Custom, Excise & Service Tax Tribunal
Awas Vikas Cable Network vs Cgst Kanpur on 31 October, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.II
Service Tax Appeal No.70727 of 2024
(Arising out of Order-in-Appeal No.58/ST/Alld/2022 dated 23/03/2022 passed
by Commissioner (Appeals) Central Excise & CGST, Allahabad)
M/s Awas Vikas Cable Network, .....Appellant
(272-B, Baudhya Nagar,
NH Road, Naubasta, Kanpur)
VERSUS
Commissioner of Central Excise &
CGST, Kanpur ....Respondent
(117/7 Sarvodaya Nagar, Kanpur) APPEARANCE:
Absent on call, for the Appellant Smt Chitra Srivastava, Authorised Representative for the Respondent CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70767/2025 DATE OF HEARING : 12 August, 2025 DATE OF PRONOUNCEMENT : 31 October, 2025 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.58/ST/Alld/2022 dated 23/03/2022 passed by Commissioner (Appeals) Central Excise & CGST, Allahabad. By the impugned order, Commissioner (Appeals) has rejected the Order-in- Original dated 08.01.2021 wherein following has been held:-
"ORDER
(i) I confirm the demand of service tax of Rs.11,18,288/-
(including cess) (Rupees Eleven Lacs eighteen Thousand Two Hundred eighty eight Only) against the party under proviso of Section 73 (i) of the Finance Act, 1994.
Service Tax Appeal No.70727 of 2024 2
(ii) I also order for recovery of Interest at appropriate rates from the due date till the date of actual deposit of the confirmed amount of Service Tax under Section 75 of the Finance Act, 1994.
(iii) I impose penalty of Rs.11,18,288/- (Rupees Eleven Lacs eighteen Thousand Two Hundred eighty eight Only) upon the party, under Section 78 of the Finance Act, 1994.
(iv) I impose penalty of Rs.10,000/- [Rupees Ten Thousand] upon the party under Section 77(2) of the Finance Act, 1994."
2.1 On the basis of specific intelligence that appellant was providing Cable Operator Services taxable under Finance Act, 1994 without paying service tax, inquiry was initiated against them.
2.2 Inquiry and investigations made, revealed that appellant during the period from 2012-13 to 2016-17 did not pay service tax including cess of Rs.11,18,288/-. They were providing taxable branded services covered under the definition of Cable Operator Service and the benefit of threshold exemption under Notification No.33/2012-ST dated 20.06.2012 was not available to them.
2.3 Show cause notice dated 18.10.2017 was issued to the appellant asking them to show cause as to why-
"(i) the Service Tax (including education cess and SHE cess swacahh bharat cess & krishi kalian cess), as discussed hereinabove amounting to Rs.11,18,288/- (Rupees Eleven lacs eighteen thousand two hundred eighty eight only) should not be demanded and recovered from them by invoking extended period under proviso to Section 73(1) of Finance Act 1994 read with Section 68 of the Finance Act, 1994 and Rule 6 of Service Tax Rules, 1994, for the reasons stated herein above.
Service Tax Appeal No.70727 of 2024 3
(ii) Interest should not be demanded/recovered from them under the provisions of Section 75 of the Finance Act, 1994 on the said amount of service tax.
(iii) Penalty should not be imposed upon them under Section 78 of the Finance Act, 1994 for failure to pay Service Tax and for suppression of the value of taxable service with intent to evade the payment to service tax, thereby contravening the provisions of Section 68 of the Finance Act, 1994 read with Rule 6 of Service Tax (Determination of Value) Rules, 2006.
(iv) Penalty should not be imposed upon them under Section 77 of the Chapter V of the Finance Act, 1994 for contravention of Section 70 of the Act ibid read with Rule 7 of the Rules ibid."
2.4 The said show cause notice was adjudicated as per the Order-in-Original No.03/ST/AwasVikas/AC/2021 dated 08.01.2021 referred in para-1 above.
