Annual Customs, Excise and Service Tax Case Digest: CESTAT Rulings 2025 (Part 5)
This article summarises all CESTAT orders published in the Taxscan.in.
This article summarises all CESTAT orders published in the Taxscan.in. Relief to Shapoorji Pallonji: CESTAT rules Non-Filing of Forms A-1 & A-2 does not Invalidate SEZ Service Tax Exemption Shapoorji Pallonji & Company Limited vs Commissioner ofCentral Excise 2025 TAXSCAN (CESTAT) 301 The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal...
This article summarises all CESTAT orders published in the Taxscan.in.
Relief to Shapoorji Pallonji: CESTAT rules Non-Filing of Forms A-1 & A-2 does not Invalidate SEZ Service Tax Exemption
Shapoorji Pallonji & Company Limited vs Commissioner ofCentral Excise 2025 TAXSCAN (CESTAT) 301
The Mumbai Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled in favor of Shapoorji Pallonji & Company Limited, ruling that the failure to submit Forms A-1 & A-2 does not invalidate the SEZ service tax exemption under the Special Economic Zones ( SEZ ) Act, 2005.
The two-member bench, comprising S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member), ruled in favor of the appellant. The tribunal held that the SEZ Act provides a standalone exemption that cannot be restricted by procedural conditions under the Finance Act. Misdeclaration of Quantity and Value in MACE Grade III Import: CESTAT sets aside Re-determined Value and Penalties
Misdeclaration of Quantity and Value in MACE Grade III Import: CESTAT sets aside Re-determined Value and Penalties
M/s. Anisha Trends vs Commissioner of Customs (Imports) 2025 TAXSCAN (CESTAT) 302
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT)set aside the re-determined value, fine, and penalties in a case involving the alleged misdeclaration of quantity and value in the import of ‘MACE GRADE III’ from Indonesia.
It found that the Department failed to provide key documents, including the relied-upon Bill of Entry, and the Spice Board’s report lacked clarity on the grade of goods. Citing a Supreme Court ruling, Commissioner of Central Excise, Bangalore vs. M/S Brindavan Beverages (P) Ltd., the tribunal held that a vague Show Cause Notice denied the importer a fair chance to respond. It reiterated that the burden of proving undervaluation rested on the Department and that NIDB data could not be used unless it met legal criteria for identical or similar goods.
Due to these shortcomings, the appellate tribunal set aside the re-determined value, fine, and penalties. It directed that the declared price be adopted for the excess 590.83 Kgs and the appropriate duty be levied as per law.
Denial of CENVAT Credit for Non-Production of Documents: CESTAT Sets Aside Order for Document Verification
M/s.New Rina TV vs The Commissioner of GST & Central Excise 2025 TAXSCAN (CESTAT) 303
The tribunal reviewed the Order-in-Original and the appeal. The assessee had claimed CENVAT Credit but did not provide the original documents. The assessee explained that most of the documents were destroyed in the Thane cyclone. It was argued that they could now recover many of the documents and requested another chance to present them to the Original Authority.
The two member bench comprising P.Dinesha ( Judicial Member ) and M.Ajit Kumar ( Technical Member ) found the assessee’s reason plausible and beyond their control. Since the denial of Credit was only due to the missing documents, the CESTAT decided to set aside the order.
It directed the assessee to appear before the Commissioner, provide the necessary documents, and allow for verification. If satisfied, the authority would consider the CENVAT Credit claim. The assessee was also asked to cooperate and ensure a speaking order was passed within 30 days.
Denial of Service Tax Exemption: CESTAT Grants Exemption for Powder Coating Activity
M/s.Trident Coatings Pvt. Ltd. vs The Commissioner of GST &Central Excise 2025 TAXSCAN (CESTAT) 304
The case was heard by Ms. Swetha R.S., the assessee's counsel and Shri Anoop Singh, the Revenue's Joint Commissioner. After reviewing the arguments, documents, and rulings, the main issue was whether the service tax demand was justified.
The two member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) decided that the assessee was entitled to the exemption under Notification No. 8/2005 and that the activity was not taxable under BAS. This was supported by several judicial rulings. As a result, the impugned order was set aside.
In short,the appeal filed by the assessee was allowed.
Service Tax Demand on Construction of Complex Service: CESTAT Sets Aside Demand for Individual Houses
M/s.K.B. & Co vs The Commissioner of GST & CentralExcise 2025 TAXSCAN (CESTAT) 305
The appellant argued that the contract was for rebuilding houses, not constructing residential complexes. Therefore, they claimed their work didn’t fall under the definition of ‘Construction of Complex Service’ under the Finance Act, 1994. Since more than 12 independent houses were built, they argued the service wasn’t taxable under Section 65(105)(zzh).
The impugned order referred to a statement by the assessee’s proprietor, which confirmed that more than 12 individual houses were constructed, and this was not disputed by the Revenue. The appellate tribunal concluded that since the appellant built individual residential units, which were not covered under ‘Construction of Complex Service,’ the demand for service tax was not applicable.
The CESTAT also referred to a previous case where it was ruled that constructions of residential units with fewer than 12 units were not taxable under the Finance Act, 1994. Based on this, the bench decided that the service tax demand in the current case could not stand and set aside the order.
Non-Filing of Documents within Prescribed period under Customs Provisional Duty Assessment Regulations CESTAT reduces Penalty imposed on SAIL
M/s. Steel Authority Of India Limited vs Commissioner (Appeals)CGST, Central Excise & Customs 2025 TAXSCAN (CESTAT) 306
In a recent case, the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) reduced the penalty imposed on Steel Authority of India Limited( SAIL) for non-filing of documents within the prescribed period under customs provisional duty assessment regulations, 2000.
The bench found that the appellant has filed the documents after 1 or 2 years’ time, whereas, they were required to file the same within 30 days’ time. Thus they have not paid any heed to the statutory provisions and have contravened the same . Just because the appellants happen to be a Public Sector Undertaking, no special concession can be shown. They are carrying commercial activity and are profit generating unit.
However, the bench felt that the imposing of penalty at the rate of Rs.50,000/- per Bill of Entry is quit harsh. The two member bench of Shri R. Muralidhar, Member (Judicial) And Shri K. Anpazhakan, Member (Technical) held that the appellant is required to pay penalty of Rs.2500/- for every Bill of Entry and reduced the penalty from Rs.44,00,000 to Rs.2,25,000.
Tyre Re-Treading Classified as Works Contract: CESTAT Sets Aside Service Tax Demand
M/s. Tojo Tyre Retread vs Commissioner of GST and Central Excise 2025 TAXSCAN (CESTAT) 307
Tojo Tyre Retread,appellant-assessee,re-treaded used tyres. The Revenue classified this under "Management, Maintenance or Repair Service" (MMR) based on documents like cash credit bills, sales tax returns, and income tax records for 2008–09 and 2009–10. Since service charges were collected, a Show Cause Notice was issued on 16.09.2010, demanding service tax, cesses, interest, and penalties.
