Custom, Excise & Service Tax Tribunal
Bureau Of Indian Standards vs Cst Ch - I on 24 February, 2026
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
Service Tax Appeal No. 41913 of 2016
(Arising out of Order in Appeal No. 380/2016 (STA-I) dated 30-06-2016 passed by
the Commissioner of Service Tax (Appeals-I), Chennai)
Bureau of Indian Standards .... Appellant
P.B.No.8290 CIT Campus,
IV Cross Road, Taramani,
Chennai - 600 113
VERSUS
Commissioner of GST and Central Excise ...Respondent
Chennai Outer Commissionerate
Newry Towers, No.2054, I Block,
II Avenue, 12th Main Road,
Anna Nagar, Chennai-600 040.
APPEARANCE:
For the Appellant: Shri. G. Natarajan, Advocate
For the Respondent: Ms. G. Krupa, Authorised Representative
CORAM:
HON'BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL)
HON'BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)
FINAL ORDER No.40295/2026
DATE OF HEARING: 16.10.2025
DATE OF DECISION: 24.02.2026
Per AJAYAN T.V.
Bureau of Indian Standards (BIS), the Appellant
herein, has called into question the Order in Appeal No.380/2016
(STA-I) dated 30-06-2016 (impugned order), whereby the
appellate authority upheld the Order No.13/2014 (VCES) dated
01-03-2014 passed by the designated authority (VCES), Chennai
rejecting the VCES declaration filed by the Appellant.
2. The brief facts of the case are that the Appellant is said to be a
statutory body responsible for issuing "Hallmark", a quality
certification for jewelries, through their approved assaying centres
and is registered with the Department. The appellant filed a
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declaration in form VCES-I under Service Tax Voluntary
Compliance Encouragement Scheme,2013 (VCES) vide letter
dated 24-9-2013, further amended by letter dated 02-12-2013,
revising the tax dues for the period July 2012 to December 2012
as Rs.29,40,712/-.
3. On verification of records, the Department noticed that since the
appellant had not paid service tax on the royalty amount received
from the Assaying and Hallmark centres, the appellant had been
earlier issued nine show cause notices (SCNs) periodically,
demanding service tax under intellectual property service covering
the period from 01-09-2004 to 31-03-2012. Out of these nine
SCNs, 4 SCNs covering the period 01-09-2004 to 31-07-2009,
were adjudicated and the demands confirmed by the Adjudicating
Authority was upheld by the Appellate Authority. Aggrieved, the
Appellant had filed appeals before the Tribunal which were then
pending decision. The remaining 5 SCNs covering the period 01-
08-2009 to 31-03-2012 were pending adjudication.
4. The Department was of the opinion that in terms of second
proviso to section 106 (1) VCES, no declaration shall be made on
the same issue for any subsequent period where a notice or order
of determination has been issued to the declarant during the past
period starting from October 2007 onwards. Hence a show cause
notice dated 20-11-2013 was issued to the appellant proposing
rejection of the declaration in terms of second proviso to section
106 (1) of the VCES, 2013. After due process of law, the learned
designated authority, vide Order No.13/2014 (VCES) dated 01-03-
2014, held that the Appellant is not eligible for VCES benefit and
therefore rejected the VCES declaration in terms of second proviso
to section 106 (1) of Finance Act, 2013. Aggrieved, the appellant
preferred an appeal before the Commissioner of Service Tax
(Appeals-I), Chennai, who has however, vide the impugned order
rejected the appeal. Hence this appeal.
5. Shri. G. Natarajan, learned advocate, appearing on behalf of the
appellant submitted that the impugned order, rejecting the
declaration filed by the appellant is not sustainable in as much as
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the "issue" which was raised by the department for the period up
to 30-6-2012 was "Whether the appellant is liable to pay service
tax leviable under section 66 of the Finance Act, 1994 under
"intellectual property service" as defined in section 65 (105) (zzr)
of the Finance Act, 1994"; which is not the same as that involved
in the period post introduction of negative list based levy of
service tax from 1-7-2012. The issue involved for the period on
or after 1-7-2012, for which the declaration under VCES has been
filed by the appellant, was again "Whether the appellant is liable
to pay service tax leviable under section 66B of the Finance Act,
1994 on the services provided by them as defined under section
65B (44), of the Finance Act, 1994".