2.5 Aggrieved appellant have filed appeal before Commissioner (Appeals) who vide the impugned order modified the Order-in- Original.
2.6 Aggrieved appellant have filed this appeal.
3.1 Appellant is absent on call. I have heard Smt Chitra Srivastava learned Authorized Representative appearing for the revenue.
4.1 I have considered the impugned orders along with the submissions made in appeal and during the course of argument.
4.2 Impugned order records the findings as follows:-
"4.2 I take up the issues one by one for decision. Firstly, the core issue of taxability on account of "Cable Operators"
under tile category of "Cable Services" needs to be discussed. I observe that the Cable Operators Service provided by Cable Operators was first time brought under the ambit of Service Tax vide Notification No. 08/2002-ST dated 01.08.2002 and as per Section 65(21) of the Service Tax Appeal No.70727 of 2024 4 Finance Act, 1994, "Cable operator has the meaning assigned to it in clause (aa) of Section 2 of the Cable Television Networks (Regulation) Act. 1995 (7 of 1995) and as per Section 65(22) of the Act, "Cable Service shall have the meaning assigned to it in clause (b) of Section 2 of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995), Further, as per Section 2(aa) of the Cable Television Networks (Regulation) Act, 1995 (7 of 1995) (here-in-after referred to as 'CTN Act'), "cable operator means any person who provides cable service through a cable television network or otherwise controls or is responsible for the management and opcration of a cable television network and fulfills the prescribed eligibility criteria and conditions. Also, Section 2(b) of the CTN Act, "cable service" means the transmission by cables of programmes including re-transmission by cables of any broadcast television signals. Further, "the cable television network is defined as per Section 2(c) of the CTN Act to mean any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment, designed to provide cable service for reception by multiple subscribers. "Subscriber" is defined as per Section 2(i) of the CTN Act to mean any individual or association of individuals or a company or any other organization or body who receives the signals of cable television network at a place indicated by him or it to the Cable Operator without further transmitting it to any other person. The definition of the cable services under the Act was amended w.e.f. 10.9.2004 as Taxable services"
means any service provided to any person by a cable operator including a MSO in relation to cable service. Subsequently, w.e.f. 16.6.2005 the definition of taxable service was amended as "Taxable service means any service provided or to be provided to any person by a cable operator including MSO in relation to cable service. So the services provided by both cable operator and MSO Service Tax Appeal No.70727 of 2024 5 continued to be taxable within the scope of definition of service' and taxable service given under Section 65B (44) of the Act which emphasized that "service means any activity carried out by a person for another for consideration, and includes declared service after introduction of negative tax regime w.e.f 01.07.2012.
4.3 1 further observe that the CBEC vide Circular No. 80/10/2004-ST dated 17.09.2004, explained the changes made in the budget for 2004-05 as under: "Extension of service tax on cable operators to Multi system operators (MSOs): In cable TV services, broadcast channels transmit television signals to multi system operators (MSO) who further send them to the cable operator. The services provided by the MSOs to the cable operators have been made taxable 4.3.1 Furthermore, CBEC vide circular No F.No.B11/6/12005-TRU dated 27.07.2005, explained the changes in the budget for 2005-06 as under: "In the case of radio or TV broadcasting services, the services are subject to tax where the services are effectively used and enjoyed. Multi System Operators (MSOs) are permitted to receive signals from the broadcasting agencies on payment of prescribed amount. Cable operators transmit programmes to customers through cable network after receiving signals from the multisystem operators (MSOs).
Prior to 16.06.2005, service tax was leviable on services provided by cable operators to their customers and multisystem operators to cable operators. In this year's budget, the charges recovered by the broadcasting agencies from the multisystem operator for providing the signals have been specifically made liable to service tax. This completes the service tax chain from the customer to the broadcaster.
4.3.2 1 observe that the MSO's received the TV signals from the broadcasters/aggregators.