It held that tyre re-treading was a works contract, making the materials used liable only to sales tax. The demand covered 2005- 06 to 2008- 09, but the Show Cause Notice was issued on 16.09.2010 by invoking the extended limitation period. Since the demand for 2008-09 was already dropped, the tribunal found that extending the limitation period for 2005-06 to 2007- 08 was unjustified.
Failure to Consider Judicial Decisions on Redemption Fine and Penalty: CESTAT Sets Aside Order
M/s.SLV Trading Company vs The Commissioner of Customs 2025 TAXSCAN (CESTAT) 308
SLV Trading Company,appellant-petitioner,challenged the redemption fine and penalty under Sections 112(a) and 114AA of the Customs Act, 1962. The counsel argued that the Commissioner (Appeals) did not consider binding judicial decisions before imposing the fine. The assessee requested a remand for a fresh order after considering these precedents.
Section 112(a) of the Act, imposes penalties for importing goods illegally. If the goods are dutiable, the penalty can be up to the duty amount or ₹5,000, whichever is higher. For prohibited goods, it can be up to their value or ₹5,000, whichever is greater. Section 114AA applies to those who submit false declarations or documents to evade duty or gain benefits illegally, with a fine of up to five times the duty evaded. These rules help prevent customs violations and ensure compliance.
A single member bench comprising P. Dinesha (Judicial Member) allowed the early hearing and took up the appeal for final disposal. It set aside the impugned order and remanded the case to the Commissioner (Appeals) to consider binding judicial decisions and issue a fresh order. All other contentions on the redemption fine and penalty remained open. The miscellaneous application was allowed, and the appeal was disposed of.
Refund Claim Filed Within Time Rejected Without SCN: CESTAT Sets Aside Order for Natural Justice Violation
M/s.Rasi Seeds Private Limited vs The Commissioner of GST &Central Excise 2025 TAXSCAN (CESTAT) 309
The Chennai Bench of Customs,Excise and Service Tax Appellate Tribunal(CESTAT)set aside an order rejecting a refund claim filed within time without issuing a show-cause notice (SCN), holding that the failure to provide an SCN violated natural justice and rendered the order legally unsustainable.
The two member bench comprising P.Dinesha(Judicial Member) and Vasa Seshagiri Rao(Technical Member) held that the Revenue should have issued a SCN before rejecting the refund claim. An SCN was essential to inform the assessee of the reasons for rejection and ensure compliance with natural justice. Calling for a personal hearing did not replace this requirement.
By failing to issue an SCN, the AA violated procedural fairness. The appellate tribunal found the order to be legally unsustainable and noted that the mistake was wrongly upheld in the appeal order. As a result, the CESTAT set aside the order.
CESTAT Sets Aside Service Tax Demand on Electrification Work Over Unjustified Extended Limitation
M/s. P & C Constructions (P) Ltd vs Commissioner of GST andCentral Excise 2025 TAXSCAN (CESTAT) 310
P & C Constructions (P) Ltd.,appellant-assessee,provided construction services. The Revenue verified its records for the period from April 10, 2004, to November 31, 2007, and issued a letter on February 21, 2007, stating that the electrification work for the Civil Court Complex at Pondicherry was taxable under "Erection, Commissioning, or Installation Service" (ECIS). A Show Cause Notice (SCN) dated October 22, 2012, was later issued, demanding service tax along with interest and penalties by invoking the extended limitation period.
The assessee did not dispute doing the electrification work but claimed it was a sub-work. The first notice about tax liability was sent on February 21, 2007, followed by reminders. The assessee stated that verbal submissions were made, but there was no proof.
Since the extended limitation period was not justified, the CESTAT set aside the demand and the impugned order.
CESTAT Sets Aside Service Tax Demand on Air Freight Mark-Up, Cites Lack of Third-Party Involvement Under BAS
M/s.AVR Cargo Agency Pvt. Ltd. vs The Commissioner of GST &Central Excise 2025 TAXSCAN (CESTAT) 311
AVR Cargo Agency Pvt.Ltd.,appellant-assessee, provided Custom House Agent (CHA) and BAS. It collected air freight from clients and paid airlines for cargo forwarding. The authorities classified its role in procuring cargo space for clients as 'Business Auxiliary Service' (BAS) from September 10, 2004, and considered the markup on air freight as part of the taxable service value.
The two member bench comprising P.Dinesha(Judicial Member) and Vasa Seshagiri Rao(Technical Member) reviewed the documents, orders, and arguments presented. The main issue was whether the service tax demand under Commission Agent service on other receipts was justified.
Citing decisions in DHL Logistics (P) Ltd. and Continental Carriers, the tribunal found that freight rebates and incentives from bulk cargo space purchases did not fall under ‘BAS. Since the assessee bought and sold cargo space directly, without acting on behalf of a client, the transaction was not a taxable service.
Setback for Ashok Leyland: CESTAT Rejects Input Service Credit on Windmill Expenses Over Lack of Lease Arrangement
M/s. Ashok Leyland Limited vs The Commissioner of GST &Central Excise 2025 TAXSCAN (CESTAT) 312
Ashok Leyland Limited,appellant-assessee, manufactured cast iron and aluminum articles for motor vehicles under CETA, 1985. It claimed input service credit on service tax paid for leasing and maintaining windmills in Tirunelveli. The electricity generated was sent to the Tamil Nadu Electricity Board (TNEB) grid, and an equal amount was drawn for its factory use.
The assessee argued that it claimed credit for service tax paid on windmill leasing and maintenance, as the electricity generated was sent to the TNEB grid and an equal amount was used in its factory. It maintained that the credit should not be denied since the electricity was used in manufacturing.
The Revenue countered that the agreement with ALWEL only covered the sale of electricity, not windmill leasing. The appellate tribunal found that ALWEL handled windmill operation and maintenance, bore the costs, and retained ownership. The agreement did not mention any lease arrangement.
Misinterpretation of Regulation 10: CESTAT Clarifies Customs Brokers Are Not Responsible for Educating Clients on Compliance
Sarajdeep Logistics Pvt Ltd vs Principal Commissioner of Customs(General) 2025 TAXSCAN (CESTAT) 313
Sarajdeep Logistics Pvt. Ltd., the appellant, was a licensed customs broker whose license was revoked by the Principal Commissioner of Customs (General), Mumbai. The revocation was based on alleged violations of multiple provisions under Regulation 10 of the CBLR, including failure to verify importer details, failure to advise clients on compliance, and failure to ensure efficient customs clearance.