6. The Learned Counsel placed reliance on the definition of the term
"issue," as defined in Black Law Dictionary, which is stated to be
"A point in dispute between two or more parties; A plea (of term,
a general denial), by which a party denies the truth of every
material allegation in an opposing party's leadings." Reliance was
also placed on the definition in P Ramanatha, Aiyer's Law Lexicon,
which is stated to be; "An issue in a pleading is a question, either
of fact or of law, raised by the pleadings, disputed between the
parties and mutually proposed and accepted by them as the
subject for the decision". Ld. Counsel further placed reliance on
the decision in Frankfinn Aviation Services P. Ltd v. Asstt.
Commr., Designated Authority, VCES, Service Tax, 2014 (34),
STR, 165 (DEL), to contend that since that for the particular
distinct period of July 2012 to December 2012, the subject matter
of declaration, the issue is not pending the declaration ought not
to have been rejected. The decision has been maintained in 2021
(41), GSTL J 51 SC, when the SLP preferred by the Revenue was
disposed of. The Ld. counsel prayed that the appeal may be
allowed.
7. Ms. G Krupa, Ld. Authorised Representative, appearing for the
Respondent, while reiterating the findings of the learned appellate
authority, contended that it is clear from the facts on record that
all the show cause notices issued to the appellant were only with
regard to non-payment of service tax on royalty charges. Ld. A.R
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would contend that prior to 01-07-2012, these services had a
specific nomenclature, whereas post 01-07-2012, there was no
specific classification. While the appellant agrees to their liability
post 01-07-2012, they disagree for the liabilities raised prior to
01-07-2012. The common issue in all the notices both pre and
post 01-7-2012 was that the appellant had not paid service tax on
royalty charges received by them, and there has been no change
in the nature of service involved. The claim of the appellant that
the issues were different, just because the impugned services fell
under a specific head prior to 01-07-2012, while post 01-07-2012,
the same service fell under the general description of service. Ld.
A.R argues that therefore the contention that the issues are
different prior to 01-07-2012 and post 01-07-2012 does not have
any merit. The only issue being non-payment of service tax on the
royalty charges, all through these years, the appellant is hit by the
bar laid down under the Proviso 2 section 106 (1) ibid. Reliance is
placed on the decisions in M/s. Suprasesh General Insurance
Service and Brokers, (P) Limited versus Assistant Commissioner/
Designated Authority (VCES), Chennai, 2020, (37), GSTL 276,
(MAD), M/s Yashwant Agarwal & Co Company, versus Union of
India, 2017, (47), STR 10, (MP), and GR Tech Services, Private
Limited, versus CCE, Cochin, 2018, (12), GSTL 105, (TRI.- BANG).
Reliance is also placed on the clarification at Sl. No.9 of the
Board's Circular-170/5/2013- ST dated 08-08-2013. Learned AR
submits that the order in appeal does not warrant any interference
and may be upheld.
8. Heard both sides, perused the appeal records and the citations
submitted.
9. The sole issue that arises for our consideration is whether the
rejection of the declaration filed by the appellant under the
Service Tax Voluntary Compliance Encouragement Scheme, 2013
is tenable.
10. It would be apposite to notice the statutory provisions of the
Scheme that are relevant for determination of the issue at hand,
which are as under:
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" THE FINANCE ACT, 2013 (17 of 2013)
----------
CHAPTER VI SERVICE TAX VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME, 2013 Short title.
104. This Scheme may be called the Service Tax Voluntary Compliance Encouragement Scheme, 2013.
Definitions.
105. (1) In this Scheme, unless the context otherwise requires,--
(a) "Chapter" means Chapter V of the Finance Act, 1994;
(b) "declarant" means any person who makes a declaration under sub-section (1) of section 97;
(c) "designated authority" means an officer not below the rank of Assistant Commissioner of Central Excise as notified by the Commissioner of Central Excise for the purposes of this Scheme;
(d) "prescribed" means prescribed by rules made under this Scheme;
(e) "tax dues" means the service tax due or payable under the Chapter or any other amount due or payable under section 73A thereof, for the period beginning from the 1st day of October, 2007 and ending on the 31st day of December, 2012 including a cess leviable thereon under any other Act for the time being in force, but not paid as on the 1st day of March, 2013. (2) Words and expressions used herein and not defined but defined in the Chapter or the rules made thereunder shall have the meanings respectively assigned to them in the Chapter or the rules made thereunder.