Service Tax Appeal No.70727 of 2024 6 They entered into agreements with the broadcasters who provide the integrated receiver decoder boxes (IRD) to receive the signals in the encrypted form. These boxes were installed by the MSO. The MSO then transmits the signals either through the LCO or directly to the subscribers. When the MSO provides the service through the local cable operator who would then re-transmit the broadcast television signals by the cable to the last mile subscriber, then such a LCO is the cable operator. The definition of the cable operator as per Section 2(aa) of the CTN Act states that a "cable operator" means any person who provides cable service through a Cable Television Network or otherwise controls or is responsible for management and operation of Cable Television Network and fulfills the prescribed eligibility criteria and conditions. The "Cable Television Network as per section 2(c) of the CTN on other hand means any system consisting of a set of closed transmission paths and associated signal generation, control and distribution equipment designed to provide cable service for reception by multiple subscribers. Hence there are two main ingredients in the definition of the Cable Television Network, one is cable service and the other is subscribers. The "Cable Service is defined in Section 2(b) of the CTN Act to mean transmission by cables of programmes including re-transmission by cables of any broadcast television signals while "Subscriber has been defined in Section 2(f) of the CTN Act to mean any individual or association of individual or a company or any other organization or body who receives the signals of cable television network at a place indicated by him from MSO or the cable operator, without further transmitting it to any other person. In view of these definitions it is clear that LCO is the cable operator when he re-transmits the TV signal as he fulfills the definition of the term Cable Operator when he provides cable service to the last mile subscriber.
Service Tax Appeal No.70727 of 2024 7 4.3.3 The same view has been taken by the Hon'ble High Court of Delhi in its judgment dated 09.03.2017 in the case of M/s Siti Cable Networks Limited vs Govt. of NCT of Delhi & ORS. [W.P. (C) 427/2014 & CM No. 851/2014)), Hon'ble Tribunal in the case of Krishna Satellite Cable Network vs CCE, Jaipur reported in 2008 (12) S.T.R. 605 (Tri. Del) and CESTAT, Chandigarh in its Final Order No- A/60167-60171/2019 dated 22.2.2019 pronounced in the case of M/s Blue Star Communication & others Vs CCE, Ludhiana.
4.4 From the above discussion, it is clear that as the MSO had provided the service through the LCOs, the individual LCOs having their own subscription network were regarded as the cable operators and were liable to pay the service tax. Thus, the contention of the appellant that since MSO has already paid service tax, therefore, they are not liable to pay service tax is devoid of merit.
4.5 The appellant has also contested that in the present case the MSO were paying service tax on the same transmission received by them from the Television Channels and the cable operators again being asked to pay the service tax on the same transmission received from Television Channels leads to the double taxation on the same service. The appellant has relied upon the judgment of Hon'ble High Court of Punjab & Haryana given in the case of M/s Aameet Puri Vs Union of India (2007 (5) STR 188 (P & H)). I observe that in the said case the Hon'ble High Court has held that the in view of clear definition of "service" as "service to any person" by a cable operator including "a Multi System Operator", contention raised on behalf of the petitioners that Multi System Operator was not liable to pay service tax, unless service was rendered to a viewer or consumer, has no merit. Similarly, contention that service tax is required to be paid twice on the same service is also without any merit. Thus, it is Service Tax Appeal No.70727 of 2024 8 evident that the appellant has misconstrued the said judgment of the Hon'ble High Court of Punjab & Hariyana. Relevant portion of the judgment is as under:
"7. In the reply filed on behalf of the Commissioner Central Excise Service Tax, it is submitted that since w.e.f 10-9- 2004, "taxable service" has been re defined to mean service provided to "any person", it was not necessary that the cable operator must be providing services to "any customer". Definition of "cable service" under Section 65(22) is as per definition under Section 2(b) of the Cable Television Networks (Regulation) Act, 1995 which is:
"cable service' means transmission by cables of programmes including re-transmission by cable of any broadcast Television signals."
7.1 Thus, the said definition also includes services provided by "Multi System Operator". It is further pointed out that there is no system of double burden as Cenvat Credit Rules have been applicable to give credit of the amount of service tax on the input by MSO which can be utilised on output services by cable service providers to the viewers.
