CESTAT Weekly Round-up

The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that freight is the consideration paid for transportation of goods, whereas demurrage and despatch money arise only from how the vessel is dealt with at the port.

The tribunal explained that neither the importer nor the transporter performs any activity when these amounts arise. Demurrage and despatch money are merely contractual consequences and do not involve the rendering of any service. Since the basic requirement of a “service” was not met, the levy could not be sustained.

Clandestine Removal must be proven through Complete Chain of Evidence, Not Estimates or Assumptions: CESTAT M/s. Sri Poovathal Polymers vsCommissioner of GST and Central Excise CITATION : 2025 TAXSCAN (CESTAT) 1245

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that allegations of clandestine removal cannot be sustained unless the department establishes a complete chain of evidence showing actual manufacture and clearance, rather than relying on estimates or assumptions such as electricity consumption data.

The two-member bench comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) agreed with the appellants’ arguments. The tribunal observed that the electronic evidence did not comply with the statutory requirements under Section 36B and could not be treated as admissible.

It further observed that electricity consumption cannot, by itself, prove clandestine manufacture. The tribunal explained that clandestine removal must be established through a chain of events, such as evidence of unaccounted raw materials, proof of actual manufacture, packing and transport records, and receipt of sale proceeds. None of these were shown in the present case.

Customs Duty Exemption on Fertilizer Import: CESTAT Remands case for Proper Interpretation of Notification on Tata Chemicals’ Claim Tata Chemicals LtvsCommissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 1246

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently remanded a dispute concerning customs duty exemption claim made by Tata Chemicals Ltd. on the import of fertilizer and allied materials, holding that the benefit of exemption as claimed required to be interpreted properly as per the amended notification.

The Bench observed that a plain reading of the amended notification renders goods in Chapter 31, except those specifically excluded to be eligible for nil rate of tax. The Bench noted that the exclusion is qualified by the phrase ‘clearly not to be used’, and therefore disentitlement must be shown by evidence making it unmistakably apparent that the imports were not for use in manufacture of fertilisers.

The Tribunal concluded that the lower authorities had proceeded on an impermissibly narrow scope of exclusion of the amended text.

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Accordingly, CESTAT set aside the impugned orders and restored the show-cause notice and remanded the matter to the original adjudicating authority for fresh decision in light of proper interpretation of the exemption notification, as per the facts of the present case.

Pre-2007 Composite Work Contracts for Hydro & Road Projects Not Taxable Under CICS: CESTAT M/s ECI Engineering &Construction Company Ltd vsCommissioner of Central Tax Rangareddy - GSTCITATION : 2025 TAXSCAN (CESTAT) 1247

The Hyderabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has partially allowed the appellants' appeal against service tax demands for the period April 2006 to March 2010, holding that composite work contracts prior to 2007 are not taxable under Commercial or Industrial Construction Service (CICS).

The Tribunal emphasised that certain works, like dams and canals, are excluded from WCS and may qualify for exemptions. It directed the adjudicating authority to review each contract and the actual work undertaken to determine the service tax liability, including eligibility for abatement and exemption notifications.

Additionally, the Tribunal clarified that sub-contractors are independently liable to discharge service tax if applicable, regardless of the main contractor’s exemption status. It also observed that the supply and laying of RMC constituted a service and not a mere sale.

The two-member bench comprising AK Jyothishi (Technical Member) and Angad Prasad (Judicial Member) quashed the service tax demand for pre-2007 works contracts and remanded the post-2007 levy for detailed, contract-specific examination, ensuring that exemptions, abatement, and the nature of each project component are properly assessed.

Supreme Court Ruling Invalidates CVD Refund Claims on CNG/LPG Vehicle Kits: CESTAT Upholds Recovery of ₹1.79 Cr Refund With Interest M/s Standard Consultants Ltd vsPr. Commissioner of Customs Hyderabad - Customs CITATION : 2025 TAXSCAN (CESTAT) 1248

The Hyderabad bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has upheld the recovery of Rs 1.79 cr refund with interest following the Supreme Court ruling that invalidated the appellant's Countervailing Duty(CVD) claim on CNG/LPG vehicle conversion kits.

