Daawat Foods Limited Vs Commissioner of CGST & Central Excise (CESTAT Delhi)
The appeal before the Customs, Excise and Service Tax Appellate Tribunal challenged Order-in-Appeal dated 30.03.2022, wherein a service tax demand of Rs. 6,59,000 along with interest and equal penalty was confirmed against the appellant. The appellant, a company engaged in production and supply of rice and related products, had received grant-in-aid from the Ministry of Food Processing Industries under a government scheme aimed at creation and expansion of food processing and preservation capacities. The grants were received in two installments in 2013 and 2015 and were treated by the appellant as reimbursement of capital expenditure incurred for setting up and modernizing a rice milling unit. No service tax was paid on such receipts.
The Department alleged that the grant-in-aid was linked to obligations such as technological upgradation and transfer of know-how and intellectual property rights to the Government, thereby constituting consideration for a declared service under Section 66E(e) of the Finance Act, 1994. Based on this, a show cause notice dated 15.04.2019 was issued proposing recovery of service tax along with interest and penalty. The adjudicating authority confirmed the demand, and the Commissioner (Appeals) upheld the same, leading to the present appeal.