8. We have considered the rival submissions and perused the record.
9. In view of clear definition of "service" as "service to any person" by a cable operator including "a Multi System Operator", contention raised on behalf of the petitioners that Multi System Operator was not liable to pay service tax, unless service was rendered to a viewer or consumer, has no merit. Similarly, contention that service tax is required to be paid twice on the same service is also without any merit, in view of the stand taken on behalf of the State in the written statement to the effect that in terms of Cenvat Credit Rules, 2004, credit of the service tax paid on input services is available while paying service tax on output services. The same is also supported by Service Tax Appeal No.70727 of 2024 9 Circular No. F. No. B2/8/2004-TRU dated 10-9-2004, para
29.
10. Accordingly, both the writ petitions are dismissed".
4.6 Now I take the issue whether the appellant is providing branded service or not. I observe that in this case, the appellant is cable operator and providing cable services to the subscribers on the basis of signals received from the MSO i.e M/s SITI. The subscriber has not asked for any brand for providing the said services. In fact, the appellant is also not providing any branded service as M/s SITI is supplying signal to the appellant which has been transmitted to the subscribers, in that circumstances, there is no relation of brand name to the ultimate customers. Therefore, I hold that the appellant is not providing any branded service to the subscribers; therefore, the appellant is entitled to avail the benefit of exemption Notification No. 33/2012-ST dated 20.06.2012 subject to fulfilment of conditions mentioned in the said exemption notification.
4.6.1 I observe that the Notification No. 33/2012-ST, dated 20.06.2012 exempts taxable services of aggregate value not exceeding ten lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66B of the Finance Act, 1994, provided the aggregate value of taxable services rendered by a provider of taxable service does not exceed Ten Lakh rupees in the preceding financial year. Since in the instant case the appellant has received Rs. 11,59,302/-, Rs. 11,78,256/- &Rs. 11,28,132/- during the FY 2014-15, 2015-16 & F.Y 2016-17 respectively, therefore, the appellant is not entitled to threshold exemption of Rs. 10 lakh in the F.Y. 2015-16, 2016-17 2017-18 in terms of Notification No. 33/2012-ST, dated 20.06.2012 as amended. The appellant has not produced any evidence that taxable value received during the F.Y 2012-13 was less than Ten Lakh, therefore, Service Tax Appeal No.70727 of 2024 10 threshold exemption of Rs. 10 lakh in the F.Y. 2013-14 could not be extended to the appellant in terms of Notification No. 33/2012-ST, dated 20.06.2012 as amended. However, the appellant is eligible for threshold exemption of Ten Lakh during the FY 2014-15 since taxable value received during the F.Y 2013-14 was Rs. 9,22,482/-.
4.7 As regard the issue of admissibility of Cenvat credit of the service tax paid by the MSO ie M/s DEN, I find that the matter has been decided by the CESTAT, Chandigarh in its Final Order No- A/60167-60171/2019 dated 22.2.2019 in the case of M/s Blue Star Communication & others Vs CCE, Ludhiana by observing that "We find that the out of total amount received by the appellants, some amounts of total subscriptions, the appellant are remitting to the MSO on which the MSO is paying service tax, therefore, the signals provided by the MSO to the appellants is an input services for the appellants. Therefore, the service tax paid by the MSO is available as Cenvat credit to the appellants". Applying the ratio decided in the above decision of the Hon'ble CESTAT, I hold that the Cenvat credit of total service tax amount on input service used for providing taxable service during relevant financial years is allowed to the appellant subject to fulfillment of other such conditions as provided under the Cenvat Credit Rules, 2004 for the admissibility of the same. In the instant case appellant has neither registered with the department dueng relevant period nor filed statutory ST-3 returns showing availment /utilization of eligible CENVAT credit in the said returns. Thus, it is evident that the appellant failed to avail CENVAT Credit on input services within prescribed limit of six months/one year thereby contravened the sixth proviso to the Rule 4(7) of the CENVAT Credit Rules, 2004. It is well settled principle that the claim of CENVAT Credit taken and/or utilized crystallizes only when the appellant has maintained CENVAT credit records & files statuary returns Service Tax Appeal No.70727 of 2024 11 before the Department claiming the eligible CENVAT credit in the said returns. Thus, the CENVAT Credit can only be availed by filing the statuary ST-3 return, if no return is filed, it cannot be presumed that appellant has legitimate credit available within the prescribed time limit & would be available for infinite period of time. The appellant has also failed to maintained/produced any CENVAT record for availment of CENVAT credit within prescribed time limit, therefore, contravened the provisions of Rule 9(6) & Rule 9(9) of the CENVAT Credit Rules, 2004. Therefore, I am of the considered opinion that the appellant is not eligible for CENVAT credit due to non-fulfillment of condition mentioned in the Rule 4/7), 9(6) & 9(9) of the CENVAT Credit Rules, 2004.