Person who may make declaration of tax dues.
106. (1) Any person may declare his tax dues in respect of which no notice or an order of determination under section 72 or section 73 or section 73A of the Chapter has been issued or made before the 1st day of March, 2013:
Provided that any person who has furnished return under section 70 of the Chapter and disclosed his true liability, but has not paid the disclosed amount of service tax or any part thereof, shall not be eligible to make declaration for the period covered by the said return:
Provided further that where a notice or an order of determination has been issued to a person in respect of 6 any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period. (2) Where a declaration has been made by a person against whom,--
(a) an inquiry or investigation in respect of a service tax not levied or not paid or short-levied or short-paid has been initiated by way of--
(i) search of premises under section 82 of the Chapter; or
(ii) issuance of summons under section 14 of the Central Excise Act, 1944, as made applicable to the Chapter under section 83 thereof; or
(iii) requiring production of accounts, documents or other evidence under the Chapter or the rules made thereunder; or
(b) an audit has been initiated, and such inquiry, investigation or audit is pending as on the 1st day of March, 2013, then, the designated authority shall, by an order, and for reasons to be recorded in writing, reject such declaration. (emphasis supplied)
11. We notice that genesis of the Scheme is in the Finance Bill 2013 (Bill No.18 of 2013) as introduced in the Lok Sabha on 28th February 2013, to give effect to the financial proposals of the Central Government for the financial year 2013-2014. It is in Chapter VI of the Finance Bill 2013 that the Service Tax Voluntary Compliance Encouragement Scheme 2013 has been laid out. The memorandum to the Finance Bill 2013, under Service Tax, in paragraph V titled " Amnesty Scheme for Non filers and stop filers", has stated as under:
"To encourage voluntary compliance and broaden the tax base, it is proposed to provide one time amnesty by way of (i) waiver of interest and penalty; and (ii) immunity from prosecution, to the stop filers, non-filers or non- registrants or service providers (who have not disclosed true liability in the returns filed by them during the period from October 2007 to December 2012) who pay the "tax dues". Details of the scheme are available in 7 Chapter VI of the Finance Bill, 2013. The scheme will be operational from the date on which the Finance Bill, 2013 receives the assent of the President." (emphasis supplied)
12. The Finance Bill received the assent of the President on 10th May, 2013 and the VCES came into effect from the said date.
2. Bearing the above in mind, when we examine section 106 reproduced above, it can be seen that the said section deals with persons who may make declaration of tax dues. Sub-section (1) of Section 106 spells out the tax dues in respect of which any person can declare and specifies such tax dues to be those in respect of which no notice or an order of determination under Section 72,73 or 75 of Chapter V of the Finance Act, 1994 has been issued or made before 1st March, 2013. The first proviso to sub-section (1) makes a person who has furnished return under Section 70 and disclosed his true liability, but not paid the disclosed amount of service tax or part thereof, ineligible to make a declaration for the period covered by the said return. The second proviso to sub-section (1) further provides that where a notice or order of determination has been issued to a person in respect of any period on any issue, no declaration shall be made of his tax dues on the same issue for any subsequent period.
3. In other words, the first proviso which makes a person who has furnished his return disclosing his true liability but has not paid the disclosed amount or part thereof ineligible to make a declaration under the VCES and the second proviso which bars a person from making a declaration of his tax dues on an issue for the subsequent period, in case on the very same issue any notice or order of determination has been made, makes it amply clear that the intent of the Government was to exclude such of those persons who have already come to the notice of the Department as defaulters, subject to the issue being the same. Thus, sub- section (1) of Section 106 and its two provisos, are evidently intended to rope in only non-filers or non-registrants or stop filers or service providers who have not disclosed true liability in 8 the returns filed by them during the period from October 2007 to December 2012 and thereby to encourage voluntary compliance and broaden the tax base.