The appellant challenged these recovery actions before the Tribunal, arguing that the refunds were initially sanctioned in good faith and based on Tribunal precedent. Their counsel emphasised the earlier favourable orders and contended that the company had acted correctly in claiming the refunds.

Despite these submissions, the two-member bench of AK Jyotishi(Technical member) and Angad Prasad (Judicial Member) observed that the Supreme Court had set aside the Tribunal’s orders, leaving no legal ground to sustain the refund claims.

The Tribunal further noted that the department’s powers under the Customs Act to recover erroneously refunded duties, along with interest, were unambiguous.

Unauthorized Benami Shipping Bills: CESTAT Upholds Rs. 10 Lakh penalty against Custom Broker M/S PLANET WORLD CARGO vsCOMMISSIONER OF CUSTOMS EXPORTNEW DELHI ICD TKD CITATION : 2025 TAXSCAN (CESTAT) 1249

The New Delhi Bench of the Custom, Excise & Service Tax Appellate Tribunal ( CESTAT ) upheld Rs. 10 Lakh Penalty against the appellant for filing Benami Shipping bills without proper authorization from actual exporters and thus violating the CBLR obligations.

The Two-Member Bench comprising Justice Dilip Gupta (President) and P. V Subba Rao (Technical Member) clarified that the Canon India Judgement was not applicable to the issue SCN concerning confiscation and penalties under section 124 of the Customs Act, 1962 and had also subsequently been reviewed by the Supreme Court.

The Tribunal stated that since the appellant had Benami (pseudonymous) Shipping Bills in the name of KKS, at the behest of Mohd. Najib Abdulsattar Memon they were fully responsible for any fraud or misdeclaration. It also held that penalties under CBLR, 2018 and Section 114 of the Customs Act, 1962 were distinct and could be imposed independently.

Failure to Consider Superintendent’s Certification and Defence Evidence: CESTAT Remands Matter in Exemption Case M/s Gilco Steel Limited vsCommissioner of Central Excise CITATION : 2025 TAXSCAN (CESTAT) 1250

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal by remanding the matter for a fresh decision, after finding that the Commissioner had denied the benefit of Notification No. 50/2003-CE on assumptions while ignoring crucial departmental evidence confirming commencement of commercial production.

The Bench Comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) noted that the Commissioner selectively relied on the visit report of 06.04.2010 while completely overlooking the Superintendent’s later certification that the unit was operational as on 31.03.2010.

The Tribunal found that no enquiry was conducted into transportation, manufacture, or financial transactions to support allegations of manipulation. It also observed that submissions regarding purchase of raw materials for expansion and clerical errors in khasra numbers were not addressed. A Khasra number is a unique identifier of each plot of land in rural areas, similar to a survey or a plot number in urban areas.

CESTAT Rules Excavation and Manpower Services for Dam Construction Exempted from Service Tax M/s Austees Hydro Power &Construction Co Pvt Ltd vs Commissioner of Central Excise and Central Goods& Service Tax, Shimla CITATION : 2025 TAXSCAN (CESTAT) 1251

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal by setting aside the service tax demand, holding the authorities wrongly classified the services provided as taxable while ignoring specific statutory exemptions available for dam-related work under Notifications No. 17/2005-ST and 25/2012-ST.

The Bench comprising S.S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) found that the activities of excavation, loading, transportation, unloading and cleaning work at the Koldam dam were specifically exempted under Notification No. 17/2005-ST and continued to remain exempt under the later Negative List regime.

The Tribunal also held that NTPC qualified as a “governmental authority” under settled Supreme Court law, thereby strengthening the exemption. It noted that the services were related, bundled and undertaken in the course of construction, repair, maintenance etc. of the same dam, and that the authorities had overlooked this statutory protection.

BIS Mark Not Mandatory for Imports Shipped Before QCO Effective Date: CESTAT Sets Aside Penalty MA Trading Company vsCommissioner of Customs,Ahmedabad CITATION : 2025 TAXSCAN (CESTAT) 1252

TheAhmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Stainless Steel Products (Quality Control) Order, 2016 was not in force on the date of shipment (January 2017), and therefore, BIS marking was not mandatory for the imported stainless-steel cold-rolled coils.

