Company Fails to File Grounds of Appeal in ST-4 Form: CESTAT Remands Service Tax Dispute Back to Commissioner (Appeals) [Read Order]

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) remanded a service tax dispute back to the Commissioner (Appeals) after finding that the company failed to file proper grounds of appeal and statement of facts in the prescribed Form ST-4.

Salini NDT Services Pvt. Ltd., the appellant, was issued a show cause notice based on information received from the Income Tax Department regarding mismatch between Income Tax Returns (ITR) and Service Tax Returns (STR) for the financial year 2016-17. The department alleged short payment of service tax amounting to Rs. 25,42,189 along with interest and penalties under the Finance Act, 1994.

During adjudication proceedings, the appellant submitted reconciliation statements comparing ITR and STR figures and also produced challans showing payment of service tax amounting to Rs. 6,85,494. The appellant also claimed exemption on services provided to Special Economic Zone (SEZ) units under Notification No. 12/2013-ST dated 01.07.2013. The Adjudicating Authority partly confirmed the demand and upheld service tax demand of Rs. 14,49,375 along with interest and penalty.

Aggrieved by the order, the appellant filed appeal before the Commissioner (Appeals). However, the Commissioner (Appeals) dismissed the appeal after observing that the appellant had not filed statement of facts and grounds of appeal along with Form ST-4. The authority also observed that balance sheet, Form 26AS, sales registers, invoices and CA-certified reconciliation statement were not submitted for verification of the SEZ exemption claim.

The appellant’s counsel argued that all relevant documents including evidence relating to SEZ exemption were placed before the Commissioner (Appeals), but the same were not considered. It was argued that the matter should be examined on merits after considering the documents and exemption claim.

The revenue counsel argued that the appellant failed to comply with mandatory procedural requirements prescribed for filing appeals under the Finance Act, 1994. The department submitted that proper grounds of appeal were not filed in Form ST-4 and because of this there was no error in the order passed by the Commissioner (Appeals).

The bench comprising Ajay Sharma (Judicial Member) agreed that the appellant had not properly filed the memorandum of appeal in the prescribed manner. The tribunal observed that although the appellant mentioned the relief sought in Form ST-4, the statement of facts and grounds of appeal were completely absent from the appeal memorandum.

The tribunal explained that filing grounds of appeal is not just a procedural formality because such pleadings help the appellate authority to examine the disputed findings and legal issues involved in the case. The tribunal also pointed out that when a statute prescribes a particular procedure for exercising a right, the prescribed procedure must be followed strictly.

The tribunal observed that the substantive merits of the SEZ exemption claim should still be examined properly in the interest of justice. Accordingly, the tribunal set aside the impugned order and remanded the matter back to the Commissioner (Appeals) for fresh adjudication after granting opportunity to the appellant to file proper statement of facts, grounds of appeal and supporting documents.

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