The two-member bench comprising C.J. Mathew (Technical Member) and Ajay Sharma (Judicial Member) observed that customs brokers are responsible for the correct filing of documents but are not expected to act as educators or enforcers of compliance for their clients. The tribunal further observed that there was no substantive evidence to support the allegations and that the charges relied entirely on statements deemed inadmissible in law.
Refundable Amount Deposited as Service Tax cannot ber Treated as Pre-Deposit u/s 35F Central Excise Act: CESTAT
M/s ESSJAY TELECOM AND IT SERVICES PRIVATE LIMITED vsCOMMISSIONER OF CENTRAL TAX & CGST 2025 TAXSCAN (CESTAT) 314
Essjay Telecom and IT Services Private Limited, the assessee/appellant in this case, was the subject of an investigation by the Revenue because it was alleged that service tax had not been paid. The assessee had paid a portion of the service tax during the actual investigation. Following the issuance of a Show Cause Notice, the adjudicating body issued an order confirming the demand and allocating the funds submitted throughout the investigation to this verified demand.
The single bench of P.V. Subba Rao (Technical Member) observed that Section 11B allows for duty or service tax refunds. When determining whether any additional funds must be paid to satisfy the section 35F pre-deposit requirement, any sum that has already been paid in duty or service tax is taken into account. The amount paid as service tax, fine, or penalty does not become pre-deposit under section 35 simply because such an adjustment is made
A circumstance when the duty becomes refundable due to an order or judgment by the Tribunal or any Court is covered by Section 11B of the Central Excise Act, 1944. According to Central Excise Act, 1944, Section 35F, the Tribunal or the Commissioner (Appeals) would not consider an appeal unless the appellant has deposited 7.5% of the duty.
Renting of Immovable Property subject to Service Tax: CESTAT
SATNAM KAUR vs COMMISSIONER OF CENTRAL EXCISE 2025 TAXSCAN (CESTAT) 315
Satnam Kaur, the assessee/appellant, was registered with the service tax department. During the course of scrutiny of its ST-3 returns, it was found that the assessee was not paying service tax on the gross amount of income received as “renting on immovable property”. A show cause notice was issued to the assessee proposing to recover the service tax under section 73 (1) of the Finance Act with interest and penalty. The Assistant Commissioner passed the order confirming the demand of service tax as proposed under section 73(1).
While dismissing the appeal, the Tribunal upheld the levy of service tax on the renting of immovable property service by the appellant. Consequently, the appropriate amount of interest has to be paid. The Commissioner (Appeals) has already set aside the penalty under section 78 in the impugned order but upheld the penalty of Rs. 10,000/- under section 77 of the Finance Act.
‘Bagasse’ Not a Manufactured Product: CESTAT Sets Aside Demand Under Rule 6 of CCR
M/s. Sakthi Sugars Ltd vs Commissioner of GST and Central Excise 2025 TAXSCAN (CESTAT) 316
The assessee availed Cenvat credit on inputs and input services used for sugar and molasses. The department treated bagasse as exempted goods under Rule 2(d) of the CCR since it had a nil duty rate. As separate accounts were not maintained for dutiable and exempted goods as required under Rule 6(2) of CCR, and the required amounts under Rule 6(3)(i) / 6(3)(ii) were not paid, the department alleged a violation of Rule 6.
The tribunal referred to similar cases, including Ponni Sugars (Erode) Limited, where the Chennai Bench set aside similar demands. It also noted that the Allahabad High Court in Balrampur Chini Mills Ltd. ruled that Bagasse was not a manufactured product and, therefore, Rule 6 did not apply. Following these precedents, the CESTAT held that the demands were unsustainable and set them aside.
CESTAT sets aside Transaction Value Enhancement due to Lack of Evidence in Chartered Engineer’s Report
M/s.Sri Aisvaresvaraya Imports vs The Commissioner of Customs 2025 TAXSCAN (CESTAT) 317
The Supreme Court, in Century Metal Recycling Pvt. Ltd. v. Union of India (2019), ruled that transaction value must be accepted unless there were reasonable doubts under Rule 12 of the 2007 Customs Valuation Rules. The tribunal found that in this case, the Revenue failed to justify such doubts.
Initially, the authorities noted the declared value seemed low and brought in SIIB officers and a Chartered Engineer, who increased the value. However, there was no claim that the parties were related or that the transaction was influenced by external factors. Instead, the Chartered Engineer reassessed the value without proving the declared amount was incorrect.
The two member bench comprising P.Dinesha (Judicial Member) and Vasa Seshagiri Rao(Technical Member) held that the Revenue acted prematurely by assuming under-valuation without first establishing valid reasons for doubt. Citing similar rulings, it ruled that the rejection of the declared value was unjustified and set aside the order.
Eligibility for Customs Exemption During Interregnum Period: CESTAT Sets Aside Demand Based on Clarificatory Approach
M/s.Vividh Print Media Pvt. Ltd vs The Commissioner of Customs 2025 TAXSCAN (CESTAT) 318
The Adjudicating Authority(AA), through an order dated May 30, 2014, confirmed the demand with interest. The Commissioner (Appeals) later upheld this decision and the assessee aggrieved by this decision appealed before the tribunal.
The two member bench comprising P.Dinehsa(Judicial Member) and M.Ajit Kumar(Technical Member) reviewed the arguments and documents on record. The assessee submitted additional evidence, highlighting a government-acknowledged omission of CTH 480920 and 480990. Since the Revenue raised no objection, the tribunal admitted the evidence.
The assessee cited a Supreme Court ruling in Ralson (India) Limited v. CCE Chandigarh, where a similar omission in an exemption notification was treated as a mistake and later corrected. The court had ruled that the exemption continued during the interim period applying the clarificatory approach to treat the correction as retrospective.
CESTAT Dismisses Appeal Due to Inordinate Delay Beyond Limitation Period, Upholding FAA's Order
M/s.Sakthi Construction India (P) Ltd. vs The Commissioner ofGST & Central Excise 2025 TAXSCAN (CESTAT) 319
The two member bench comprising P. Dinesha( Judicial Member ) and M. Ajit Kumar(Technical Member) noted that the assessee had filed an affidavit explaining the delay, but the appeal was filed on time. The affidavit only acknowledged the delay in filing the first appeal and asked for it to be condoned. However, the CESTAT found the delay in filing the first appeal was significant.
The law set a time limit for filing the appeal and allowed a short period for delay. The FAA pointed out the delay and noted that no request for condonation was made. The FAA followed the Apex Court’s ruling in the case of M/s. Singh Enterprises Vs CCE Jamshedpur [2008 (221) ELT 163 (SC)].