4.8 Now I come to appellant contention that Entertainment Tax collected & paid to the Government, is not to be included in the taxable value. In this regard, I observe that the Notification No. 1672/XI-Ka-Ni-6-2009-M(92)-2009 dated 04.09.2009 of the Entertainment Tax Department, Government of Uttar Pradesh, notified, the rate of Entertainment Tax for cable service & direct to home service as 25% out of each aggregate payment, vide Sl. No. 5 of this Notification, the amounts received by the appellants from their customers for providing the cable operator service, were, therefore, worked out backwards on the basis of Entertainment Tax paid by the appellant 4.8.1 It is further observed that Section 2(a) & the Explanation 2 under Section 3 of the U.P. Entertainments and Betting Tax Act, 1979, defined the expressions "admission to an entertainment" & "aggregate payment"
respectively, as under:
Section 2(a): "admission to an entertainment" includes admission to any place in which the entertainment is held or any other place from entertainment is provided by any means of the cable television network or Direct to Home Service Tax Appeal No.70727 of 2024 12 service or any other emerging transmission by whatever name called.
Explanation 2 under Section 3- For the purposes of this Act, the expression aggregate payment shall mean a sum paid by a person for admission to the entertainment which shall include entertainment tax and any other amount required to be paid under this Act but does not include any fee or other charges which is not a part of entertainment tax under this Act.
4.8.2 From the aforesaid statutory provisions of the U.P. Entertainments and Betting Tax Act, 1979, it is clear that aggregate payment for cable operator service, includes Entertainment Tax. In this case, the value worked out by dividing the Entertainment Tax paid by the appellants with the rate of Entertainment Tax (which is 25% out of each aggregate payment) is nothing but the gross payment received by the appellants from their customers (aggregate payment). Thus, I find that the gross receipt of the appellants worked out in this manner, is the aggregate payment & thus, includes Entertainment Tax.
4.8.3 I also find that the Central Board of Excise & Customs under Para 5 of the Annexure-IX of the letter F.No. B. 11/1/2002-TRU dated 01.08.2002, clarified, as under: 5. In some States, cable operators are also liable to pay entertainment tax In such cases, a cable operator charges from his customer an amount inclusive of entertainment tax. A point has been raised as to whether the amount paid as entertainment tax is liable to be included in the value of taxable service it is clarified that the entertainment tax collected and paid to the Government toll not be includible in the value of taxable service, provided the cable operator clearly indicates the entertainment tax element in his bill to the customer 4.8.4 Since in this case, Service Tax liability of the appellant is to be ascertained on the basis of Service Tax Appeal No.70727 of 2024 13 Entertainment Tax paid by the appellant and the gross receipt of the appellant includes this Entertainment Tax, I, thus, find that the amount of such Entertainment Tax paid by the appellant is not includible in the taxable value as per the aforesaid clarification of the Central Board of Excise & Customs.