The Tribunal, chaired by Dr. Ajaya Krishna Vishvesha (Judicial Member) rejected the Revenue’s contention and noted that the Quality Control Order came into force only on 07.02.2017. It was observed that the goods were shipped in January 2017, when the Order was not yet operational.

The precedent in Metro Bright Bar squarely applied that goods shipped before 07.02.2017 are not subject to BIS marking requirements. Consequently, the confiscation and penalty were not legally sustainable.

POPS Rules Cannot Extend Finance Act to J&K: CESTAT Quashes Service Tax Demand on Telecom Infrastructure Services Tower Vision India PrivateLimited vs Commissioner of Central Excise, Goods & Service Tax - Gurugram CITATION : 2025 TAXSCAN (CESTAT) 1253

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that services rendered and consumed within the State of Jammu & Kashmir fall wholly outside the ambit of Chapter V of the Finance Act, 1994, and therefore no service tax can be levied by resorting to the Place of Provision of Services (POPS) Rules.

The Tribunal comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) accepted the appellant’s position and held that it was an undisputed fact that the services and input services were both provided and consumed within J&K. The Bench observed that Chapter V of the Finance Act does not extend to J&K, therefore no service tax can be levied for activities occurring within the State.

It was further ruled that POPS Rules cannot expand the charging section or override Section 64 of the Finance Act. Since, the demand itself failed on merits, interest and penalties automatically fail.

No Service Tax on Offshore Seismic Surveys Conducted Beyond 12 Nautical Miles of Indian Waters: CESTAT M/s Western Geco InternationalLtd vs The Commissioner,Service Tax Commissionerate CITATION : 2025 TAXSCAN (CESTAT) 1254

The Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) at New Delhi recently affirmed that no service tax may be demanded on seismic survey services performed beyond 12 nautical miles from the Indian landmass, as they fall outside the taxable territory and therefore cannot attract levy under the Finance Act, 1994.

The assessee, M/s Western Geco International Ltd. (Geco), is a company incorporated in the British Virgin Islands with project offices in Gurugram and Mumbai, having centralised registration with the Service Tax Department in Gurugram.

A Bench comprising Dr. Rachna Gupta, Member (Judicial) and P.V. Subba Rao, Member (Technical), examined the contractual arrangements, which reflected a single consolidated engagement covering both offshore data acquisition and subsequent processing in the Mumbai project office.

Although invoices indicated 4% of the value towards data processing, the Tribunal held that this did not create separate contracts or separate taxable services and that the primary part of the work, being data acquisition, took place entirely beyond twelve nautical miles, which was outside the territorial scope of the Finance Act, 1994.

Business Auxiliary and Business Support Services Rendered to Foreign Entities Qualify as Export of Services: CESTAT Allows Appeal YKK India Private Limited vsCommissioner of Central Excise, Goods & Service Tax, Rohtak CITATION : 2025 TAXSCAN (CESTAT) 1255

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside an order confirming a service tax demand of ₹68.59 lakh along with recovery of Cenvat Credit and penalties holding that services rendered to its foreign group entities qualify as export of services under Rule 3 of the Export of Service Rules, 2005.

The demands arose on four counts: classification of Business Auxiliary and Business Support services as non-export, levy on reimbursement of expenses, and denial of Cenvat Credit on input services used in trading activity.

The Tribunal comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) held that the Business Auxiliary Services and Business Support Services provided by YKK India to its group companies abroad were consumed outside India and therefore qualified as export of services under Rule 3(1)(iii) of the Export of Service Rules.

CESTAT Dismisses Department’s Appeal Challenging Revocation of Customs Broker Licence Suspension as Infructuous Commissioner of Customs vs M/s.OPMS Clearing and Forwarding Agencies Pvt. Ltd CITATION : 2025 TAXSCAN (CESTAT) 1256

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Bench at Chennai, has dismissed the appeal filed by the Commissioner of Customs, Chennai-VIII Commissionerate, and upheld the revocation of suspension of Customs Broker Licence, holding that the order of the Adjudicating Authority was legally sustainable and that the departmental appeal had become infructuous.

