Custom, Excise & Service Tax Tribunal
Velocity Propbuild Private Limited vs Noida on 12 August, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.II
Service Tax Appeal No.70210 of 2024
(Arising out of Order-in-Appeal No.NOI-EXCUS-002-APP-248-23-24 dated
06/09/2023 passed by Commissioner (Appeals) Central Goods & Services
Tax, Noida)
M/s Velocity Propbuild Pvt. Ltd., .....Appellant
(GF-51, SNG Plaza, Opp-Expo Market,
G.B. Nagar, Noida-201308)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(3rd Floor, Wegmans Business Park, Noida)
APPEARANCE:
Shri Atul Gupta, Advocate for the Appellant
Smt Chitra Srivastava, Authorised Representative for the Respondent
CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NO.70563/2025
DATE OF HEARING : 01 May, 2025
DATE OF PRONOUNCEMENT : 12 August, 2025
SANJIV SRIVASTAVA:
This appeal is directed against order-in-Appeal No.NOI-
EXCUS-002-APP- -23-24 Dated: 06.09.2023 of Commissioner,
CGST (Appeals), Noida. By the impugned order following has
been held:
"ORDER
12. In view of the above I uphold the confirmation of
demand of Rs. 6,65,134/- with interest and imposition of
penalty equivalent to the said amount in the impugned
order. However, I set aside that part of the order whereby
the adjudicating authority has confirmed demand of Rs.
Service Tax Appeal No.70210 of 2024
2
1,45,000/- with interest and imposed equal amount of
penalty. The impugned order is modified to this extent.
Appeal is disposed of accordingly."
1.2 By Order-in-Original No. 4/AC/ST/DIV.-III/GBN/2022-23
dated 26.12.2022 following has been held:
(a) I confirm the demand of Rs. Service Tax of Rs. 6,65,134/-
[Rs. Six Lakhs Sixty-Five Thousand One Hundred Thirty-
Four Only) [inclusive of Ed. Cesses, SBC. KKC] towards
service taxnot , paid during the F.Y. 2015-16, 2016-17
and 2017-18 (up to June, 2017) and order for its recovery
from them under Section 73(1) of the Finance Act, 1994
along with interest payable from the due date of payment
till the actual date of payment of such tax in terms of
section 75 of the Finance Act, 1994.
(b) I impose a penalty of Rs. 6,65,134/- [Rs. Six Lakhs Sixty-
Five Thousand One Hundred Thirty-Four Only] on the
party under Section 78 of the Finance Act, 1994 and order
for its recovery from them.
(c) I also confirm demand of Rs. 1,45,000/- [Rs. One Lakh
Forty-Five Thousand Only] [inclusive of Cess] towards
service tax not paid for the F.Y. 2015-16 and order for its
recovery from them under Section 73(1) of the Finance
Act, 1994 read with Section 174 of the CGST Act, 2017
along with interest payable on the amount.
(d) I also impose a penalty of Rs. 1,45,000/- [Rs. One Lakh
Forty-Five Thousand Only] on the party under Section 78
of the Finance Act, 1994 and order for its recovery from
them.
(e) I order that a sum of Rs.12,67,544/- already deposited by
the party under SVLDR Scheme be appropriated.
2.1 Appellant at the relevant time was registered a Service tax
registrant with Registration No. AADCV1190NSD001 for
providing the taxable services viz. "Real Estate Agent Service
and Construction of Residential Complex Service". They opted for
voluntary disclosure under the SVLDRS (Sabka Vishwas Legal
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3
Dispute Resolution Scheme), 2019 under Section 125(f) of the
Finance Act, 2019 and deposited a sum of Rs.12,67,544/- under
the said SVLDRS Scheme. SVLDRS-4 was also issued to them.
2.2 On verification and scrutiny of the documents submitted by
the appellant revealed that during the Financial Year 2015-16,
2016-17 and 2017-18 (up to June'2017), the appellant received
an amount of Rs. 1,38,15,775/- against the taxable services
provided by them and the service tax liability comes to
Rs.19,32,678/- on the said consideration amount. It was also
revealed from the documents that during the F.Y. 2015-16, the
appellant had forfeited an amount of Rs.10,00,000/- received as
an advance for providing Real Estate Agent service on which
service tax amounting to Rs.1,45,000/- (inclusive of Cess) was
payable by the appellant.
2.3 A show cause notice dated 28.04.2021 was issued to the
appellant asking to show cause as to why: -
(i) Service Tax amounting to Rs. 19,32,678/- (Rupees
Nineteen Lakh Thirty Two Thousand Six Hundred Seventy
Eight only) (inclusive of Ed. Cess & SH Ed. Cess, KKC/SBC
wherever applicable ) should not be demanded and
recovered from them under Proviso to Section 73 (1) of
the Finance Act, 1994 read with Section 174 of the CGST
Act, 2017. As the party has deposited Rs 12,67,544/-
through SVLDR Scheme, the same should not be
appropriated against aforementioned demand.
(ii) Service Tax amounting to Rs 1,45,000/- (Rupees One
Lakh forty Five Thousand Only) (inclusive of Ed. Cess &
SH Ed, Cess, KKC/SBC wherever applicable ) on account
of advance income forfeited should not be demanded and
recovered from them under Proviso to Section 73 (1) of
the Finance Act, 1994 read with Section 174 of the CGST
Act. 2017
(iii) Interest should not be recovered from them on the
service lax amount mentioned in above (i) and (ii) under
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Section-75 of the Finance Act, 1994 read with Section
174 of CGST Act,2017.
