Win for SpiceJet: Supreme Court Dismisses Revenue Appeal Delayed by 567 Days, CESTAT’s ₹25.56 Crore Tax Demand Drop Order Stands [Read Order]
Supreme Court dismisses Revenue’s 567-day delayed appeal, letting CESTAT’s order dropping Rs. 25.56 crore service tax demand on SpiceJet stand final.
![Win for SpiceJet: Supreme Court Dismisses Revenue Appeal Delayed by 567 Days, CESTAT’s ₹25.56 Crore Tax Demand Drop Order Stands [Read Order]](https://images.taxscan.in/h-upload/2025/09/04/2084054-spicejet-case-supreme-court-cestat-taxscan.webp "Win for SpiceJet: Supreme Court Dismisses Revenue Appeal Delayed by 567 Days, CESTAT’s ₹25.56 Crore Tax Demand Drop Order Stands [Read Order]")
In a recent ruling, the Supreme Court of India dismissed an appeal filed by the Commissioner of CGST and Central Excise against SpiceJet Ltd. on the grounds of 567 days delay without any sufficient cause as well as on merit.
The case began after the department alleged that SpiceJet had wrongly availed excess CENVAT credit of Rs. 21.55 crores for July 2010 to March 2011 and failed to pay service tax of Rs. 4.01 crores on excess baggage charges collected from passengers between 2009 and 2012. A show cause notice was issued on 21 October 2014 invoking the extended limitation period under Section 73(1) of the Finance Act, 1994.
The two-member bench comprising Mr. Justice Dilip Gupta (President) and P. Anjani Kumar, Member (Technical Member) observed that passenger air transport became taxable only from July 2010. Under Rule 6(3A)(h) of the CENVAT Credit Rules, 2004, full credit was available in such cases, with adjustment required at year-end.
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SpiceJet had recomputed the credit in June 2012 and informed the department within the prescribed time. On this basis, the Tribunal held that the demand of ₹21.55 crores was unsustainable.
On the baggage issue, CESTAT observed that excess baggage charges were integrally connected to passenger transport and already covered under the capped tax of ₹100 per ticket provided by Notification No. 26/2010-ST. The Tribunal explained that even if baggage charges were included, the tax liability would not change.
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CESTAT also observed that the extended period of limitation could not be invoked, since the department had audited records in 2012 but issued the notice only in 2014, without any evidence of suppression.
In light of the above, the tribunal set aside a service tax demand of Rs. 25.56 crores relating to CENVAT credit and excess baggage charges. Aggrieved, the revenue appealed this order before the Supreme Court with a delay of 567 days
The Bench comprising Justice J.B. Pardiwala and Justice R. Mahadevan observed that the delay was not satisfactorily explained and pointed out that no good reason existed to interfere with the CESTAT’s findings.
The Supreme Court dismissed the appeal both on the ground of delay and on merits. It also ordered that all pending applications, including those for condonation of delay and ex parte stay, stood disposed of.
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