The appellate tribunal agreed, stating that the delay was too long, and no request had been made to excuse it. According to the Apex Court, no authority could condone a delay beyond the allowed 60+30 days, and in this case, the delay was over two years.
Service Tax on Early Payment Incentives: CESTAT Rules Extended Limitation Period Unjustified
M/s.RR Polymers vs The Commissioner of GST & Central Excise 2025 TAXSCAN (CESTAT) 320
During an audit, the Revenue found that RR Polymers received early payment incentives from Haldia but did not pass them on to customers as required. Instead, they made early payments to Haldia on behalf of customers and collected the amount later, retaining the discounts. The Revenue viewed this as procurement of goods for customers, classifying it under "Business Auxiliary Service" (BAS) and liable for service tax.
The two member bench comprising P.Dinesha(Judicial Member) and M.Ajit Kumar(Technical Member) found that the Revenue failed to prove that early payment incentives always involved advance payments by end-customers, as there was no cross-verification of payments. It noted that Section 65(19)(iv) of the Finance Act, 1994, did not cover cash discounts and applied only to the procurement of inputs, which the Revenue did not establish in this case.
Commissioner Wrongly Revives Settled Demands: CESTAT sets aside Order, Restricts Re-Adjudication to Normal Period
M/s.Mukesh Associates vs The Commissioner of GST & CentralExcise 2025 TAXSCAN (CESTAT) 321
Mukesh Associates, appellant-assessee, received a Show Cause Notice on 18.04.2007, proposing ₹1,38,95,688 in tax, penalties, and interest. The Commissioner confirmed the demands in an Order-in-Original on 12.12.2007. The assessee appealed to the tribunal, which, on 17.04.2008, set aside the demands and the order, asking the Commissioner to issue a new decision.
The appellate tribunal ruled that the scope of the appeal could not go beyond the appellant's grievance. Since the Revenue did not appeal, they could not misuse the remand order. It found that the Original Authority had misinterpreted the remand order, so it set aside the impugned order to the extent of the relief granted in the 22.12.2008 order.
Penalty Imposition and Extended Limitation Period for Pre-SCN Tax Payment: CESTAT Sets Aside Commissioner’s Order
M/s.Madhangi Enterprises (P) Ltd. vs The Commissioner of GST& Central Excise 2025 TAXSCAN (CESTAT) 322
Madhangi Enterprises (P) Ltd.,appellant-assessee,stated that they did not pay the service tax or file their ST-3 returns on time due to financial issues. They claimed to have paid the full tax and interest by 07.01.2011, before the show-cause notice was issued on 19.02.2013. The show-cause notice proposed to adjust the amount already paid and impose penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
The two member bench comprising P.Dinesha( Judicial Member ) and M.Ajit Kumar(Technical Member) also noted that the order only adjusted the tax and interest payments and imposed penalties. It concluded the notice was issued to impose penalties using the extended limitation period, which is not allowed under Section 73(3). The tribunal set aside the Commissioner’s order.
CESTAT sets aside Time-Barred Excise Duty Demand Over Delayed SCN Issuance
M/s. Jeppiaar Furnace and Steels P. Ltd. vs Commissioner of GSTand Central Excise 2025 TAXSCAN (CESTAT) 323
Jeppiaar Furnace and Steels P. Ltd, appellant-assessee, received a Show Cause Notice (SCN) on April 16, 2014, after the Revenue found a discrepancy of Rs. 17,32,475/- between sales figures in ER-1 Returns and the Balance Sheet.
The CESTAT noted that the authority did not dispute DGCEI’s verification of records, including ER-1 Returns. It referred to the Jeppiaar Waters Pvt. Ltd. case, where the Supreme Court ruled that the extended time limit under Section 11A of the Central Excise Act, 1944, could apply only if there was fraud, willful misstatement, or suppression of facts with intent to evade duty. Mere inaction or failure to disclose was not enough.
A single member bench comprising of P.Dinesha( Judicial Member ) found that DGCEI had visited and verified records in 2010, but the SCN was issued in 2014, more than three years later. Since the time limit started from the date of the visit, the demand was held to be time-barred.
Service Tax Liability Falls on Contractor, Not Promoter, for Construction Services: CESTAT
M/s. Golden Preethi Property Developers vs Commissioner of GSTand Central Excise 2025 TAXSCAN (CESTAT) 324
Golden Preethi Property Developers ,appellant-assessee,was a partnership firm providing Construction of Residential Complex Service. The department alleged that the appellant-assessee owed service tax on amounts received from customers. A Show Cause Notice (SCN) dated 18.08.2010 was issued, proposing a demand of Rs. 2,47,585/- for the period from April 2009 to June 2010, along with interest and a penalty.
The two member bench comprising Ajayan T.V (Judicial Member) and Vasa Seshagiri Rao(Technical Member) found that the issue was already decided in the assessee's favor for the period from 16.06.2005 to 31.03.2009. In Final Order No. 40112/2009, the CESTAT had set aside the service tax demand on the construction of residential complexes, following the Supreme Court's decision in the Larsen & Toubro case.
The assessee also referred to a CBEC Circular from 29.10.2009, which clarified that the service tax liability falls on the contractor, not the promoter. The tribunal noted that the construction services were provided by M/s. Golden Homes Pvt. Ltd., the contractor employed by the appellant. Therefore, the CESTAT ruled that the demand for service tax from the assessee was not legally valid.
CESTAT upholds Suspension of Customs Broker License against Proven Misdeclaration of Silver, Pen Drives etc as PU-Belt
The Commissioner of Customs vs M/s.Freight Link Logistics 2025 TAXSCAN (CESTAT) 325
The two member bench comprising P.Dinesha(Judicial Member) and M.Ajit Kumar(Technical Member) reviewed the impugned Order-in-Original and noted that the Commissioner found the offence occurred in Mumbai, where the Customs Broker’s License had already been suspended on 05.01.2016. Since the suspension was in effect, the Commissioner saw no need for further action against the Customs Broker or its employees. However, it was clarified that the broker was not absolved of all charges, and proceedings under Regulation 20 of the CBLR would continue.
The appellate tribunal found that the issue fell within the proper officer’s discretion and cited the Supreme Court’s ruling in Narayan Govind Gavate v. State of Maharashtra [(1997) 1 SCC 133], which stated that decisions based on relevant material should not be interfered with by courts. It also noted that the Revenue had not questioned the exercise of discretion by the competent authority.
Based on these findings, the CESTAT saw no reason to prevent Customs authorities from taking action under Customs law or CBLR provisions, as long as due procedures were followed within the prescribed time frame.
