CESTAT Abates Service Tax Appeal against Vasan Dental Hospitals since Company is Undergoing Liquidation [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has abated the Service Tax appeal filed by the Department, noting that the company is under liquidation and no application for continuance has been made by the official liquidator.

The assessee-respondent, Vasan Dental Hospitals Private Limited, was engaged in providing dental related treatments. They are registered with the Service Tax Department under the

category of ‘Health Services’.

The Respondent, despite being registered, had not paid Service Tax from August 2010 to March 2015 and filed Nil ST-3 returns, which led to a notice dated 01.06.2015 seeking details of specified services which were rendered by the respondent during April 2010 to April 2015.

A Show Cause Notice (SCN) was issued, which demanded the Service Tax amount of ₹17,46,45,393 along with interest and also imposed a penalty under Sections 75, 76, 77 and 78 of the Finance Act, 1994.

The Department had appealed against the order dated 20.06.2016, but the adjudicating authority confirmed Service Tax demands of ₹6,43,911 for August 2010 to June 2012 and ₹87,53,315 for July 2012 to March 2015 under the Finance Act, 1994.

The Tribunal noted that the National Company Law Tribunal (NCLT) had ordered liquidation of the respondent company. Referring to the Supreme Court’s ruling in Ghanshyam Mishra (2021), it reiterated that once a Resolution Plan is approved, all claims not part of the plan stand extinguished, and no further proceedings can be initiated.

The Bench comprising P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) cited Rule 22 of the CESTAT (Procedure) Rules, 1982, which provides that proceedings abate when a company is being wound up unless an application is made by the successor or liquidator within 60 days. Since no such application was filed by the Official Liquidator, the Tribunal held that the appeal stood abated under Rule 22 and dismissed it as infructuous.

Sanjay Kakkar represented the revenue, while none appeared for the assessee.

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