(iv) Penalty should not be imposed upon them on the service
tax amount mentioned in above (i) and (ii) under Section
78 of the Finance Act, 1994 read with Section 174 of
CGST Act, 2017.
2.4 The show cause notice was adjudicated as per the order in
original referred in para 1.2 above.
2.5 Aggrieved appellant filed appeal before the Commissioner
(Appeal) which has been disposed as per the impugned order
referred in para 1 above.
2.6 Aggrieved appellant has filed this appeal.
3.1 I have heard Shri Atul Gupta, Advocate for the appellant
and Ms Chitra Srivastava, Authorized Representative for the
revenue.
3.2 Arguing for the appellant learned counsel submits that:
Appellant has made correct declaration under SVLDR
Scheme and has rightly availed the CENVAT Credit before
opting for the said scheme.
On plain reading of Rule 3, 4 and 9 of Cenvat Credit Rules
along with Rule 4A of the Service Tax Rules, it is evident
that the provider of the output service could have taken
CENVAT Credit on the basis of invoices evidencing the
payment of service tax on the input services received by
him. Appellant had taken CENVAT Credit of Rs 6,65,134/-
in his CENVAT register, though not declared in the ST-3
return filed by them. Non mentioning of the CENVAT Credit
in the ST-3 return was just a procedural lapse. The
substantial benefit could not be denied for such procedural
infirmities as has been held in following cases:
o Origin Learning Solutions Pvt. Ltd. [2021 (7) TMI
898 - CESTAT Chennai];
o Target Corporation India Pvt. Ltd. [2019 (10) TMI
1148 - CESTAT Bangalore;
Service Tax Appeal No.70210 of 2024
5
o Voss Exotech Automotive Pvt. Ltd. [2018 (3) TMI
1048 - CESTAT Mumbai.
Board has by Circular No 1071/4/2019-CX dated
27.08.2019 clarified that "Duty/ tax already paid through
input credit shall be adjusted by the designated committee
at time of determination of final amount payable under the
scheme."
Reliance is also placed on the decisions in the case of
Jagdish Advertising [2020 (8) TMI 788 - Karnataka High
Court]
If the duty is held payable on the final product, then
CENVAT Credit is admissible on inputs, input services, etc.
Appellant had outstanding tax liability of Rs 19,32,678/-
and same was netted of by the available Cenvat Credit,
before opting for SVLDRS.
Impugned order has erroneously concluded that appellant
had not made full and complete disclosure under SVLDRS.
The extended period of limitation cannot be invoked in the
present case. The benefit of order dated 27.04.2021 of the
Hon'ble Apex court is available only to the litigants as has
bee held in case of S Kasi [2020 (6) TMI 727] and Circular
No 157/13/2021-GST dated 20.07.2021]. Reliance is also
placed on the following decisions:
o Rungta Mines Ltd. [2023 (8) TMI 786 Jharkhand
High Court];
o N K Impex India and Findoc Impex [2021 (12) TMI
1064 CESTAT Chandigarh]
Extended period of limitation could not have been invoked
for making this demand as necessary ingredients are
missing. Reliance is placed on the following decisions:
o Suryavistacom Pvt Ltd. [2022 (66) GSTL 290 (Cal)]
o ABB Ltd [Karnataka High Court Central Excise Appeal
No 16/2021];
o Anand Nishkawa Co Ltd [2005-TIOL-118-SC-CX]
o MTNL [2023-TIOL-407-HC-Del-ST]
Service Tax Appeal No.70210 of 2024
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o Continental Foundation A Venture [2007 (216) ELT
177 (SC)]
o Padmini Products Limited [1989 (43) ELT 195 (SC)]
No penalty and interest is imposable.
3.3 Authorized representative reiterated the findings recorded
in the impugned order.
4.1 I have considered the impugned order along with the
submissions made in appeal.
4.2 Impugned order records the findings as follows:
"9. On careful consideration of the facts, circumstances of the
case, documents on record and the submissions of the
appellant, I find that the issues for determination in this case
are:
(i) Whether the Show Cause Notice issued in this case is
barred by limitation of one year prescribed under
Section 129(2)(c) of the SVLDRS, 2019 thereby
rendering the demand proceedings void?
(i) Whether demand of Rs.1,45,000/- confirmed by the
adjudicating authority holding the same liable to
Service Tax under Section 66E(e) of the Finance Act,
1994 is legal and proper?
(ii) Whether the order of recovery of interest and
Imposition of penalty on the appellant as
consequence to the confirmation of demand is
correct or not?
10.1 I note that the appellant had filed declaration under
SVLDRS, 2019 under the category `voluntary disclosure' and
paid an amount of Rs. 12,67,544/-. The declaration was
accepted by the Designated Committee and SVLDRS-4 was
issued on 19.03.2020. Being the case of voluntary disclosure
matter post verification was initiated by the department and
accordingly requisite documents were sought by the
jurisdictional Range officer from the appellant vide letter
dated 14.09.2020. The appellant submitted documents vide
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letter dated 24.11.2020 and 26.02.2021. On scrutiny of
documents submitted by the appellant it was found that the
total amount of Service Tax payable by them worked out to
Rs. 19,32,678/- as against Rs. 12,67,544/- paid by them.