Relief to Shapoorji Pallonji & Company Ltd , Tax Exemption for services provided to SEZ u/s 26 SEZ Act cannot be denied on Procedural Lapse: CESTAT
Shapoorji Pallonji & Company Limited vs Commissioner ofCentral Excise, Customs & S.Tax 2025 TAXSCAN (CESTAT) 326
Shapoorji Pallonji & Company Limited, Nagpur the appellants herein is engaged in the business of providing taxable services under Section 65 (105) of the Finance Act, 1994. For this purpose the appellants have registered themselves with the jurisdictional service tax authorities and have obtained service tax registration certificate No.AAACS6994CST020. The appellants also avail CENVAT credit of central excise duty paid on inputs and capital goods, as well as service tax paid on input services as per the provisions of CENVAT Credit Rules, 2004 ( ‘CCR’).
A two member bench of S.K. Mohanty, Member (Judicial) and M.M. Parthiban, Member (Technical) viewed that exemption benefits extended to taxable services provided to SEZ under Section 26 of the Special Economic Zones Act, 2005 cannot be denied on the ground that certain procedures have not been followed or certain conditions prescribed in the notification have not been fulfilled. The bench set aside the order to the extent it had confirmed the adjudged demands proposed in the SCNs.
Relief to Capgemini Technology Services, ITC cannot be denied due to procedural lapses: CESTAT
Capgemini Technology Services India Limited vs Commissioner ofCentral Tax& Central Excise 2025 TAXSCAN (CESTAT) 327
The appellants, M/s Capgemini Technology Services India Limited, contested the original order issued by the Commissioner of Central Tax & Central Excise at Navi Mumbai. The appellants' business activities include management consulting, IT and IT-enabled services in a variety of technical domains, and other services that are subject to service tax under the Finance Act of 1994. The appellants have secured service tax registration certificate No. AAACK2632BST002 and registered with the jurisdictional service tax authorities for this purpose. In accordance with the terms of the CENVAT Credit Rules, 2004 (the "CCR"), the appellants also claim CENVAT credit for service tax paid on input services.
Accordingly, the Tribunal had granted the appellants' appeal by remanding the case to the original authority for a correct and efficient resolution, in accordance with the observations stated therein. The Tribunal's judgment further mandated that the originating authority review the case laws cited by both parties in order to determine if the appellant should be eligible for CENVAT credit.
Eligibility for Excise Duty Exemption: CESTAT Grants Exemption for Aircraft Parts Supplied to Research Institutions
Taneja Aerospace and Aviation Ltd vs The Commissioner of CGST& Central Excise 2025 TAXSCAN (CESTAT) 328
Taneja Aerospace and Aviation Ltd,appellant-assessee, manufactures aircraft parts under chapter heading 8803 30 00 of the Central Excise Tariff Act, 1985. The assessee cleared these parts without paying duty under notification 10/97-CE to institutions like M/s National Aerospace Laboratories and M/s Hindustan Aeronautics Limited, based on Excise Duty Exemption Certificates.
The Department argued that the assessee was not eligible for the exemption, as the goods did not meet the criteria. As a result, a show cause notice (SCN) was issued for the period 05/12 to 02/13, though it was not considered in the case. Three Statements of Demand (SOD) were issued for the periods 03/13 to 11/13, which were adjudicated, confirming the demand.
The Department argued that the assessee was not eligible for the exemption, as the goods did not meet the criteria. As a result, a show cause notice (SCN) was issued for the period 05/12 to 02/13, though it was not considered in the case. Three Statements of Demand (SOD) were issued for the periods 03/13 to 11/13, which were adjudicated, confirming the demand.
CESTAT upholds Reclassification of ESBO as Chemically Modified Vegetable Oil
M/s. Sankhla Industries vs Commissioner of Customs 2025 TAXSCAN (CESTAT) 329
The two member bench comprising Ajayan T.V(Judicial Member) andM.Ajit Kumar(Technical Member) ruled that ESBO was correctly classified under CTH 1518, rejecting the assessee's claim for classification under CTH 3812. It noted that ESBO, being a chemically modified vegetable oil, fell under the more specific heading of CTH 1518, which covers animal or vegetable fats and oils subjected to chemical modifications
The appellate tribunal observed that the manufacturing process of ESBO involved epoxidation, vacuum distillation, centrifugation, and filtration, resulting in a bio-based plasticizer. Referring to the Harmonized System of Nomenclature (HSN) explanatory notes, it highlighted that epoxidized oils, such as ESBO, were explicitly covered under CTH 1518. Although plasticizers are also listed under CTH 3812, the CESTAT applied Rule 3(a) of the Rules of Interpretation, which gives preference to specific descriptions over general ones.
Relying on the Supreme Court's rulings, the bench emphasized that HSN notes and the Rules of Interpretation play a crucial role in determining the correct classification of goods. It concluded that since ESBO was specifically mentioned under CTH 1518 in the HSN explanatory notes, it was appropriately classified under this heading. The tribunal upheld the classification.
Relief to MIRC: CESTAT Grants Refund of Excess Customs Duty Caused by System Error
Commissioner of Customs vs MIRC Electronics Ltd 2025 TAXSCAN (CESTAT) 330
The Revenue-appellant appealed against the order passed by Commissioner of Customs(Appeals-II) dated 1.5.2023 .In this case, MIRC Electronics Ltd, respondent-assessee, imported 6680 packages of Split Air Conditioners and filed four Bills of Entry for bonding in April 2018. On 26.09.2018, the respondent filed four Ex-bond Bills of Entry through ICEGATE, but they were rejected due to a system error related to bond updates.
A single member bench comprising M.Ajit Kumar(Technical Member) considered whether the assessee was responsible for the error. The OIO noted that the Bond section's manual process of updating ICES was not feasible daily. The assessee argued the department could not blame them for the delay, as they were not required to keep the electronic bond module updated.
The appellate tribunal also looked at previous rulings, which stated that delays caused by system faults should not penalize the importer. Since the appellant had attempted to file the Bills of Entry before the rate change notification, the CESTAT ruled in favor of applying the duty rate as it was on 26/09/2018.
Cenvat Credit Available on Inputs Irrespective of Goods Being Dutiable or Exempted: CESTAT
Adisankara Spinning Mills Pvt Ltd vs Commissioner of CentralExcise 2025 TAXSCAN (CESTAT) 331
Adisankara Spinning Mills Pvt Ltd.,appellant-assessee,a manufacturer of 100% cotton yarn, cleared goods for export between 2009-10 and 2011-12 under notification No. 29/2004-CE and claimed a rebate. They also used the exemption under notification No. 30/2004-CE for both export and domestic clearances. The assessee took Cenvat credit on capital goods and input services but did not claim credit on inputs. They used common input services for both dutiable and exempted goods (exported).
