Case Law Details
Capgemini Technology Service India Ltd Vs Commissioner of CGST (CESTAT Mumbai)
In a recent ruling by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Mumbai, a crucial legal principle was reiterated. The case, “Capgemini Technology Service India Ltd. vs. Commissioner of CGST,” revolved around the limitations of review proceedings and the importance of adhering to the grounds mentioned in the show-cause notice (SCN). This article delves into the case’s details and the CESTAT’s decision.
Detailed Analysis
1. Background: Capgemini Technology Service India Ltd. was involved in providing various taxable services, as defined under the Finance Act, 1994. During a disputed period, the company filed a refund application for service tax, amounting to Rs. 10,58,10,484, under Rule 5 of the CENVAT Credit Rules, 2004, in conjunction with Notification No. 27/2012-C.E. (N.T.) dated 18.06.2012. The Deputy Commissioner of Service Tax, in an order dated 30.01.2017, sanctioned a refund of Rs. 8,51,67,603 while rejecting the refund claim of Rs. 2,06,42,881, invoking Rule 5 and Section 11B of the Central Excise Act, 1944.
2. Review Order: Subsequently, the Department initiated a review of the original order. In a Review Order dated 20.04.2017, the Reviewing Committee directed the concerned officer to file an appeal before the Commissioner (Appeals) under Section 84 of the Finance Act, 1994. The appeal was decided by the Principal Additional Director General, CGPM, WRU, Mumbai (Pr. ADG), who, in an order dated 29.06.2018, reversed the original order and denied the refund benefit.
3. Appellant’s Argument: The appellant contended that the show-cause notice had proposed the rejection of the refund claim based on Rule 9(c) of the Place of Provision of Services Rules, 2012. However, the Pr. ADG rejected the refund by applying Rule 4 of the same rules. The appellant argued that the Pr. ADG had gone beyond the show-cause notice’s scope, as the notice had only proposed the denial of the refund as an intermediary. This deviation from the grounds mentioned in the show-cause notice was a breach of established legal principles.
4. CESTAT Decision: CESTAT noted that the show-cause notice serves as the foundation for the Department’s case, and new grounds or points that were not raised in the notice cannot be introduced later. The tribunal cited various legal precedents, emphasizing that review proceedings cannot extend beyond the grounds mentioned in the show-cause notice. This principle was vital in the case, as the Pr. ADG had adopted an entirely different basis for denying the refund, not specified in the original notice. The CESTAT found that the impugned order could not sustain judicial scrutiny due to this breach of legal principles.
5. Previous Departmental Decisions: The appellant also highlighted that the Department had previously accepted appeals rejected by the Commissioner (Appeals) on identical facts. The Department had granted refunds based on the decision of the learned Commissioner of CGST & Central Excise (Appeals-II), Mumbai, dated 27.06.2018. The appellant argued that the Department could not selectively accept or reject similar cases, applying inconsistent criteria.
6. Precedent for Department’s Decision: The Department, in a letter dated 12.07.2023, confirmed that it had not filed any appeal against Order-in-Appeal No. PK/601 to 602/ME/2018 dated 27.06.2018. However, it was later acknowledged that the Order-in-Appeal No. in the letter was incorrect, and it should have referred to Order-in-Appeal No. PK/601 to 602/ME/2018 dated 27.06.2018. The Revenue accepted this correction, indicating that the law was settled on the matter.
Conclusion: The CESTAT’s decision in the case of Capgemini Technology Service India Ltd. vs. Commissioner of CGST reaffirms the importance of adhering to the grounds mentioned in the show-cause notice and the limitations of review proceedings. The ruling sets a precedent that the Department cannot introduce new grounds in the appellate stage that were not part of the original notice. The decision also emphasizes the need for consistency in the Department’s approach to similar cases, preventing selective acceptance or rejection based on varying criteria. This case serves as a valuable reference for future matters involving review proceedings and adherence to legal principles.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Briefly stated, the facts of the case are that the appellant herein is engaged in providing various taxable services defined under the Finance Act, 1994 and for that purpose they themselves have registered with the Service Tax Department. During the disputed period, the appellant had filed an application before the jurisdictional Service Tax authorities claiming refund of Service Tax of Rs.10,58,10,484/- under Rule 5 of the CENVAT Credit Rules, 2004 read with Notification No. 27/2012-C.E. (N.T.) dated 18.06.2012. The refund application was disposed of by the Dy. Commissioner of Service Tax vide order dated 30.01.2017 in sanctioning the amount of Rs.8,51,67,603/- and rejected the refund claim amounting to Rs.2,06,42,881/- in terms of Rule 5 ibid read with Section 11B of the Central Excise Act, 1944. The said original order dated 30.01.2017 was reviewed by the Department and vide Review Order dated 20.04.2017, the Reviewing Committee has directed the concerned officer for filing an appeal before the learned Commissioner (Appeals) under Section 84 of the Finance Act, 1994. The appeal filed by the Revenue was decided by the learned Principal Additional Director General, CGPM, WRU, Mumbai (Pr. ADG) in terms of CBEC Order No. 17/2017-S.T. dated 28.11.2017 issued in exercise of the powers conferred upon it by Section 83A of the Finance Act, 1994 read with Rule 3 of Service Tax Rules, 1994 appointing him as the competent authority for deciding the case. The said Pr. ADG disposed of the case by issue of impugned order dated 29.06.2018 in rejecting the original order and negating the order to the effect it has allowed the refund benefit amounting to Rs.8,51,67,603/- sanctioning in favour of the appellant. Feeling aggrieved with the impugned order dated 29.06.2018, the appellant has preferred this appeal before the Tribunal.