13. The sub-section (2) of Section 106 further stipulates that in case declarations have been made by a person against whom actions as specified therein have already been initiated and such inquiry, investigation or audit is pending as on 1st March 2013, then the designated authority shall, by an order and for reasons to be recorded in writing, reject such declaration. In other words, sub- section (2) only spells out the action that a designated authority has to take when a person, despite an ongoing investigation or enquiry that continues to be pending on 1st March 2013, files a declaration.
14. The sole contention of the Appellant in this appeal is that the Designated Authority could not have rejected the VCES declaration filed by the Appellant BIS, by relying on second proviso to section 106(1) in as much as the "issue" which was raised by the department for the period upto 30.06.2012 is not the same as that involved in the period post introduction of negative list based levy of Service Tax from 01-07-2012.
15. We find that the Ld. Appellate Authority has rendered his finding as under:
" 8. It is observed that the Declaration was filed in respect of service tax payable on royalty. Admittedly, show cause notices covering the earlier periods were issued for demanding service tax on royalty. Hence, the subject matter of tax is one and the same both under the show cause notices and Declaration. The impugned service fell under a specific heading under erstwhile service tax regime and falls under the general description of service under the present negative list based tax regime or for that matter the Honourable Tribunal has waived the deposit and stayed the recovery do not make any difference as to the fact that on the same issue show cause notices have been issued for the previous periods. Hence the declaration clearly attracts second proviso to Section 106 (1) of the act..."9
16. We are unable to concur with the aforesaid finding as we see that the Ld. Appellate Authority has approached the issue on the premise that service tax is payable on royalty, i.e premised on the nomenclature of the consideration without examining how the charge of service tax was attracted for the period prior to 01-07- 2012 and for the period for which the Appellant filed the declaration.
17. Prior to 01-07-2012, the charge of service tax as per Section 66 of the Finance Act, 1994 was on the taxable services of the various sub-clauses of clause (105) of Section 65 at the specified percentage rate of the value of the taxable services, collected in such manner as prescribed. Therefore, what constituted taxable services were defined under clause (105) of Section 65, which stipulated that " 'taxable service' means any service provided or to be provided," and went on to specify the nature of these services under the various sub-clauses.
18. It was thus imperative that the requirement of the particular sub- clause had to be satisfied so as to bring the service provided or to be provided within the ambit of taxable service.
19. In the instant case admittedly the facts before 01-07-2012 and after 01-07-2012 are the same, BIS authorizes the Hallmarking/Assaying Centers to administer the Hallmarking Scheme and has been collecting royalty from these Hallmarking/Assaying Centers.
20. However, the 'issue' raised in the SCNs that were issued to the appellant was premised on the allegation that the appellant was rendering the 'taxable service' within the ambit of Section 65 (105) (zzr), that is, the taxable service provided to any person, by the holder of intellectual property right, in relation to intellectual property service. The Department was of the view that the 'Hallmark' was an intellectual property right held by the appellant and it was in relation to this intellectual property right held that the appellant was rendering the intellectual property service. Therefore, the dispute or the "issue" in these SCNs was whether 10 the Appellant was the holder of 'intellectual property right' rendering service to these Hallmarking/Assaying Centers in relation to intellectual property service so as to come within the ambit of "intellectual property service" as defined in Section 66 (105) (zzr) and thereby attract the charge of service tax under Section 66 of the Finance Act, 1994. Concededly, at that point in time the appellate authority has noted that the Tribunal had waived the predeposit and stayed recovery of the tax demanded. We notice that the appellant has produced the Final Order No.43451-43454/2017 dated 21.12.2017, whereby this Tribunal has held in the appellant's favour that "Hallmark" is not at all any intellectual property governed by any law for such right and that the Appellant are not providing any Intellectual property right service in terms of Finance Act, 1994.