A single member bench comprising Ajayan T.V (Judicial Member) after reviewing the appeal and case laws,referred to a previous ruling in Sivaraj Spinning Mills Pvt. Ltd. v. Commissioner of GST & Central Excise, Madurai (2024), where a similar issue was decided in favor of the assessee. In that case, the assessee cleared cotton yarn under two notifications, one at a concessional rate and the other at a nil rate- simultaneously. The CESTAT held that CENVAT credit on input services was allowed, even when exempted goods were exported, citing Rule 6(6)(v) of the CENVAT Credit Rules, 2004.
The appellate tribunal also relied on decisions in M/s. Drish Shoes Ltd., Jolly Board Ltd., and Lavino Kapur Cottons Pvt. Ltd., where it was held that the requirement to execute a bond while exporting exempted goods was merely procedural. The rulings clarified that credit on input services used in the manufacture of exported goods remained valid, even if the final product was otherwise exempt from duty.
Vegetable Waste Oil and Dry Wax from Edible Oil Refining Classified as Waste, Exempt from Excise Duty: CESTAT
M/s. S.V. Sivalinga Nadar & Sons vs Commissioner of GST andCentral Excise 2025 TAXSCAN (CESTAT) 332
The appellate tribunal referred to conflicting judgments. In CCE, Hyderabad v. Priyanka Refineries Ltd., it held that soap stock was waste and not excisable, even if it had market value. The Supreme Court later affirmed this decision. However, in CCE, Jalandhar v. A.G. Fats Ltd., the tribunal ruled that soap stock, fatty acids, waxes, and gums were by-products with marketability, making them excisable. This decision was also upheld by the Supreme Court.
In Maheshwari Solvent Extraction Ltd. v. Commissioner of C.Ex., Nagpur, the bench addressed conflicting decisions by its coordinate benches. It held that in cases of conflicting judgments, the one accurately stating the law should prevail. It concluded that waste with some value could be treated as excisable goods, while waste of no value would not attract duty. It also cited the Supreme Court's ruling in Babu Parasu Kaikadi v. Babu, applying the per incuriam principle, and held that the A.G. Fats ruling was not in line with the exemption notification's intent. The Court allowed the appeals with consequential relief.
The two member bench comprising Ajayan T.V(Judicial Member) and Vasa Seshagiri Rao(Technical Member) concluded that the assessee, engaged in refining edible oils fully exempt from duty, was eligible for exemption as it did not produce any other dutiable final products.
Milk Chilling not ‘Agricultural Produce’, Liable for Service Tax: CESTAT
M/s. Jai Durge Ice Factory vs Commissioner of CGST & CentralExcise 2025 TAXSCAN (CESTAT) 333
The appellant did not challenge the tax liability on godown rent but challenged the imposition of service tax on milk chilling services. The appellant’s counsel argued that chilling of milk falls under the negative list of services under Section 66D(d)(iii) of the Finance Act, 1994, which exempts processes carried out at an agricultural farm that do not alter the essential characteristics of agricultural produce.
The two-member bench comprising Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) observed that the negative list under Section 66D(d)(iii) specifically applies to agricultural processes carried out on a farm and does not extend to milk chilling.
The tribunal further held that the Gujarat High Court ruling was inapplicable because it related to the GST regime and not the Finance Act, 1994. The tribunal confirmed that chilling of milk constitutes a service and is chargeable to service tax from July 1, 2012, onwards. The appellant’s appeal was dismissed.
Relief for ONGC: CESTAT Rules Pipeline Transportation Charges as Part of Sale Price, Quashes ₹4.56 Crore Service Tax Demand
Principal Commissioner of CGST & Central Excise vs Oil andNatural Gas Corporation (ONGC) Limited 2025 TAXSCAN (CESTAT) 334
The Commissioner of Service Tax ruled that the transportation charges were part of the sale transaction and not a separate service. The department challenged this ruling before CESTAT, arguing that service tax was applicable to transportation of goods through pipelines, irrespective of whether the transporter owned the goods.
The corporation counsel countered this argument, asserting that the transportation charges were an integral part of the Gas Supply Agreement (GSA) with GAIL (India) Ltd. and not an independent service. They argued that ownership of the gas remained with ONGC until delivery at Trombay Terminal so the transportation of gas was not a service but part of the sale transaction.
The tribunal also referred to similar rulings in GAIL India Ltd. (2018) and Grasim Industries Ltd. (2016), where pipeline transportation charges were ruled to be part of the sale price, exempt from service tax. The tribunal upheld the Commissioner’s order and dismissed the department’s appeal.
Relief for Larsen & Toubro Ltd: CESTAT Rules No Excise Duty on Repacking and Labeling Before April 29, 2010
Larsen & Toubro Limited vs Commissioner of Central Excise& Customs 2025 TAXSCAN (CESTAT) 335
The Commissioner of Central Excise & Customs held that repacking and labeling amounted to manufacturing, making the goods liable for excise duty, confiscating the goods, and imposed redemption fines and penalties.
The company challenged the order before CESTAT, arguing that the amendment in the excise law, which brought such activities under the purview of excise duty, was introduced only on April 29, 2010, making it inapplicable to prior periods. They also argued that repacking and labeling did not change the nature of the goods and hence did not qualify as manufacturing.
The tribunal observed that the amendment explicitly introduced liability from April 29, 2010, making it prospective and not applicable retrospectively. The tribunal set aside the excise duty demand for the pre-2010 period, ruling that L&T was not liable to pay excise duty on repacking and labeling activities before April 29, 2010. The tribunal also quashed all penalties, redemption fines, and confiscation orders, providing major relief to L&T and its co-appellants.
CESTAT Rules Receiver as Mobile Phone Part, not Separate Component Under Audio Device Tariff
M/s. Bharath FIH Ltd. vs The Commissioner of Customs 2025 TAXSCAN (CESTAT) 336
The two member bench comprising P.Dinesha ( Judicial Member ) and Ajit Kumar ( Technical Member ) reviewed the contentions, documents, and judicial rulings. It noted that in a similar case involving Flextronics Technologies Pvt. Ltd., the same bench had remanded the matter for further examination.
Referring to Section Note 2 of the Customs Tariff Act, 1975, the tribunal observed that parts used mainly with machines under headings 8517 and 8525 to 8528 should be classified under heading 8517. It found that the "Receiver," being a part of a mobile phone, fell under CTH 8517, which covers cellular network devices.
The tribunal ruled that the Revenue's attempt to classify the item under CTH 8518, meant for standalone devices like microphones and loudspeakers, was incorrect. It held that the "Receiver" was an integral part of the phone, making the assessee's classification appropriate, and set aside the impugned order.