2. Learned Advocate appearing for the appellant submitted that the show-cause notice at paragraph 5 had proposed for rejection of the refund claim in terms of Rule 9(c) of the Place of Provision of Services Rules, 2012, whereas the learned Pr. ADG has rejected the refund benefit by applying Rule 4 of the said Rules. Thus, learned Advocate submitted that the learned Pr. ADG has travelled beyond the scope of show-cause notice inasmuch as the show-cause notice had only proposed for denial of the refund benefit as an intermediary, whereas the learned Pr. ADG has taken entirely different ground for allowing the appeal in favour of the Revenue. Further, learned Advocate has submitted that the issue arising out of the impugned order is no more res integra inasmuch as on identical facts Department’s appeals rejected by the learned Commissioner (Appeals) were accepted by the Department and no appeal has been preferred against such decisions. In this context, learned AR also fairly concedes that for different period from July, 2012 to June, 2015, the Department has sanctioned the refund benefit in favour of the party by relying upon the order dated 27.06.2018 passed by the learned Commissioner of CGST & Central Excise (Appeals-II), Mumbai. Thus, the learned Advocate appearing for the appellant submitted that the Department cannot adopt pick and chose theory for acceptance of the order sanctioning refund in some of the cases and for denial of refund in some other cases.
3. On the contrary, the learned AR appearing for the Revenue has reiterated the findings recorded in the impugned order.
4. On perusal of the case records, we find that the show-cause notice dated 20.07.2015 had proposed for denial of the refund benefit, holding that the appellants are an intermediary and as such, their case falls under Rule 9(c) ibid and as such, the services provided by them do not fall under the category of ‘Export of Service’ for the purpose of grant of the refund benefit. The original authority while adjudicating the show-cause notice dated 20.07.2015 had dropped the proposals made therein and had considered that the services provided by the appellant qualify as ‘Export of Service’ for the purpose of grant of benefit of the refund provided under Rule 5 ibid read with Notification issued thereunder. However, on appeal filed against the said original order by the Revenue, the learned Pr. ADG has taken entirely a different view and accepted the appeal filed by the Revenue holding that the appellant should not be entitled for refund in terms of Rule 4 ibid. Hence, it is evident that the learned Pr. ADG has gone beyond the scope of show-cause notice. It is settled law that show-cause notice is the foundation on which the Department must build up its case and the Department cannot urge new grounds/points which were never raised in the show-cause notice. It is also settled by the Hon’ble Supreme Court that Review proceedings cannot go beyond the grounds taken in the show-cause notice, as held in the cases of CCE, Nagpur Vs. Ballarpur Industries Ltd. – 2007 (215) ELT 489 (SC), Commissioner of Central Excise, Chandigarh Vs. Shital International – 2010 (259) ELT 165 (SC) and CCE, Bhubaneswar-I Vs. Champdany Industries Ltd. – 2009 (241) ELT 481 (SC) that the show-cause notice is the foundation in the matter of levy and recovery of duty, penalty and interest. Thus, Revenue cannot take a new ground at the appellate stage which was not canvassed in the show-cause notice issued by the Department. Further, the law is well settled in the case of Bajaj Auto Ltd. Vs. Union of India – 2003 (151) 23 (Bom) that the ground taken in appeal pursuant to appellate order cannot travel beyond the ground mentioned in the show-cause notice. In the circumstances of the present case, since the learned Commissioner (Appeals) has traveled beyond the scope of the show-cause notice and applied entirely the different rule for rejection of refund benefit in favour of the appellant, we are of the considered view that the impugned order cannot sustain for judicial scrutiny.
5. Further, we also find that the Assistant Commissioner (Review) in his letter dated 12.07.2023 addressed to the Dy. Commissioner (AR), CESTAT, Mumbai has confirmed that the Department has not filed any appeal against the Order-in-Appeal No. NVK/38-40/RGD/2018 dated 14.03.2018 passed by the learned Commissioner (Appeals). However, learned Advocate pointed out that the Order-in-Appeal No. referred in the said letter dated 12.07.2023 is incorrect and the same should be read as Order-in-Appeal No. PK/601 to 602/ME/2018 dated 27.06.2018. The learned AR appearing for the Revenue fairly concedes the point raised by the learned Advocate for the appellant. Since the legal point discussed by the learned Commissioner (Appeals) in the order dated 27.06.2018 has been accepted by the Department, in our considered opinion, Department cannot agitate the same matter subsequently for a contrary decision. In this context, we find that the law is well settled as in the case of Commissioner of Central Excise, Allahabad Vs. Surcoat Paints (P) Ltd. – 2008 (232) ELT 4 (SC), the Hon’ble Supreme Court have held that once the Department accepts the benefits available to an assessee in any one case, then it cannot agitate the same issue for subsequent assessee(s).
6. In view of the foregoing discussions, we do not find any merits in the impugned order passed by the learned Pr. ADG in rejecting the refund benefit due to the appellant. Therefore, by setting aside the impugned order, the appeal is allowed in favour of the appellant with consequential relief, if any, as per law.
(Dictated and pronounced in open court)