4.8.5 I also find that Hon'ble CESTAT in the case of Universal Communication vs. Commr. Of C.Ex., Cus. & S.T., Nagpur 2016 (45) S.T.R. 80 (Tri.- Mumbai), inter alia, held, as under: Valuation (Service Tax) Cable Operator Service Deduction of Entertainment Tax Notwithstanding that said Tax not shown separately in invoice as stipulated in C.B.E. & C. circular dated 1-8-
2002, deduction of said tax from assessable value allowable if its payment otherwise established In view of appellant submitting details of its payment to Government account through banking channel, matter remanded to adjudicating authority to verify payment particulars and if found in order, not levy any Service Tax on it Section 67 of Finance Act, 1994.
4.9 Regarding the submission of the appellant for extending the benefit of cum-tax value, it is observed that it is not the case of the Department that the appellant has charged & collected Service Tax, from their customers, on the amount worked out on the basis of Entertainment Tax, without depositing such Service Tax in the Government account. Thus, I find that in this case, the appellant is entitled for the benefit of cum-tax value as per Section 67(2) of the Act 4.10 In view of the above discussion & findings, I hereby determine the service tax liability after excluding the entertainment tax from the taxable value and allowing the cum-tax benefit, as under:
Period Value excluding Taxable value after allowing Rate of S Service Tax entertainment cum tax value Tax payable Service Tax Appeal No.70727 of 2024 14 2012-13 tax 427752 380698 12.36% 47054 2013-14 1348506 1200166 12.36% 148340 2014-15 1378776 1227106 12.36% 151670 Apr'15 to 241218 214683 12.36% 26535 May'15 June'15 to 599340 525737 14.00& 73603 Oct'15 Nov'15 to 610353 533059 14.50% 77294 Mar'16 Apr'16 to 261498 228383 14.50% 33115 May'16 June'16 to 1390749 1209347 15.00% 181402 Mar'17 Total 6258192 5519179 739013 4.11 It is observed that appellant has neither taken service tax registration nor filed any ST-3 returns, whereas under
the self-assessment procedure specified in the statute, they were required to assess & pay their Service Tax liability correctly, on their own. The non-payment of Service Tax could be detected only during the course of enquiry conducted by the Department. Thus, it is a clear case of suppression of facts and contravention of the statutory provisions, with intent to evade payment of Service Tax. Thus, I find that extended period of limitation has been rightly invoked in this case. Therefore, the appellant is liable for penalty of Rs. 7,39,013/- under Section 78 of the Act. Further, I also observe that the appellant has never filed ST-3 returns; therefore, penalty of Rs. 10,000/- imposed by the adjudicating authority under Section 77(2) of the Act for non-filing of ST-3 returns for the period April'2012 to March'2017 is justified."
4.3 I find that the basis for making the demand against the appellant is decision of Chandigarh Bench in case of Blue Star Communications [Final Order No- A/60167-60171/2019 dated 22.2.2019]. It is settled principal in law that a subsequent judgment cannot be a basis for making the demand by invoking extended period. In this decision Tribunal has concluded that extended period of limitation would not be available for making this demand. Accordingly, I am inclined to hold that extended Service Tax Appeal No.70727 of 2024 15 period of limitation would not be available for making this demand and the demand should be restricted to normal period of limitation.
4.4 With regards to admissibility of Cenvat credit, I do not find any reason to disagree with the findings recorded in the impugned order. The credit has to be allowed strictly as per the provisions of the Cenvat Credit Rules, 2004 and appellant should have taken the credit within one year from the date of submission of document against which credit has been taken. In the case of Kusum Ingots & Alloys Ltd. (supra) referred by Authorized Representative appearing for revenue, Tribunal have upheld the denial of credit taken beyond the period prescribed by Central Excise Rules, 1944. Larger bench has held as follows:-
"12. We find that after the decision of the Hon'ble Supreme Court in the case of Eicher Motors Ltd. v. Union of India (Supra), Sub-Section XXVIII is introduced in Section 37 to provide for Rules which empower the Government to make rules for not allowing credit to be utilised for payment of duty on excisable goods, by Section 131 of Finance Act, 1999. Therefore, after this amendment reliance by the appellants on the decision in the case of Eicher Motors Ltd. v. Union of India will not help them. If a manufacturer wants to avail the benefit of Modvat credit in respect of inputs used in or in relation to the manufacture of final product on payment of duty on such final products under Rule 57A of the Central Excise Rules, he should follow the procedure laid down under the Modvat Scheme.