Concessional Duty on Microphones Used in Mobile Phone PCBAs: CESTAT denies Exemption, Citing Distinct Commodity Classification
M/s. Bharath FIH Ltd vs The Commissioner of Customs 2025 TAXSCAN (CESTAT) 337
The appellate tribunal applied the commercial parlance test, stating that goods not specifically defined in the statute should be interpreted based on common trade understanding. Citing Indo International Industries v. Commissioner of Sales Tax, Uttar Pradesh (1981), it held that undefined terms should be understood in their trade sense rather than scientific meaning.
The bench applied the legal principle of generalia specialibus non derogant, which gives precedence to specific provisions over general ones. Although the tribunal denied the exemption, it limited the demand period to the normal period with applicable interest, citing the genuine interpretative nature of the case. It also rejected the department's appeal for redemption fine, noting that no bond had been executed for the clearance of goods. It distinguished earlier rulings favoring exemption, stating that they lacked detailed analysis and were not binding precedents.
Wrongful Reversal of Cenvat Credit on Re-exported Goods: CESTAT allows Refund or Re-credit Option
TRANSPEK INDUSTRY LTD vs COMMISSIONER OF CENTRAL EXCISE ANDSERVICE TAX-VADODARA-I 2025 TAXSCAN (CESTAT) 339
Transpek Industry Ltd,appellant-assessee, imported goods that were later re-exported with the department's permission. Their accountant mistakenly reversed the Cenvat Credit of CVD and SAD paid at the time of import. They later filed for a refund based on Board Circulars dated December 31, 1996, and August 29, 2000. However, the department denied the refund, stating that since they had reversed the credit, they were no longer eligible for it.
A single member bench comprising Somesh Arora (Judicial Member) reviewed the Board Circulars and relevant decisions. It noted that the circulars allowed re-export of inputs under bond without reversing the credit. Referring to a similar case, Zydex Industries vs. Commissioner of C. Ex., Vadodara, it held that re-exported goods were eligible for a refund or re-credit.
The appellate tribunal sent the matter back, granting relief to the assessee and directed the department to decide, with the assessee's consent, whether they preferred re-credit or a refund.
Extended Limitation not Applicable without Intent to Evade Duty at Time of Clearance: CESTAT
Sunrise Containers Ltd vs C.C.E. & S.T.-Daman 2025 TAXSCAN (CESTAT) 340
Sunrise Containers Ltd,appellant-assessee, cleared fire-damaged capital goods from its unit in August 2012, based on transaction value. The clearance was properly recorded in the books of account and reported to the department through the ER-1 return, with the applicable duty duly paid.
The assessee's counsel argued that the show cause notice, issued nearly four years after the August 2012 clearance, was time-barred. It was claimed that the Commissioner (Appeals) overlooked the lack of intent to evade duty, making the extended period invalid. However, the counsel did not address the case's merits.
A Single member bench comprising Somesh Arora (Judicial Member) noted that the Commissioner (Appeals) did not deny the filing of ER-1 returns at the time of the August 2012 clearance. However, the Commissioner claimed that complete details of the capital goods clearance were not provided later, without specifying what additional information was required.
CESTAT Grants CENVAT Credit on GTA Services for FOR Basis Sales, Relying on Board Circular
Gmm Pfaudler Ltd vs Commissioner of Central Excise & ServiceTax-Anand 2025 TAXSCAN (CESTAT) 341
Gmm Pfaudler Ltd.,appellant-assessee,through its counsel and stated that the present case involved a periodical Show Cause Notice for April 2015 to September 2015. It was highlighted that in their own case for an earlier period, the matter had been decided in their favor through Final Order No. A/10872-10873/2019 dated 10.05.2019, while an adverse decision was issued through Final Order No. A/11425/2019 dated 22.07.2019.
A single member bench comprising Somesh Arora (Judicial Member) considered the submissions and found merit in the decisions cited by the assessee’s counsel. It referred to the Salasar Copper case, which allowed Cenvat credit on GTA services for FOR basis sales, along with similar rulings in the Sanghi Industries Ltd. and Ultratech Cement Ltd. cases.
Based on these precedents and the assessee’s earlier case, the CESTAT ruled that the matter was no longer res-integra. It allowed the appeal and set aside the impugned order.
Incorrect Penalty Imposition on Firm under Customs and Excise Laws: CESTAT Remands Matter to AA
Swagat Synthetics vs C.C.E. & S.T.-Surat-ii 2025 TAXSCAN (CESTAT) 342
The assessee argued that the penalty under Section 112 was incorrect, as it was a 100% Export Oriented Unit (EOU) that only received finished goods and had no role in importing raw materials or the alleged diversion by M/s. Micro Polyester P. Ltd. It also contended that the penalty under Rule 26 was wrongly imposed, as a firm does not qualify as a "person" under the rule.
A single member bench comprising Somesh Arora (Judicial Member) found that the adjudicating commissioner had not considered the case law stating that penalties under Rule 26 apply only to individuals, not firms. It also noted that the scope of Section 112 regarding firms was not examined. The appellate tribunal remitted the matter to the adjudicating authority for reconsideration in light of the case law and the applicability of Section 112 and Rule 26 to the assessee, being a firm.
CESTAT Sets Aside Penalty and Interest on Delayed Service Tax Payment for Lack of Fraud and Time-Barred Claim
Krupa Engineering and Co vs Commissioner of Central Excise &ST 2025 TAXSCAN (CESTAT) 343
The assessee's counsel, argued that the assessee had paid the entire service tax under protest before the show cause notice was issued. He claimed it was unfair for the authorities to impose interest and a penalty under Section 78 of the Finance Act, 1994, as all transactions were properly recorded with no fraud or suppression.
The appellate tribunal noted that for a penalty under Section 78 to apply, the department needed to establish fraud, collusion, willful misstatement, suppression of facts, or rule violations with intent to evade tax. However, since the audit findings were based solely on contracts with Gujarat Alkalies and Chemicals Limited, which were already on record, no such intent was proven. The CESTAT also considered the service classification dispute irrelevant, as the assessee had already paid the service tax.
Regarding interest under Section 75, the tribunal held that the demand raised in 2014 for payments made in 2011, related to the 2005-08 period, was beyond the normal limitation period. It relied on the Gujarat High Court's ruling in GNFC Limited, which stated that interest on time-barred demands was not valid.
Relief to Tata Motors: CESTAT Rules No Social Welfare Surcharge When Basic Customs Duty is Zero
Tata Motors Ltd. vs Commissioner of Customs 2025 TAXSCAN (CESTAT) 344
The revenue countered that SWS is not explicitly exempted under the law and that even if BCD is paid through duty credit scrips, SWS must still be paid separately in cash. The department’s counsel argued that the exemption under MEIS did not cover SWS and relied on previous assessments where SWS had been collected.