The CESTAT Bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the Adjudicating Authority had considered all material facts and recorded findings acknowledging that the respondent appeared to have violated certain provisions of the CBLR, 2013. However, the Authority had rightly held that further inquiry was required before any punitive action such as cancellation could be taken.

Quoting from paragraph 32 of the impugned order, the Bench noted that the Adjudicating Authority had detailed its reasoning, finding prima facie irregularities but concluding that continuation of suspension was not justified at that stage.

The Tribunal remarked that the Department’s appeal was unsustainable, especially since the procedural timelines under the CBLR for issuing a show cause notice, conducting inquiry, and passing a revocation order had long expired.

Oppo Mobiles Entitled to Customs Duty Exemption on Imported Microphones & Receivers Used in PCBA: CESTAT M/s. Oppo Mobiles India Pvt.Ltd. vs The Principal Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 1257

The New Delhi Bench of Custom, Excise & Service Tax Appellate Tribunal (CESTAT) held that Oppo Mobiles India was entitled to Custom Duty exemptions on imported microphones and receivers used in manufacturing Printed Circuit Board Assembly (PCBA) of mobile phones for a period from 02.02.2018 to 06.07.2019.

The two-member Bench comprising Justice Dilip Gupta, President and P.V Subba Rao, Member (Technical) held that the amendments dated 02.02.2018 and 02.04.2018, did not alter the exemption for microphones and receivers used in PCBA manufacturing for cellular mobile phones.

The Tribunal further held that the amendment dated 06.07.2019 could not be applied retrospectively.

Pre-2015 Flight Ticket Reimbursements Not Subject to Service Tax: CESTAT Allows Refund for CA Firm M/s. Guru & Ram vsCommissioner of GST & Central Excise CITATION : 2025 TAXSCAN (CESTAT) 1258

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled in favour of a Chartered Accountants firm, clarifying that client-reimbursed flight ticket expenses prior to May 2015 cannot be included in the taxable value of services.

The Tribunal noted that Rule 5(1) treats expenditures incurred “in the course of” providing taxable services as part of consideration, with an exception under Rule 5(2) for pure agents. However, the Supreme Court in Intercontinental Consultants clarified that reimbursable expenses could only be included in taxable value post-May 2015.

Applying this principle, the two-member bench comprising Vasa Seshagiri Rao (Technical Member) and P. Dinesha ( Judicial Member) observed that the inclusion of client-reimbursed flight ticket expenses for the 2010–2011 period was inconsistent with the law as it stood then.

CESTAT classifies Micronutrient Fertilizers Containing N, P, K as Fertilizers, Rejects Plant Growth Regulator Classification M/s KPR Fertilizers Ltd vsCommissioner of Central Excise Visakhapatnam CITATION : 2025 TAXSCAN (CESTAT) 1259

The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has clarified the classification of micronutrient fertilisers containing nitrogen (N), phosphorus (P), and potassium (K). The tribunal rejected the Department’s claim that such products should be treated as Plant Growth Regulators (PGRs).

The two-member bench comprising AK Jyotishi(Technical Member) and Angad Prasad (Judicial Member) observed that Chapter Note 6 does not restrict the role of N, P, or K in fertilizers to being “substantial” rather than essential, nor does it exclude their presence in chelated form.

Consequently, the tribunal held that the products are rightly classified as fertilizers, and the alternative classification as PGRs was unsustainable.

No Service Tax on Installation Expenses w/o Evidence of Commission Agent being Reimbursed by Principals: CESTAT M/s Link Well Electronics ..APPELLANT Pvt Ltd vs Commissioner Of Central Tax .. RESPONDENT Medchal - GST CITATION : 2025 TAXSCAN (CESTAT) 1260

The Hyderabad Regional Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) recently held that no service tax demand on installation-related expenditure can be raised to a commission agent in the absence of evidence showing that the agent had been reimbursed by its principals.

The Bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) noted that the Department had failed to substantiate its allegation with any material showing that the assessee had received reimbursable amounts for installation. CESTAT further noted that Rule 5 of the Service Tax Valuation Rules, relied upon by the Department to include reimbursable expenses, had been declared ultra vires by the Supreme Court in Union of India vs Intercontinental Consultants & Technocrats Pvt. Ltd. (2018).