The contention of the appellants is that if on the inputs the manufacturer had already paid the duty on the basis that when the goods are utilised in the manufacture of final product then tax on these goods are to be adjusted and this right accrued to the manufacturer on the date when they paid the tax on the inputs. The right will continue till the facility is available. A manufacturer who is working Service Tax Appeal No.70727 of 2024 16 under the Modvat Scheme can certainly utilise the credit of the duty paid on the inputs used in or in relation to the manufacture of final product for payment of duty on such final product; but he has to take credit on such inputs within six months from the date of issue of the duty paying documents. After the amendment credit cannot be taken on duty paying documents which are more than 6 months old.
13. In view of the above discussions, we answer the question referred to Larger Bench in the favour of Revenue. Therefore, the view taken in case of Osram Surya Pvt. Ltd. v. Commissioner of Central Excise, Indore, reported in 1998 (29) RLT 684 is the correct view and the contrary view taken in correct.
14. No other issue is involved in the appeals. Therefore, the appeals are being taken up for disposal. The appellants availed the benefit of Modvat credit on documents after six months from the date of their issue. After amendment to Rule 57G of Central Excise Act, the appellants are not entitled to such credit. The appeals are accordingly dismissed."
4.5 I also note that the view taken by the Tribunal have approved by Hon'ble Supreme Court in the case of Osram Surya Pvt. Ltd. [2002 (142) ELT 5 (SC).
4.6 Hon'ble Allahabad High Court has in case of Rathi Ispat Ltd. [2010 (251) ELT 199 (All)] referred by the Authorized Representative observed as follows:
7. Considered the respective submissions of the learned counsel for the parties and perused the record. Before proceeding further, it would be appropriate to have a glance on Rule 57G(5) of the Central Excise Rules, 1944 as on the date on which the Modvat credit of Rs. 1,15,405/- was taken, which reads as follows :-
Service Tax Appeal No.70727 of 2024 17 "(5) Credit shall also not be taken by the manufacturer after six months of the date of issue of any document specified in sub-rule (3) and where the intermediate products manufactured by the user of inputs specified under Rule 57J are received by the manufacturer, after nine months."
8. The above rule came up for consideration and interpretation before the Apex Court in the case of Osram Surya (P) Ltd. (supra) The validity of the said provision was not under challenge therein. The only controversy raised before the Apex Court was that the rule in question is not applicable in regard to the credits acquired by a manufacturer prior to coming into force of the rule. Disagreeing with the said proposition, the Apex Court observed that a plain reading of the said sub-rule clearly shows that it applies to those cases where a manufacturer is seeking to take the credit after the introduction of the rule and to cases where the manufacturer is seeking to do so after a period of six months from the date when the manufacturer received the inputs. It was held that the said sub-rule operates prospectively in regard to those manufacturers who seek to take credit after coming into force of the rule. Agreeing with the Tribunal, the Apex Court has observed as follows :-
"Therefore, in our opinion, the Tribunal was justified in holding that the rule in question only restricts a right of manufacturer to take the credit beyond the stipulated period of six months under the rule."
9. The ratio of the above judgment is that the said sub-rule is in the nature of period of limitation restricting the right of manufacturer to take the credit within the specified period of limitation and beyond the period of limitation, the benefit of said rule cannot be availed of by the manufacturer.
10. Having said as above, we may consider certain salutary principles regarding the principle of limitation, to test the argument of the applicants.