Subsequently Show Cause Notice dated 28.04.2021 was
issued proposing demand of Service Tax invoking extended
period of limitation, interest and imposition of penalty on the
appellant.
10.2 In the above background I feel it necessary to refer to
the provisions of Section 129(2)(c) of the SVLDRS, 2019,
relevant portion of which reads as under:
"(2) Notwithstanding anything contained in sub-section
(1), -
(a) .........
(b) ..........
(c) in a case of voluntary disclosure where any
material particular furnished in the declaration is
subsequently found to be false, within a period of
one year of issue of the discharge certificate, it shall
be presumed as if the declaration was never made
and proceedings under applicable indirect tax
enactment shall be instituted."
10.3.1 I note that the aforesaid provisions stipulated
initiation of proceedings under Finance Act, 1994, in the cases
of voluntary disclosure where declaration was found to be
false, within one year of issue of discharge certificate. In
other words this provision enabled the department to initiate
demand proceedings as per law by way of issuing of Show
Cause Notice, where the declaration was found to be false
within one year of discharge certificate. It did not lay down
that the demand Show Cause Notice should have been issued
within a period of one year. Close reading of the above
provision makes it clear that the proceedings so initiated
would be governed by the relevant provisions of Finance Act,
Service Tax Appeal No.70210 of 2024
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1994. Therefore, I hold that the Show Cause Notice in the
present case is not barred by limitation of one year prescribed
under Section 129(2)(c) of the SVLDRS, 2019 as contended
by the appellant since the department had found the
declaration of the appellant false within one year of issue of
discharge certificate though specific date thereof is not
forthcoming.
10.3.2 Further, I find that the Hon'ble Supreme Court vide
Judgement dated 27.04.2021 in Miscellaneous Application No.
665/2021 in SWM (C) No. 3 of 2020 has issued the following
directions
"We, therefore, restore the order dated 23rd March, 2020
and in continuation of the order dated 8th March, 2021
direct that the period(s) of limitation, as prescribed under
any general or special laws in respect of all judicial or
quasi-judicial proceedings, whether condonable or not,
shall stand extended till further orders.
It is further clarified that the period from 14th March, 2021
till further orders shall also stand excluded in computing
the periods prescribed under Sections 23 (4) and 29A of
the Arbitration and Conciliation Act, 1996, Section 12A of
the Commercial Courts Act, 2015 and provisos (b) and (c)
of Section 138 of the Negotiable Instruments Act, 1881
and any other laws, which prescribe period(s) of limitation
for instituting proceedings, outer limits (within which the
court or tribunal can condone delay) and termination of
proceedings.
We have passed this order in exercise of our powers under
Article 142 read with Article 141 of the Constitution of
India. Hence it shall be a binding order within the meaning
of Article 141 on all Courts/Tribunals and Authorities."
I also find, that the matter of extension of period of limitation
under Section 168A of the CGST Act, 2017 was deliberated in
the 43rd Meeting of GST Council. Council, while providing
various relaxations in the compliances for taxpayers, also
Service Tax Appeal No.70210 of 2024
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recommended that wherever the timelines for actions have
been extended by the Hon'ble Supreme Court, the same
would apply. In this context the CBIC vide Circular No.
157/13/2021-GST dated 20/07/2021 on the subject matter of
limitations of time lines under GST Law, has clarified the
following: -
(ii) For the purpose of counting the period(s) of
limitation for filing of appeals before any appellate
authority under the GST Law, the limitation stands
extended till further orders as ordered by the Hon'ble
Supreme Court in Suo Motu Writ Petition (Civil) 3 of 2020
vide order dated 27th April 2021. Thus, as on date, the
Orders of the Hon'ble Supreme Court apply to appeals,
reviews, revisions etc.
Accordingly, the SCN issued by the department to the
appellant on 28.04.2021 is, therefore, considered to be issued
within limitation period.
10.4 It is on record that the appellant had a balance of
Rs. 6,65,134/- in CENVAT Credit account, which was not
permitted to be utilized for payment of any amount payable
under SVLDRS, 2019. The appellant has contended that they
had paid Rs. 12,67,544/- (net of CENVAT Credit). They never
paid any amount through CENVAT Credit account as held by
the adjudicating authority. In view of the fact that the
appellant has not challenged that the total amount of Rs.
19,32,678/- payable by them under SVLDRS, 2019 whereas
admittedly they had paid Rs. 12,67,544/-, thus the fact
remains that their declaration under SVLDRS, 2019 was not
correct which stipulated 100% payment in case of voluntary
disclosure without utilizing any CENVAT Credit. As such I
uphold confirmation of demand of Service Tax of Rs.
6,65,134/- with interest and imposition of penalty to that
extent. It is not out of place to mention that in the facts and
circumstances of the present case I uphold invocation of
Service Tax Appeal No.70210 of 2024
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extended period of limitation for the purpose of demand of
Service Tax."
4.3 Order in original records the findings as follows:
"6. I observe that the issues for my consideration in the
instant matter are (a) Whether or not the party is liable to
pay Service Tax amounting to Rs. 19,32,678/-[Rs.
Nineteen Lakhs Thirty Two Thousand Six Hundred Seventy-
£ight Only] [inclusive of Ed. Cesses, SBC, KKC] for the
period 2015-16, 2016-17 and 2017-18 (up to June, 2017)
and Rs. 1,45,000/- [inclusive of all Cesses] on forfeited
amount along with interest for the F.Y. 2015-16. (b)
Whether or not they are liable to penalty under Section 78
of the Act. I proceed to decide the issues sequentially.