The two-member bench comprising S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) agreed with Tata Motors, holding that the issue was already settled by the Bombay High Court. The tribunal observed that the customs department's review petition against the High Court ruling had been dismissed, making the matter final and binding.
The tribunal set aside the Commissioner’s order, ruling that SWS cannot be charged when BCD is nil. The tribunal granted the refund of the SWS paid in cash. The appeal was allowed, along with any consequential benefits as per law.
Intermediary Services Not Subject to Service Tax: CESTAT Rules Services as Export
M/s Coperion Ideal Pvt. Ltd. vs Commissioner of Service Tax,Noida 2025 TAXSCAN (CESTAT) 345
Coperion Ideal Pvt. Ltd,appellant-assessee,was registered with the Service Tax Department and paid Service Tax on its services. The assessee assisted foreign parties by sharing details of Indian customers and market conditions, helping them prepare quotes and handle negotiations independently.
Though the assessee acted as an intermediary, the services were excluded from the intermediary definition because they involved goods. This exclusion remained until October 1, 2014. The judgment referred to another case and confirmed that, before October 1, 2014, services related to the sale of goods were not considered intermediary services. Since the recipient of the services was outside India, these services qualified as export of services, and no service tax was applicable.
No Tripartite Agreement: CESTAT Rules Services to Overseas Clients as Export, Dismisses Revenue’s Appeal
Commissioner, Central Tax vs M/s U.V. Graphics Technologies Pvt.Ltd. 2025 TAXSCAN (CESTAT) 346
In this case,U.V. Graphics Technologies Pvt. Ltd.,respondent-assessee,had an agreement with an overseas client to identify prospective customers for goods sales. All further dealings, including the sale agreement, supply, and payment, were between the overseas supplier and Indian buyers, with no involvement from the assessee.
The two member bench comprising P.K.Choudhary (Judicial Member) and Sanjiv Srivastava(Technical Member) reviewed the impugned order and submissions made during the appeal. It found that the assessee only identified potential buyers for SRAG, while SRAG handled the sales, retained the title of the goods, and received payments directly. The assessee's role was limited to promoting SRAG’s products, checking buyer solvency, and helping build SRAG’s brand in India.
No Service Tax on Advertising Agency against Amount Payable to Media Companies on Behalf of their Clients: CESTAT
M/s. Raj Kumar Jain vs Commissioner of CGST 2025 TAXSCAN (CESTAT) 347
The assessee argued that the government had not presented any concrete proof that the assessee had concealed the facts in order to avoid paying service tax. Therefore, the prolonged statute of limitations cannot be revoked. However, the department argued that it was authorized to use the proviso to Section 73 of the Finance Act of 1994 if the assessee did not file returns as required by Rule 7 of the Service Tax Rules of 1994.
While granting the appeal, the tribunal ruled that the authorities below had legitimately invoked the extended period because the appellant had neglected to register for service tax and to file their ST-3 returns. Although the Finance Act's Section 70 has been triggered, the assessee's services are deemed to be on the negative list. As a result, the appellant was only required to pay the commission and not tax on the money received for providing advertising agency services to the print medium.
Penalty not Leviable on Failure of Discharge oF Tax Liability under Bonafide Belief of Non Necessity of Payment: CESTAT
M/s The Indure Private Limited vs The Commissioner of ServiceTax 2025 TAXSCAN (CESTAT) 348
The assessee, Indure Private Limited, is involved in the production, acquisition, and installation of ash management machinery. Under Reverse Charge and Works Contract Services, the assessee paid the service tax. According to the department's investigation, the assessee was unable to claim the abatement benefit because they were using CENVAT Credit for input services, which required them to pay service tax.
The demand was validated by the adjudicating authority. Disappointed with the Adjudicating Authority's ruling, the assessee appealed to the Commissioner, who upheld the Adjudicating Authority's judgment. Before the Tribunal, the assessee has contested the Commissioner's order. The assessee argued that the services they received could not be considered imports of services since they were not classified as business auxiliary services. Additionally, the assessee paid the head selling commission in convertible foreign currency.
As a result, the assessee was exempt from paying service tax. In contrast, the Department argued that the assessee had unquestionably compensated the aforementioned foreign entity for the services. Despite what they claim, these services fall under Business Auxiliary Services rather than Business Support Services.
Service Tax Liability on Various Contracts: CESTAT Quashes Demand, Citing Exemptions and Clarifications
M/s. Samy Construction vs The Commissioner of CGST & CentralExcise 2025 TAXSCAN (CESTAT) 349
Regarding the Mettur Municipality contracts, the assessee's claim was rejected due to missing evidence, which the assessee disputed. The contracts involved building a stormwater drain, small culverts, and a shopping complex. The assessee argued that no service tax was due for the stormwater drain and culvert, referring to a 2004 Board clarification. While the work order was provided, the Commissioner wrongly stated that it was missing.
For the shopping complex contract, the assessee paid service tax after applying for an abatement under Notification No. 1/2006. The abatement was denied because the assessee did not submit evidence for free material supplied. However, the assessee clarified that no free material was supplied, and even if there was, its value should not be included in the taxable amount, in line with a Supreme Court ruling.
The two member bench comprising Vasa Seshagiri Rao(Technical Member) and P.Dinesha(Judicial Member) reviewed the case and found that service tax was wrongly demanded on various contracts. It needed to be checked against relevant Circulars and case law. For the Mettur Municipality contracts, the claim was rejected due to lack of evidence, but the assessee argued that the required documents had been submitted.
Failure to Record Statements: CESTAT quashes Gold Biscuit Confiscation
Jyoti Jewellers vs C.C.-Ahmedabad 2025 TAXSCAN (CESTAT) 350
Jyoti Jewellers,appellant-assessee, had sent a 1 kg gold bar for job work to M.H. Karbawala & Co., Mumbai. On November 16, 2013, an Angadia firm in Ahmedabad was intercepted, and two gold bars of 1 kg each were found. One bar, belonging to another party, was released, while the other, linked to Jyoti Jewellers, was seized by the Directorate of Revenue Intelligence (DRI) on May 6, 2014.
The appellate tribunal referred to the ruling in Dhanishtah Gold vs. CC, Ahmedabad [2019], which held that if the department failed to record statements of relevant persons after proof of legitimate acquisition was provided, the burden of proof shifted to them. It also cited the Calcutta High Court judgment in Commissioner of Customs (Prev) vs. Puni Dhapa Lokeswara Rao [2009], which stated that if the probability did not favor the customs authorities, they could not prove the seized gold was smuggled.
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