Service Tax Appeal No.70727 of 2024 18
11. The law of limitation is based on delay and laches. It does not bar the right but the remedy. One of the most important and universal rules (which is not, however, without exception in English law) is that time, when it has once commenced to run in any case will not cease to do so by reason of any subsequent event which may be within the saving of the statute. Of this there is a well-known instance drawn from the time of the English civil wars. In answer to a plea of the statute, the plaintiff replied that a civil war had broken out, and the Government was usurped by certain traitors and rebels, which hindered the course of justice, and by which the courts were shut upon and that within six years after the war ended he commenced his action and yet his replication was held to be bad.
12. The law of limitation is not one of substance but of procedure. The object of prescribing limitation is to put an end to itigation, or to state it in other words, litigation may attain a finality.
13. The other principle of interpretation while dealing with the provisions of a fiscal statute is that a fiscal statute should be read as it is without adding or subtracting any word. There is no equity about the tax and equitable considerations are not relevant in interpreting the provisions of taxing statute. But the tax laws are to be interpreted reasonably and in consonance with justice. It is said that equity and taxation are often strangers, attempts should be made that these do not remain always so and if construction results in equity rather than in injustice, then such construction should be preferred to the literal construction. [(See CIT v. J.H. Gotla (1985) 156 ITR 323 (S.C.)]
14. Keeping the above principles of interpretation of law, on a plain reading of relevant sub-rule (5) of Rule 57G would show that it admits no exception whatsoever for consideration of any claim of Modvat credit after the expiry of period of six Service Tax Appeal No.70727 of 2024 19 months from the date of the commencement of the period of limitation.
15. Apart from the above, keeping in view the salutary principle applicable to the provisions dealing with the limitation that once the period of limitation has began, no subsequent event can stop it, the argument of the applicant is liable to be rejected.
16. Though in a slightly different context the Apex Court while interpreting Section 11A of Central Excise and Salt Act has observed that:-
"Limitation period should not be stretched more than the elasticity supplied in the Section itself. So, the eventuality envisaged in S. 11A for the further lengthening of the limitation period must be strictly construed."
17. In Gurusahai Saigal v. Commissioner of Income Tax, Punjab, AIR 1963 SC 1062, a case under the Income-tax Act, the Apex Court while construing the relevant provision of the Act has held that the proper way to deal with such a provision is to give it an interpretation which, to use the words of the Privy Council in Mahaliram Ramjidas's case, AIR 1940 PC 124, "makes the machinery workable, ut res valeat potius quam pereat."
18. Reference was made by the learned counsel for the applicant to the case of Commissioner of C.EX., Jaipur v. Parasrampuria Synthetics Ltd., 2000 (116) E.L.T. 581 (Tribunal) wherein it has been held that the bar created by the amended rule would have no application when the initial credit was taken within the prescribed period and the additional or the differential credit being taken after the prescribed period of six months. The said judgment of the Tribunal is of no avail to the applicant for the reasons more than one. Firstly, no principle of law has been discussed therein and secondly, the Tribunal had not the advantage of the authoritative pronouncement of the Apex Court in the case of Osram Surya (P) Ltd. (supra) which came into existence subsequently.
Service Tax Appeal No.70727 of 2024 20 4.7 Thus, I am not inclined to allow the benefit of Cenvat credit availed in respect of the documents which admissibly are more than one year beyond one year from the date of issuance of show cause notice which goes contrary to Rule 4 of Cenvat Credit Rules.
4.8 As I find that extended period of limitation could not have been invoked in this matter, therefore, penalty imposed under Section 78 is also set aside. Penalties imposed under other provisions of Section 77 are also set aside.
4.9 I also note that appellant have as per additional submissions filed, claimed that they have made a deposits for the period in dispute. These amount needs to be adjusted against the demand would be worked out for the normal period, in the light of above observations made in previous paras.
4.10 In view of above observations, matter is remanded back to the Original Authority for re-quantification.
5.1 Appeal is partly allowed and matter remanded to Original Authority for re-quantification of demand.
(Order pronounced in open court on- 31 October, 2025) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp