Challans Lost Due to Storage Issues: CESTAT Finds Service Tax Paid under Wrong Head, Declares No Shortfall [Read Order]

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Bhogjora Enterprise had fully discharged its service tax liability, finding that a portion of the tax had been paid under an incorrect accounting head and that the total payment matched the liability.

Bhogjora Enterprise, the appellant, is engaged in providing various taxable services and was duly registered under the service tax regime. The appellant had been making regular payments of service tax but during an audit, it was unable to produce the relevant challans to substantiate its payments due to their destruction caused by storage issues.

Following the audit, the Department issued a show cause notice demanding Rs. 67,30,277. The Commissioner of Central Excise and Service Tax passed an Order-in-Original confirming the demand. Aggrieved by this, the appellant filed an appeal before the Tribunal.

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During the proceedings, the tribunal directed the Commissionerate to prepare a reconciliation of the payments made by the appellant. A meeting was held on January 7, 2025, between the jurisdictional officers and the appellant, during which the Department assessed the total service tax liability at Rs. 80,04,928. The appellant showed that it had already paid Rs. 67,32,826, along with an additional payment of Rs. 12,74,651.

A follow-up meeting on April 21, 2025, revealed that the Department had accounted for only part of these payments and claimed a shortfall of Rs. 19,64,406. However, it was noted that Rs. 6,92,304 of the payment had been deposited under a wrong head. When this amount was correctly attributed, the actual remaining liability matched the Rs. 12,74,651 already paid by the appellant prior to investigation.

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The revenue continued to treat Rs. 80,04,928 as the operative tax liability, although the original show cause notice had only demanded Rs. 67,30,277. The Tribunal found that this enhancement lacked legal basis and held that the appellant had, in fact, fully discharged its liability.

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The two-member bench comprising R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) observed that there was no shortfall in service tax payment and allowed the appeal, setting aside the order of the Commissioner. The tribunal ruled that the appellant would be entitled to consequential reliefs as per law.

To Read the full text of the Order CLICK HERE

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