CESTAT quashes demand of Service Tax on failure of Adjudicating Authority regarding Chief Examination of Witnesses u/s 9D of Central Excise Act [Read Order]

The Customs, Excise, and Service Tax Tribunal (CESTAT), Ahmedabad quashed the demand for service tax on failure of adjudicating authority regarding the chief examination of witnesses under Section 9D of the Central Excise Tax Act.

 The brief facts of the case are that the appellant, Reynolds Petro Chem Ltd is engaged in providing various services. Acting on the intelligence that M/s Forward Resources Pvt. Ltd. and other firms operated by and related to the directors of the said company was indulging in evasion of Service tax, a search was conducted and during the search number of documents related to income tax TDS statements, copies of Balance Sheet /audit reports, bank statement was seized and statement of Shri Jagdishchandra Somani Director of M/s Forward Resources Pvt. Ltd. was recorded wherein he stated that Suneet Kabra was the Director of the Appellant. Statement of Suneet Kabra was also recorded. The Investigation revealed that the appellant was engaged in trading as well as providing commission services. They had received the commission/brokerage amount. The investigation also revealed that Appellant has availed the Cenvat credit without having any corroborative evidence.

Accordingly, a show cause notice dated 14-5-2018 was issued proposing the Service tax demand along with interest, penalty, and disallowance of Cenvat Credit. The Additional Commissioner, Surat vide order dated 27.03.2018 confirmed the demand of service tax and disallowed the Cenvat Credit. Being aggrieved, the appellant filed an appeal before the Commissioner (Appeals) who by impugned order in-appeal dated 01-11-2018 upheld the order passed by the Additional Commissioner and dismissed the appeal. Aggrieved by the impugned order in-appeal present Appeals have been filed.

Ramesh Nair, Judicial Member and Raju, Technical Member observed that “In the present matter the Adjudicating Authority had failed to follow the requirement of Section9D of the Act regarding examination in chief of witness, therefore demand of service tax on the basis of statements of persons cannot be sustainable.”

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