7. I find that the party did not file any ST-3 return during
the F.¥. 2015-16, 2016-17 and 2017-18 up to June, 2017)
and thus, managed to evade payment of service tax on the
taxable services valued at Rs. 1,38,15,775/- resulting in
non-payment of service tax. Accordingly, I hold that M/s
Velocity Propbuild Pvt. Ltd., GF, 51, SNG Plaza, Opp. Expo
Mart, Greater Noida, Gautam Buddha Nagar-201308 is
liable to pay service tax of Rs. of Rs.19,32,678/-. Based on
the figures of the Balance Sheets and Trial Balance, the
liability of the party to pay Service Tax for the period in
question is as detailed in the table below:
S. Financial Taxable Value Service Tax Service Tax
No Year (Rs.) Payable as deposited
declared by the under
party (Incl. SVLDRS
Cesses in Rs.) (Rs. In
Cash)
1. 2015-16 88,01,317/- 11,73,008/-
2. 2016-17 43,26,792/- 6,56,520/-*
3. 2017-18 6,87,666/- 1,03,150/-
(up to
June,
2017)
TOTAL 1,38,15,775/- 19,32,678/- 12,67,544
*Assessed and declared by the taxpayer himself.
8. The party had not disclosed correct taxable value and
tax liability in SVLDRS papers. They had only shown
Service Tax Appeal No.70210 of 2024
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payment of Rs. 12,67,544/- in Form No. SVLDRS-4. As per
figures of the Balance Sheets for the F.Y 2015-16, 2016-17
and Trial Balance for 2017-18 (up to June, 2017) correct
service tax liability on the total taxable services valued at
Rs. 1,38,15,775/- comes to Rs.19,32,678/ whereas the
party has only deposited Rs. 12,67,544/- in cash and
claims to have paid service tax of Rs.6,65,135/- through
CENVAT credit from 01.04.2015 to 30.06.2017. However,
since the party had not filed any ST-3 return during
the F.Y. 2015-16, 2016-17 and 2017-18 (up to June,
2017), their plea of taking input service credit in
stipulated time frame and payment of tax through
CENVAT credit is not tenable. Moreover, as per Section
130(1)(a) of SVLDR Scheme, 2019, the act of payment of
tax through CENVAT credit is violation of the provisions of
the scheme. Further, under Section 129(2)(c) of SVLDR
Scheme, 2019, in case of voluntary disclosure if any
material particular is subsequently found to be false, it
shall be presumed that the declaration was never made
and proceedings under the applicable indirect tax
enactments shall be instituted. Accordingly, I hold that
M/s. Velocity Propbuild Pvt. Ltd., GF 51, SNG Plaza, Opp.
Expo Mart, Greater Noida, Gautam Buddha Nagar-201308
has contravened the provisions of SVLDR Scheme, 2019
and is liable to pay appropriate service tax for the period in
question."
4.4 From the perusal of the above orders the undisputed fact
of the case is that appellant had not filed any ST-3 Returns as
prescribed for the period 2015-16, 2016-17 and 2017-18 (Upto
June 2018) in the prescribed manner and within the prescribed
date for filing the return. The liability to the service tax of Rs
19,32,878/- is also not in dispute. The appellant has in these
proceedings claimed that they have claimed with regards to
availability of the CENVAT Credit of Rs 6,65,135/- which as per
them was netted of by them by disclosing their liability under
SVLDRS.
Service Tax Appeal No.70210 of 2024
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4.5 As appellant has not filed the ST-3 return during the
relevant period they have never made a declaration in respect of
CENVAT Credit taken by them against the invoices of input
service. The submission made, by the appellant that they were
taking the credit in the CENVAT Register is without any basis.
There is no document as CENVAT register prescribed by the
CENVAT Credit Rules, 2004 or the Service Tax Rules, 1994. The
private records of the appellant, which are duly declared by the
appellant to the department in terms of Rule 5 of the Service
Tax Rues, 1994 are considered acceptable. I do not find at any
stage of these proceedings appellant have produced any such
declaration of such a CENVAT Register.
4.6 Rule 7 of the Service Tax Rules, 1994 provides as follows:
"7. Returns.
(1) Every assessee shall submit a half yearly return in
From 'ST-3', 'ST-3A', [or 'ST-3C'] [Inserted by
Notification No. G.S.R. 1057 (E), dated 9.11.2016
(w.e.f. 1.7.1994).] as the case may be, along
with a copy of the Form TR-6, in triplicate for the
months covered in the half-yearly return.
(2) Every assessee shall submit the half yearly return
by the 25th of the month following the particular
half-year.
Provided that the Form ST-3 required to be
submitted by the 25th day of October, 2012 shall
cover the period between 1st April to 30th June,
2012 only
Provided further that the Form ST-3 for the period
between the 1st day of July 2012 to the 30th day
of September 2012, shall be submitted by the
25th day of March, 2013;]
Provided also that the return for the period from
the 1st day of April, 2017, to the 30th day of
June, 2017, shall be submitted by the 15th day of
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August, 2017, in Form 'ST-3' or 'ST-3C', as the
case may be.
(3) Every assessee shall submit the half-yearly return
electronically
(3A) .........
(3B) ........
(4) The Central Board of Excise and Customs may, by
an order extend the period referred to in sub-rule
(2) by such period as deemed necessary under
circumstances of special nature to be specified in
such order."
4.7 Sub-rule (9) of Rule 9 of the CENVAT Credit Rules, 2004
provides as follows:
"9. Documents and accounts.
(9) The provider of output service availing CENVAT
credit shall submit half-yearly return in form
specified, by notification, by the Board to the
Superintendent of Central Excise, by the end of the
month following the particular quarter or half year."
4.8 The use of word "shall" in the rule 7 of the Service Tax
Rules, 1994 and sub rule (9) makes the filing of the ST-3 return
declaring the CENVAT Credit taken a mandatory requirement and
not a procedural requirement not a procedural requirement. In
absence of the claim to credit made on the return revenue
authorities would not be position to verify the correctness of
claim made to the CENVAT Credit and recover the inadmissible
CENVAT Credit along with the penalties imposable as per Rule 14
and Rule 15 of CENVAT Credit Rules, 2004. By not filing the ST-3
return claiming the CENVAT Credit taken, appellant have denied
the opportunity to the revenue authorities to verify the
correctness of the claim of credit.
4.9 The decision in the case of
a. Origin Learing Solutions Pvt. Ltd., was case of refund
under rule 5 of the CENVAT Credit Rules, 2004. The
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credit in that case was in respect of the paid under the
reverse charge mechanism. It was not the case where
no ST-3 return was being filed but the case where
CENVAT credeit was not declared in the return for a
particular period. Party had undertaken to declare the
same in the subsequent return. In these circumstances
CESTAT held that mere non-mention of certain amounts
of Credit taken in a particular period in the ST-3 return
for that period was a procedural lapse. This judgement
is also distinguishable on the facts as the party therein
has categorically declared their claim to credit while
making the application for refund.
b. Target Corporation India Pvt Ltd., was also the case of
refund under Rule 5 of the CENVAT Credit Rules, 2004.
In that case also party had claimed the refund on the
basis of various document available with them. In that
circumstances again tribunal found that claim to the
credit/ refund can be examined on basis of these
documents. This judgement is also distinguishable on
the facts as the party therein has categorically declared
their claim to credit while making the application for
refund.
c. Case of Voss Exotech, was in case of taking the credit
within the period prescribed and not on the subject
matter in dispute and hence distinguishable.
4.10 On the contrary I find that Hon'ble Supreme Court has in
case of Mihir Textiles Ltd [1997 (92) ELT 9 (SC)] observed as
follows:
"12. In support of that contention, counsel invited our
attention to the decision of a Constitution Bench of this
Court in State of U.P. v. Manbodhan Lal Srivastava, 1958
SCR 533, wherein their Lordships were considering the
implication of non-compliance with the conditions provided
in Article 320(3) of the Constitution on an order imposing
punishment to a Government servant without reference to
Service Tax Appeal No.70210 of 2024
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the Public Service Commission. While considering that
question learned Judges made a reference to the Privy
Council decision in Montreal Street Railway Company v.
Normandin - AIR 1917 PC 142 and the Federal Court
decision in Biswanath Khemka v. Emperor - AIR 1945 FC
67. The Constitution Bench held that the provisions of
Article 320(3) are not mandatory and non-compliance of
those provisions does not afford any cause of action in a
court of law. Privy Council in the above quoted decision
has observed that the question whether provisions in a
statute are directory or imperative depends upon the
object of the statute and no general rule can be laid down.
"When the provisions of the statute relate to the
performance of a public duty and the case is such that to
hold null and void acts done in neglect of this duty would
work serious general inconvenience or injustice to persons
who have no control over those entrusted with the duty
and at the same time would not promote the main object
of the legislature, it has been the practice to hold such
provisions to be directory." This is not a case where a
certain provision is mandatory or directory. Here the
question is whether concessional relief of duty which is
made dependent on the satisfaction of certain conditions
can be granted without compliance of such conditions. No
matter even if the conditions are only directory."
4.11 The same has been echoed by the Hon'ble Supreme Court
in case of Dilip Kumar & Co [2018 (361) E.L.T. 577 (S.C.)]
holding as follows:
"44. In Hansraj Gordhandas case (supra), the
Constitutional Bench unanimously pointed out that an
exemption from taxation is to be allowed based wholly by
the language of the notification and exemption cannot be
gathered by necessary implication or by construction of
words; in other words, one has to look to the language
Service Tax Appeal No.70210 of 2024
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alone and the object and purpose for granting exemption is
irrelevant and immaterial.
45. In Parle Exports case (supra), a Bench of two-Judges
of this Court considered the question whether non-
alcoholic beverage base like Gold spot base, Limca base
and Thumps Up base, were exempted from payment of
duty under the Central Government notification of March,
1975. While considering the issue, this Court pointed out
the strict interpretation to be followed in interpretation of a
notification for exemption. These observations are made in
para 17 of the judgment, which read as follows :
"How then should the Courts proceed? The expressions in
the Schedule and in the notification for exemption should
be understood by the language employed therein bearing
in mind the context in which the expressions occur. The
words used in the provision, imposing taxes or granting
exemption should be understood in the same way in which
these are understood in ordinary parlance in the area in
which the law is in force or by the people who ordinarily
deal with them. It is, however, necessary to bear in mind
certain principles. The notification in this case was issued
under Rule 8 of the Central Excise Rules and should be
read along with the Act. The notification must be read as a
whole in the context of the other relevant provisions. When
a notification is issued in accordance with power conferred
by the statute, it has statutory force and validity and,
therefore, the exemption under the notification is as if it
were contained in the Act itself. See in this connection the
observations of this Court in Orient Weaving Mills (P) Ltd.
v. Union of India, 1962 Supp 3 SCR 481 = AIR 1963 SC
98. See also Kailash Nath v. State of U.P., AIR 1957 SC
790. The principle is well-settled that when two views of a
notification are possible, it should be construed in favour of
the subject as notification is part of a fiscal enactment. But
in this connection, it is well to remember the observations
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of the Judicial Committee in Coroline M. Armytage v.