21. Post 01-07-2012, the Finance Act 1994, overwent a complete overhaul and for the first time "service" was defined under Section 65B (44) as 'service' means any activity carried out by a person for another for consideration and includes a declared service, with certain specified exceptions. The Charging Section introduced as Section 66B also stipulated that the charge of service tax was on all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed at the specified percentage rate on their value. In other words, the definition of "service" was a "catch all" definition, save for the exceptions, and the charge of service tax was on all 'services' other than those specified in the negative list. In such circumstances, it was a non-issue whether or not "Hallmark" was an "intellectual property" or whether the appellant was a holder of an "intellectual property right" and whether the appellant as a holder of "intellectual property right" was providing a service in relation to intellectual property service. All that mattered was merely whether the Appellant was providing a 'service' as defined under Section 65B (44), and whether or not the said 'service' was one that was specified in the negative list. Given the nature of the definition of 'service' and the charge under Section 66B, the mere 11 allowing the Hallmarking/Assaying Centres to administer the BIS Scheme upon payment of royalty, itself came within the ambit of 'service' as defined under Section 65B (44) so as to attract the charge under Section 66B of the Finance Act 1994 and therefore the appellant rightly admitted its liability without demur.
22. For the reasons above, we are therefore of the considered view that the "issue" in so far as the notices issued to the appellant for the period prior to 01-07-2012 being "whether the Appellant was the holder of 'intellectual property right' rendering service to these Hallmarking/Assaying Centers in relation to intellectual property service so as to come within the ambit of "intellectual property service" as defined in Section 66 (105) (zzr) and thereby attract the charge of service tax under Section 66 of the Finance Act 1994" was different from the "issue" for which the appellant had filed the declaration for the period July 2012 to December 2012 for the "tax dues" under the chapter, which was namely, "Whether allowing the Hallmarking/Assaying Centres to administer the BIS Scheme upon payment of royalty itself constituted 'service' as defined under Section 65B(44) so as to attract the charge of service tax under Section 66B." We are therefore of the firm opinion that the Ld. Appellate Authority has erred in upholding the rejection of the declarations filed by the Appellant by the designated authority under VCES, as the proviso to Section 106(1) was inapplicable in the instant case. Ld. Counsel's reliance on the decision in reliance on the decision in Frankfinn Aviation Services P. Ltd v. Asstt. Commr., Designated Authority, VCES, Service Tax, 2014 (34), STR, 165 (DEL) in support of the contention that for the particular distinct period of July 2012 to December 2012, the subject matter of declaration, the issue is not pending and that therefore the declaration is acceptable, is also found to be apposite.
23. We find that in the decision of M/s. Suprasesh General Insurance Service and Brokers, (P) Limited versus Assistant Commissioner/ Designated Authority (VCES), Chennai, 2020, (37), GSTL 276, (MAD), unlike the present case, the activity of the appellant 12 therein was found to that of an "intermediary or insurance intermediary", and hence the Hon'ble High Court found that the amendment in the Finance Act, 2012 did not introduce service tax on "intermediary or insurance intermediary" service for the first time and it was liable to tax all along in terms of section 65 (105) (zl) of the Finance Act, 1994 and moreover, the taxability thereon was contested by the Appellant claiming it to be "export of service". Hence the facts and statutory provisions involved in the said case is entirely different from the facts and circumstances of this matter. Likewise, the decisions in M/s Yashwant Agarwal & Co Company, versus Union of India, 2017, (47), STR 10, (MP), and GR Tech Services, Private Limited, versus CCE, Cochin, 2018, (12), GSTL 105, (TRI.- BANG) involved notice issued under works contract service prior to 01-07-2012 and the declaration was filed for liability under works contract service post 01-07-2012. Similarly, the reliance placed on the clarification at Sl.No.9 of the Board's Circular dated 08-08-2013 also is inapplicable as it refers to a context where the "issue" is the same, and for the reasons elucidated supra, we have found that the "issue" herein to be different for the period prior to 01-07-2012 and for the period for which the Appellant has filed the declaration.
24. In light of our discussions and for the reasons above, we are of the considered view that the Order in Appeal No.380/2016 (STA-I) dated 30-06-2016 is unsustainable and liable to be set aside. Ordered accordingly.
The appeal is allowed with consequential relief(s) in law, if any.
(Order pronounced in open court on 24.02.2026) (AJAYAN T.V.) (M.AJIT KUMAR) MEMBER (JUDICIAL) MEMBER (TECHNICAL) ra