CESTAT Dismisses Customs Broker’s Appeal Challenging Prohibition Order as Infructuous Following Expiry of Registration Getz Transport Logistics Pvt.Ltd. vs Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 1261

The Tribunal emphasised that judicial discipline requires consistency with its earlier rulings and those of other benches. It was also observed that the rebate scheme was intended to ensure exports remain tax-neutral, free from the burden of domestic duties and levies. Denying a rebate on services integrally tied to export delivery, even if performed abroad, would defeat this purpose.

Accordingly, the bench of Vasa Seshagiri Rao (Technical Member) set aside the Commissioner (Appeals)’ order and directed that Steel Strips Wheels Ltd. be granted the refund of ₹11,07,308/- along with consequential reliefs.

Rehabilitating or Renewing Railway Wagons Qualifies as “Original Works”, Exempt from Service Tax: CESTAT M/s. Oscorp Industries PrivateLimited vs Commissioner of C.G.S.T. and Central Excise CITATION : 2025 TAXSCAN (CESTAT) 1263

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), held that the activities such as rehabilitation and renewal of railway wagons fall within the definition of “original works” and are consequently exempt from Service Tax under Notification No. 25/2012-ST dated 20 June 2012.

The bench of R. Muralidhar, Judicial Member and K. Anpazhakan, Technical Member held that all types of additions or alterations to abandoned or damaged structures to make them workable are covered under the term “original works”, according to Explanation (1)(a) to Rule 2A of the Service tax (Determination of Value) Rules, 2006.

However, the Tribunal upheld the levy of late filing fees under Rule 7C of the Service Tax Rules, 1994 read with Section 70 of the Finance Act, 1994.

Ignorantia Juris Non Excusat: CESTAT says Plea Of Confusion No Defence, Upholds Service Tax on Work Contract M/s Shri Mohmd. ShafikContractor vs Commissioner of CGST-Jodhpur CITATION : 2025 TAXSCAN (CESTAT) 1264

The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, affirmed the demand of service tax on works contract services and sustaining the invocation of the extended period of limitation. The Tribunal examined whether the plea of confusion regarding works contract taxability could nullify the demand raised under the Finance Act, 1994. Holding that ignorance of law is not a valid defence, the Tribunal upheld the service tax liability as recalculated by the adjudicating authority.

The Bench of Dr. Rachna Gupta, Judicial Member noted that the adjudicating authority had examined the work orders and applied the valuation mechanism under Notification No. 24/2012-Service Tax, which provides for taxability at 40% of the value for original works. The bench found no infirmity in the recalculation of liability at ₹1,81,995 and upheld the application of exemptions and abatements granted in the order.

On the question of limitation, CESTAT held that any confusion regarding the taxability of works contract services stood resolved in the Supreme Court’s judgment Commissioner of C.Ex. & Cus., Kerala Vs. Larsen & Toubro Ltd (2015). Since the period in dispute was subsequent to this clarification, the appellant could not claim a bona fide misunderstanding.

Discrepancy Between Statements and Bills of Entry Cannot Be a Ground to Reject Genuine Bills of Entry: CESTATSUSHANT AGRAWAL vs COMMISSIONEROF CUSTOMS-NEW DELHI CITATION : 2025 TAXSCAN (CESTAT) 1265

In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that a discrepancy between statements and bills of entry cannot be a ground for rejecting genuine bills of entry, and quashed the confiscation of imported fabrics and the associated penalties.

The two-member bench comprising Dr. Rachna Gupta (Judicial Member) andP.V. Subba Rao (Technical Member) examined the legal position, noting that statements under Section 108 are relevant only if the maker is examined as a witness and the statement is admitted as evidence under Section 138B. Since this procedure was not followed, discrepancies with statements could not legally discredit the Bills of Entry.

Further, minor differences or omissions in marks and numbers in the B/Es do not automatically negate their authenticity, as such inconsistencies may arise during filing or handling.

Extended Period Not Invocable for Lack of Willful Suppression: CESTAT Quashes ₹1.86Cr Service Tax Demand on UP Electronics Corporation U P Electronics Corporation Ltdvs Commissioner, Central Excise & Service Tax CITATION : 2025 TAXSCAN (CESTAT) 1266

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) allowed the appeal filed by U.P. Electronics Corporation Ltd., a Uttar Pradesh Government undertaking, holding that the extended period of limitation was wrongly invoked even though the assessee regularly filed the ST-3 returns and recorded all transactions in its books of accounts.

The Bench comprising Sanjiv Srivastava (Technical Member) and Angad Prasad (Judicial Member) noted that the department had not shown any evidence of intentional misstatement or deliberate suppression, that the assessee’s returns were filed within time, and that the department’s case rested only on audit findings.

The Tribunal observed that if all transactions were recorded in the books of accounts, the extended period could not be invoked, and mere non-declaration of certain receipts could not amount to willful suppression.

Excise Dept Denied CENVAT Credit On Outward GTA Ignoring Hindustan Coca-Cola’s FOR Delivery Evidence: CESTAT Remands Matter Hindustan Coca-Cola BeveragesPvt. Ltd. vs Commissioner of Central Excise & Service TaxCITATION : 2025 TAXSCAN (CESTAT) 1269

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside an order denying CENVAT credit on outward GTA services to Hindustan Coca-Cola Beverages Pvt. Ltd. and sent the matter back for fresh consideration.

The single-member bench comprising Ajay Sharma (Judicial Member) observed that the sample invoices submitted by the appellant clearly stated that delivery was on an FOR basis and that responsibility continued until the goods were delivered to the customer.

The bench pointed out that both lower authorities had recorded a finding contrary to the documents on record and had failed to properly examine the evidence and earlier Tribunal decisions in the appellant’s favour.

Importing E-Rikshaw Parts w/out 5 Key Assemblies not CKD/SKD: CESTAT Quashes Misdeclaration Claims & Higher CKD/SKD Customs Duty M/s. Soni E Vehicle Pvt. Ltd vsPrincipal Commissioner of Customs CITATION : 2025 TAXSCAN (CESTAT) 1271

The Principal Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) at New Delhi recently held that importing e-rikshaw parts without the five critical assemblies that constitute an e-rikshaw cannot be deemed to be import under Complete Knocked-Down/Semi-Knocked Down (CKD/SKD) condition as per Customs Tariff Heading (CTH) 8703.

Consequently, the Tribunal set aside the higher duty demand raised under this classification and quashed the department’s allegation of misdeclaration.

The Bench of Justice Dilip Gupta, President and Hemambika R. Priya, Member (Technical) observed that under the Office Order dated 12.03.2014 issued by the Joint Commissioner of Customs, an e-rikshaw in CKD/SKD form must necessarily include a motor along with at least two other essential assemblies - being the transmission, axle, chassis or controller. As the appellant had not imported the motor, the goods could not be classified under CTH 8703 and had to be treated as parts under CTH 8708.

As such, it was noted that the Principal Commissioner had misread the Office Order.

Lease Premium Taxable as Renting of Immovable Property: CESTAT Upholds ₹2.88Cr Service Tax Demand on Ghaziabad Development Authority Ghaziabad Development Authorityvs Commissioner, CGST, Ghaziabad CITATION : 2025 TAXSCAN (CESTAT) 1273

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) dismissed the appeal filed by the Ghaziabad Development Authority (GDA) and upheld the ₹2.88 crore service tax demand, holding that the amounts collected as lease premium, transfer charges, processing fees and other receipts constituted consideration for renting of immovable property under Section 65(105)(zzzz) read with Section 65(90a) of the Finance Act, 1994.

The Tribunal noted that GDA continued to retain ownership of the land, and that the allottees only obtained the right to occupy and use it for the lease term, thereby satisfying all elements of the taxable entry.

The Tribunal also rejected GDA’s claim of exemption, holding that no statutory notification or circular supported its argument and that the receipts were commercial in nature. It concluded that the lease premium, transfer charges and other amounts formed part of the gross value for the purpose of valuation.

Accordingly, the Tribunal dismissed the appeal and affirmed the demand of ₹2.88 crore, along with interest and penalty.

Service Tax Demand Based Solely on Discrepancy Between ITR/TDS and ST-3 Returns Invalid Without Investigating Cause of Difference: CESTAT M/s H.R Real Value vsCommissioner of Central Excise & CGST CITATION : 2025 TAXSCAN (CESTAT) 1275

The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has held that a service tax demand raised solely on the basis of a discrepancy between the figures reflected in Income Tax Returns (ITR)/TDS data and Service Tax (ST-3) returns is invalid without an investigation into the specific cause of such difference.

The CESTAT Bench, comprising Sanjiv Srivastava (Technical Member), observed that the core dispute was whether a demand could be upheld based merely on differences in receipts shown in ITR/TDS and ST-3 returns.

The Bench noted that it was settled law that a demand cannot be raised solely on such discrepancies. The Adjudicating Authority was required to investigate the causes of the differences and arrive at a specific finding regarding the taxable nature of the receipts

CESTAT upholds Service Tax on Community Centre Construction as Commercial Activity, Confirms Tax on Admitted Services M/s Anubhavi Constructions vsCommissioner, CGST & Central Excise CITATION : 2025 TAXSCAN (CESTAT) 1279

The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the service tax demand on Anubhavi Constructions for the construction of a community centre for the Ghaziabad Development Authority (GDA), holding that the activity constituted “commercial or industrial construction” as the facility was used for public functions against prescribed charges.

The Bench comprising Sanjiv Srivastava (Technical Member) and Angad Prasad (Judicial Member) held that the appellant had already admitted tax liability on ECIS, BAS, and GTA services and paid the same with interest before issuance of the SCN, making the imposition of penalty on that portion unsustainable underSection 73(3).

However, the Tribunal agreed that construction of the community centre for GDA was taxable, noting that nothing was produced to show it was a purely charitable facility.

The Tribunal also directed verification of the appellant’s claim that ₹1,64,469 had already been deposited by Uttar Pradesh Rajkiya Nirman Nigam Ltd to prevent double taxation.

Service Tax not Leviable on License Fee collected for Supply of Customised Software to BITS: CESTAT M/s. Eduquity CareerTechnologies Pvt. Ltd vs Commissioner of Service Tax CITATION : 2025 TAXSCAN (CESTAT) 1285

Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Bangalore bench has set aside service tax demands raised on the appellants for reimbursements and customised software licence fees collected from BITS Pilani in connection with BITSAT online admission tests.

The two-member bench comprising D Bhagya Devi (Technical Member) and DM Misra (Judicial Member), after considering the submissions and perusing the records, held that the demand for reimbursements could not be sustained.

It noted that Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, had been struck down by the Supreme Court, and therefore, the reimbursable expenses could not be artificially included in the taxable value.

On the issue of customised software, the Tribunal relied on its earlier decision in IBM India Pvt. Ltd. v. CCE [2010], which had been affirmed by the Supreme Court. That decision had categorically held that customised software supply was excluded from service tax under MCS/BAS before 16 May 2008. Since IT software services became taxable only thereafter, the demand for licence fees was also unsustainable.

Relief for Asianet Satellite: ₹3.04Cr Service Tax Demand Set Aside as CESTAT Finds SCN Built on Faulty Methodology The Commissioner of CentralExcise vs M/s. Asianet Satellite Communications Ltd CITATION : 2025 TAXSCAN (CESTAT) 1287

The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the Commissioner’s order dropping the ₹3,04,52,782 service tax demand raised against Asianet Satellite Communications Ltd., holding that the Show Cause Notice (SCN) was founded on an incorrect methodology and that no violation of Rule 4(7) of the Cenvat Credit Rules, 2004 was established.

The Bench comprising P.A. Augustian (Judicial Member) and R. Bhagya Devi (Technical Member) held that the Commissioner’s reasoning was unassailable, as the SCN’s foundation was indeed unstable and unsustainable.

The Tribunal found there was no infirmity in the Commissioner’s conclusion that the demand was based on a faulty methodology and that no contravention had been made out.