Frederick Wilkinson, (1878) 3 AC 355, that it is only,
however, in the event of there being a real difficulty in
ascertaining the meaning of a particular enactment that
the question of strictness or of liberality of construction
arises. The Judicial Committee reiterated in the said
decision at page 369 of the report that in a taxing Act
provisions enacting an exception to the general rule of
taxation are to be construed strictly against those who
invoke its benefit. While interpreting an exemption clause,
liberal interpretation should be imparted to the language
thereof, provided no violence is done to the language
employed. It must, however, be borne in mind that absurd
results of construction should be avoided."
In the above passage, no doubt this Court observed that
"when two views of a notification are possible, it should be
construed in favour of the subject as notification is part of
fiscal document". This observation may appear to support
the view that ambiguity in a notification for exemption
must be interpreted to benefit the subject/assessee. A
careful reading of the entire para, as extracted
hereinabove would, however, suggest that an exception to
the general rule of tax has to be construed strictly against
those who invoke for their benefit. This was explained in a
subsequent decision in Wood Papers Ltd. case (supra). In
para 6, it was observed as follows :
"... In Collector of Central Excise v. Parle Exports (P) Ltd.,
(1989) 1 SCC 345, this Court while accepting that
exemption clause should be construed liberally applied
rigorous test for determining if expensive items like Gold
Spot base or Limca base of Thums Up base were covered
in the expression food products and food preparations
used in Item No. 68 of First Schedule of Central Excises
and Salt Act and held „that it should not be in consonance
with spirit and the reason of law to give exemption for
Service Tax Appeal No.70210 of 2024
18
non-alcoholic beverage basis under the notification in
question‟. Rationale or ratio is same. Do not extend or
widen the ambit at stage of applicability. But once that
hurdle is crossed construe it liberally. Since the respondent
did not fall in the first clause of the notification there was
no question of giving the clause a liberal construction and
hold that production of goods by respondent mentioned in
the notification were entitled to benefit."
46. The above decision, which is also a decision of two-
Judge Bench of this Court, for the first time took a view
that liberal and strict construction of exemption provisions
are to be invoked at different stages of interpreting it. The
question whether a subject falls in the notification or in the
exemption clause, has to be strictly construed. When once
the ambiguity or doubt is resolved by interpreting the
applicability of exemption clause strictly, the Court may
construe the notification by giving full play bestowing
wider and liberal construction. The ratio of Parle Exports
case (supra) deduced as follows :
"Do not extend or widen the ambit at stage of applicability.
But once that hurdle is crossed, construe it liberally".
47. We do not find any strong and compelling reasons to
differ, taking a contra view, from this. We respectfully
record our concurrence to this view which has been
subsequently, elaborated by the Constitution Bench in Hari
Chand case (supra).
48. The next authority, which needs to be referred is the
case in Mangalore Chemicals (supra). As we have already
made reference to the same earlier, repetition of the same
is not necessary. From the above decisions, the following
position of law would, therefore, clear. Exemptions from
taxation have tendency to increase the burden on the
other unexempted class of taxpayers. A person claiming
exemption, therefore, has to establish that his case
squarely falls within the exemption notification, and while
Service Tax Appeal No.70210 of 2024
19
doing so, a notification should be construed against the
subject in case of ambiguity.
49. The ratio in Mangalore Chemicals case (supra) was
approved by a three-Judge Bench in Novopan India Ltd. v.
Collector of Central Excise and Customs, 1994 Supp (3)
SCC 606 = 1994 (73) E.L.T. 769 (S.C.). In this case,
probably for the first time, the question was posed as to
whether the benefit of an exemption notification should go
to the subject/assessee when there is ambiguity. The
three-Judge Bench, in the background of English and
Indian cases, in para 16, unanimously held as follows :
"We are, however, of the opinion that, on principle, the
decision of this Court in Mangalore Chemicals - and in
Union of India v. Wood Papers, referred to therein -
represents the correct view of law. The principle that in
case of ambiguity, a taxing statute should be construed in
favour of the assessee - assuming that the said principle is
good and sound - does not apply to the construction of an
exception or an exempting provision, they have to be
construed strictly. A person invoking an exception or an
exemption provision to relieve him of the tax liability must
establish clearly that he is covered by the said provision.
In case of doubt or ambiguity, benefit of it must go to the
State...."
50. In Tata Iron & Steel Co. Ltd. v. State of Jharkhand,
(2005) 4 SCC 272, which is another two-Judge Bench
decision, this Court laid down that eligibility clause in
relation to exemption notification must be given strict
meaning and in para 44, it was further held -
"The principle that in the event a provision of fiscal statute
is obscure such construction which favours the assessee
may be adopted, would have no application to construction
of an exemption notification, as in such a case it is for the
assessee to show that he comes within the purview of
exemption (See Novopan India Ltd. v. CCE and Customs)."
Service Tax Appeal No.70210 of 2024
20
51. In Hari Chand case (supra), as already discussed, the
question was whether a person claiming exemption is
required to comply with the procedure strictly to avail the
benefit. The question posed and decided was indeed
different. The said decision, which we have already
discussed supra, however, indicates that while construing
an exemption notification, the Court has to distinguish the
conditions which require strict compliance, the non-
compliance of which would render the assessee ineligible
to claim exemption and those which require substantial
compliance to be entitled for exemption. We are pointing
out this aspect to dispel any doubt about the legal position
as explored in this decision. As already concluded in para
50 above, we may reiterate that we are only concerned in
this case with a situation where there is ambiguity in an
exemption notification or exemption clause, in which event
the benefit of such ambiguity cannot be extended to the
subject/assessee by applying the principle that an obscure
and/or ambiguity or doubtful fiscal statute must receive a
construction favouring the assessee. Both the situations
are different and while considering an exemption
notification, the distinction cannot be ignored.
52. To sum up, we answer the reference holding as under
-
(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
(2) .......
(3) ........"
4.12 Interestingly the appellant have not even disclosed in respect of the CENVAT Credit while making the declaration under SVLDRS. They are SVLDRS-3 was issued by the designated committee on the basis of declaration made by the appellant of Service Tax Appeal No.70210 of 2024 21 their liability. Subsequently discharge certificate in form SVLDRS-4 was also issued. The fact of netting of the liability against the available CENVAT Credit was never disclosed to the designated committee hence the revenue authorities cannot be questioned for holding that the declaration made by the appellant was substantially false, and proceeding as per the Section 129 (2) (c) of the Finance Act, 2019 could be initiated.
4.13 Appellant has relied upon the Board Circular and decision of Hon'ble Karnataka High Court to argue that they have rightly declared their tax liability after netting of the credit. The decision of learned Single Judge of Karnataka High Court relied upon by the appellant was set aside by the division bench as reported at [2021 (48) G.S.T.L. 227 (Kar.)] Division bench of Hon'ble Karnataka High Court has observed as follows:
"21. A Scheme was enacted by the Parliament known as Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 vide Finance (No. 2) Act, 2019 and the object of the Scheme was to provide one time measure for liquidation of past disputes of service tax. The Scheme came into force vide notification dated 21-8-2019 and the respondent/assessee submitted an application in the prescribed format under the Scheme on 28-12-2019 by applying electronically in Form SVLDRS-1.
22. The dispute in the present case is that the appellants have disallowed the pre-deposit of Rs. 1,45,87,081/- i.e., amount of CENVAT which is the subject matter of the show cause notice while considering the application preferred in the SVLDR Scheme. The learned Single Judge has allowed the writ petition and has directed the Designated Committee to accept the declaration filed by the petitioner/respondent in the prescribed format as final and issue a modified Form No. SVLDRS-3 giving credit to the sum of Rs. 4,15,14,081/- as deposit and collect the remaining sum as tax dues and on payment of the said dues, issue a discharge certificate under the Scheme. A Service Tax Appeal No.70210 of 2024 22 statement has been made on affidavit by the appellants that the learned Single Judge in paragraph 29 of the impugned order has observed that the revenue has never disputed the entitlement of the respondent to avail Cenvat credit of Rs. 4,15,14,081/- and in para 30 the learned Single Judge has observed that one of the subject matter of the show cause notice was, as to whether the petitioner was entitled to Cenvat credit and therefore, the contention of the appellants is that two contradictory observations have been made by the learned Single Judge.
23. The record of the case reveal that there is a total non-compliance of Rule 6 of the Cenvat Credit Rules and the respondent has submitted the invoices pertaining to the year 2013 in the year 2019 which is not during the regime of CENVAT Credit Rules, but during the regime of GST.
24. Rule 6 of the Cenvat Credit Rules, 2017, reads as under;
"Rule 6. Conditions for allowing CENVAT credit. - (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the job worker, in case goods are sent directly to the job worker on the direction of the manufacturer :
Provided that the manufacturer shall not take Cenvat credit after one year of the date of issue of any of the documents specified in sub-rule (1) of Rule 11."
25. In the considered opinion of this Court, the learned Single Judge has not at all considered the impact of Rule 6 of the Cenvat Credit Rules, 2017 as invoices were of the year 2013-2014 which is much beyond the period of one year and therefore, the claim of the respondent could not have been appropriated in respect of the amount of Rs. 4,15,14,081/-.
Service Tax Appeal No.70210 of 2024 23
26. Another important aspect of the case is that the Designated Committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 does not have any authority to modify the SVLDRS-3 at all. When once the appellants have adjusted the claim of respondent as the CENVAT credit of Rs. 4,15,14,081/- availed by the respondent and subsequently, utilized, is an inadmissible CENVAT credit and availment of the same is proposed to be denied in show cause notice. Therefore, in the light of Rule 6(1) of the Cenvat Credit Rules, 2017, by no stretch of imagination the respondent was entitled to claim Cenvat credit.
27. It is pertinent to note that the CENVAT credit is a concession and not a vested right as held in the case of TVS Motor Company Ltd. v. The State of Tamil Nadu and Ors., reported in 2019 (13) SCC 403 = 2018 (18) G.S.T.L. 769 (S.C.). Similarly in the case of Nelco Limited v. The Union of India and Ors., reported in 2020 (36) G.S.T.L. 24 the Division Bench of Bombay High Court, in paragraph 42 has held as under :
"42. The decision of the Supreme Court in the case of Collector of Central Excise, Pune v. Dai Ichi Karkaria Ltd., MANU/SC/0467/1999 = 1999 (112) E.L.T. 353 (S.C.) cited by the petitioner refers to MODVAT credit and in deciding a correlation of the raw material and final product. The Apex Court held that it is not as if the credit can be taken only on the final product manufactured out of a particular raw material in which the credit is related. It was held that the credit may be taken on a final product on the every day it has become available. It is in this context, the nature of MODVAT credit was held to be indefeasible. The learned Additional Solicitor General has rightly distinguished this decision by pointing out that this decision does not consider the contingency of time limit on availment of credit, and also not in a transitionary provision. Under the Service Tax Appeal No.70210 of 2024 24 impugned Rule, the input credit has been denied per se, but a time limit has been placed on its availment."
28. In the considered opinion of this Court, in light of the aforesaid judgments, the CENVAT credit is a concession and not a vested right and it has to be claimed keeping in view the CENVAT Credit Rules 2004 and therefore, the learned Single Judge has erred in law and in facts in allowing the writ petition by directing the Designated Committee to adjust the amount which was the subject matter of CENVAT credit.
29. Learned counsel for the respondent has placed reliance upon a judgment delivered in the case of Thought Blurb v. Union of India and Ors., reported in 2020-TIOL- 1813-HC-MUM-ST = 2020 (43) G.S.T.L. 499 (Bom.). Heavy reliance has been placed upon paragraphs 51 and
52.
30. This Court has carefully gone through the aforesaid judgment and it is true that the basic thrust of the Scheme is to unload the baggage of pending litigations centering around service tax and excise duty. But at the same time, the statutory provisions as contained under the CENVAT Credit Rules, 2017 cannot be given a complete go-bye. The claim of CENVAT credit which has become time barred cannot be adjusted in the matter in the manner and method it has been done by the learned Single Judge.
31. Learned counsel for the respondent/assessee has also placed reliance upon the judgment delivered in the case of Vaishali Sharma v. Union of India, reported in 2020 (40) G.S.T.L. 441 (Del.). In the aforesaid case, the matter was remanded back to the Designated Committee to hear the petitioner therein and to pass an order in accordance with law. In the present case, opportunity of hearing has already been afforded and therefore, the question of interference with the order passed by the Designated Service Tax Appeal No.70210 of 2024 25 Committee in the peculiar facts and circumstances of the case does not arise.
32. Reliance has also been placed upon the judgment in the case of Seventh Plane Networks Pvt. Ltd. v. Union of India, reported in 2020 (41) G.S.T.L. 165 (Del). This Court has carefully gone through the judgment delivered by the Delhi High Court as well as the Circular issued by the Finance Department dated 27-8-2019 and 12-12-2019.
33. The present case is altogether having a distinguishable feature. In the present case, the respondent is not entitled to claim CENVAT credit in the manner and method it has been done. CENVAT Credit cannot be carried forward as input tax credit and there cannot be any adjustment on pre-deposit as the respondent has not filed GST TRAN-1. Therefore, the CENVAT credit cannot be transformed into input tax credit.
34. It is an undisputed fact that the respondent has not filed ST-3 returns till the intervention of the department and the assessee however filed a declaration in the year 2019, after introduction of GST. As the respondent has not filed the GST TRAN-1, he is not eligible on account of Rule 6(1) of the CENVAT Credit Rules, 2017. The Designated Committee was justified in passing the order which was subject matter of challenge in the writ petition and therefore, this Court is of the opinion that the order passed by the learned Single Judge deserves to be set aside and is accordingly set aside."
4.14 The decision of the division bench Karnataka High Court, is squarely applicable to the facts of the case and the claim of the appellant to the credit cannot be allowed and hence the netting of the same from the total tax liability is not possible.
4.15 I find that appellant had by not filing the returns for the relevant period and having not paid the service tax during the relevant period suppressed the facts from the department with the intention to evade payment of service tax due. The decisions Service Tax Appeal No.70210 of 2024 26 referred by the appellant in the submissions were rendered in the facts of those case and are distinguishable. Further it is worth noting that appellant has not disputed the tax liability but have claimed that liability can be netted of against the cenvat credit taken by them in their CENVAT register which was never disclosed by them to the revenue authorities. I have also observed earlier that the fact of netting of the tax liability by the CENVAT Credit was also not disclosed to the designated committee, it as an afterthought was made when the verification of the documents was undertaken. I find that appellant had positively acted to suppress the facts in respect of CENVAT Credit, and its utilization for netting of their tax liability from the revenue authorities. Thus for their positive act of suppression with intention to evade payment of service tax is established beyond iota of doubt and extended period of limitation has been rightly invoked for making this demand.
4.16 As I hold that extended period of limitation has been rightly invoked in the facts and circumstances of the case penalty imposed under Section 78 cannot be faulted with, in view of the decision of Hon'ble Supreme Court in case of Rajasthan Spinning and Weaving Mills Ltd. [2009 (238) ELT 3 (SC)] 4.17 In view of the discussions as above, I do not find any merits in this appeal.
4.15 Appeal is dismissed.
(Order pronounced in open court on-12 August, 2025) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp