Case Law Details
Mahanadi Coalfields Limited Vs Commissioner of Central Excise (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata, partly allowed the appeal by modifying the adjudication order concerning the levy of Central Excise duty on the elements of Royalty and Stowing Excise Duty collected by the appellant during the period from April 2015 to 14 June 2015. The Tribunal upheld the demand of Central Excise duty on Royalty for the normal period of limitation, set aside the entire demand on Stowing Excise Duty, and waived the interest liability on the duty payable on Royalty.
The proceedings arose from a Show Cause Notice dated 24 May 2016 proposing recovery of Central Excise duty of Rs. 22,60,02,236/- on amounts relating to Royalty and Stowing Excise Duty, along with interest and penalty. The appellant contested the notice by disputing the allegations, pointing out computational errors and referring to duty already paid. The adjudicating authority accepted certain computational errors, acknowledged that the appellant had already discharged substantial duty liability, and recorded that there was no mala fide intention to evade duty. Accordingly, the proposal to impose penalty under Section 11AC was dropped. However, Central Excise duty of Rs. 20,34,91,473/- was confirmed, amounts already deposited were appropriated, and interest was held payable on the balance amount.
Before the Tribunal, the appellant relied upon an earlier Tribunal decision involving identical issues, where it had been held that no Central Excise duty was payable on Stowing Excise Duty, that duty was payable on Royalty only for the normal period of limitation, and that no interest was payable on the duty attributable to Royalty. The appellant also contended that the demand relating to April 2015 was barred by limitation because the normal period had expired before the statutory amendment extending the limitation period came into force. It argued that the due date for filing the ER-1 return, namely 10 May 2015, should be treated as the relevant date even though the return was actually filed on 26 May 2015.
The Revenue submitted that since the return for April 2015 had actually been filed on 26 May 2015, the actual filing date constituted the relevant date for computing limitation. On that basis, the Show Cause Notice dated 24 May 2016 was within the normal period of limitation.
The Tribunal observed that the issue relating to levy of Central Excise duty on Royalty and Stowing Excise Duty had already been settled by earlier decisions of the Tribunal. Following those decisions, it held that Central Excise duty was payable on the Royalty component only for the normal period of limitation, whereas no Central Excise duty was payable on Stowing Excise Duty. Accordingly, it upheld the demand on Royalty limited to the normal period and set aside the entire demand relating to Stowing Excise Duty.
On the issue of interest, the Tribunal referred to an earlier decision of the Principal Bench and the observations of the Supreme Court in Mineral Area Development Authority v. Steel Authority of India. It noted that the Supreme Court had observed that equities would be balanced if outstanding interest accrued on the principal amount due from assessees was waived. Applying the same principle, the Tribunal held that no interest was payable on the Central Excise duty payable on the Royalty component for the normal period of limitation.
The Tribunal then considered the limitation issue concerning the April 2015 demand. It examined the statutory provisions governing the “relevant date” and held that where a return is filed, even belatedly, the relevant date is the actual date of filing the return and not the due date prescribed under the rules. The Tribunal relied upon the decision of the Patna High Court in Indian PAC Consulting Pvt. Ltd. and held that the contrary Tribunal decision cited by the appellant could not be treated as a binding precedent because the High Court judgment had not been considered therein. Since the ER-1 return for April 2015 had been filed on 26 May 2015, the Tribunal held that the normal limitation period expired on 26 May 2016. As the Show Cause Notice had been issued on 24 May 2016, it was held to be within the normal period of limitation. Consequently, the demand on the Royalty component for the period from April 2015 to 14 June 2015 was upheld.
Accordingly, the Tribunal modified the impugned order by upholding the demand of Central Excise duty on Royalty for the normal period of limitation, setting aside the demand of interest on that duty, and deleting the entire demand relating to Stowing Excise Duty. The appeal was disposed of in these terms.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The present appeal has been filed by M/s. Mahanadi Coalfields Limited, A.T. & P.O.: Jagriti Vihar, Burla, Sambalpur – 768 020 (Odisha) [hereinafter referred to as the “appellant”] against the Order-in-Original No. 41/CCE/CEX/RKL/2016-17 dated 07.12.2016 passed by the Ld. Commissioner, Central Excise, Customs and Service Tax, Rourkela Commissionerate, KK-42, Civil Township, Rourkela – 769 004 wherein the demand of central excise duty amounting to Rs.20,34,91,473/- has been confirmed against them, along with interest thereon.
2. A Show Cause Notice dated 24.05.2016 came to be issued to the appellant proposing recovery of Central Excise duty amounting to Rs.22,60,02,236/-on the amounts relatable to Royalty and Stowing Excise Duty for the period from 01.04.2015 to 14.06.2015, along with applicable interest and penalty under Section 11AC of the Central Excise Act, 1944.
2.1. The appellant contested the said proceedings by filing a detailed reply dated 29.06.2016, wherein the allegations contained in the Show Cause Notice were denied and disputed. The appellant, inter alia, contended that the quantification adopted in the notice suffered from computational errors and also placed on record particulars regarding payment of Central Excise duty already made by them during December, 2015.
3. Upon adjudication, the Ld. Commissioner of Central Excise, Customs and Service Tax, Rourkela, vide the impugned Order-in-Original dated 07.12.2016, accepted the appellant’s contention regarding certain computational errors and also took note of the payments of duty already made by the appellant. The ld. adjudicating authority further recorded that the appellant is a Public Sector Undertaking and that there was no mala fide intention to evade payment of duty. It was also observed that substantial duty liability had already been discharged prior to adjudication. On such findings, the proposal for imposition of penalty under Section 11AC of the Central Excise Act, 1944 was dropped. However, the ld. adjudicating authority proceeded to confirm central excise duty amounting to Rs.20,34,91,473/- and appropriated an amount of Rs.20,21,74,357/- already deposited by the appellant towards the said liability. It was further observed that the balance amount of Rs.13,17,116/- remained payable by the appellant, along with applicable interest in accordance with law.
4. Aggrieved by the confirmation of the demand of central excise duty, along with interest, vide the impugned order, the appellant is before us.
5. The submissions advanced by the Ld. Counsel appearing on behalf of the appellant are as under: –
(i) In an identical set of facts with regard to the levy of Central Excise Duty on the elements of Royalty and Stowing Excise Duty, this Tribunal in the case of CCL v Principal Commissioner of CGST and CX, Ranchi vide Final Order No. 75511-75521/2026 dated 12.03.2026 has held that:
(a) No Central Excise duty is payable on Stowing Excise Duty,
(b) Central Excise Duty is payable on the element of royalty for the normal period of limitation,
(c) No interest is payable on the Central Excise Duty amount on the element of royalty.
(ii) It is submitted that the demand pertaining to the month of April 2015 is falling beyond the normal period of limitation. The last date of issuance of Show Cause Notice (SCN) for April-2015 was 10.05.2016. The SCN in the present case has been issued on 24.05.2016. It is submitted that the amendment made in Central Excise Act w.e.f. 14.05.2016 extending the timeline for issuance of SCN under normal period of limitation from 1 year to 2 year will not be applicable in the present case for the reason that the demand which was already dead on 10.05.2016 could not be revived by virtue the subsequent amendment on 14.05.2016. Reliance is placed on the following decisions:
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- Aveco Technologies Pvt. Ltd. v Commissioner of Cus., Hyderabad [2018 (362) E.L.T. 624 (Tri. Hyd.)] upheld by the Hon’ble Supreme Court as reported in Commissioner v Aveco Technologies Pvt. Ltd. Commissioner of Cus., Hyderabad [2018 (362) E.L.T. 624 (Tri. Hyd)].
- Right Resource Management Service v Commissioner of CGST, Central Excise and Customs, Dehradun [(2024) 15 Centax 362 (Tri.-Del)]
- The Braithwaite Burn And Jessop Construction Company Limited (Formerly known as BHARAT BHARI UDYOG NIGAM LIMITED) v Commissioner of Service Tax-II, Kolkata [Final Order No. 75530/2026 dated 21.04.2026 in Service Tax Appeal No.75391 of 2016].
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(iii) It is, therefore, submitted that demand for the month of March 2015 having been issued after the normal period of limitation cannot legally survive.
5.1. Further, by way of supplementary written submissions filed on 16.06.2026, the Ld. Counsel for the appellant has made the following additional submissions: –
(i) The excise return in Form ER-1 for the month of April-2015 was required to be filed within 10.05.2015. However, the assessee appellant filed the said return belatedly on 26.05.2015.
(ii) That the ‘relevant date’ for the purpose for issuance of Show Cause Notice (SCN) need to be considered as 10.05.2015 and not 26.05.2015, and accordingly, the last for issuance of SCN under normal period of limitation expired on 10.05.2016 and not 26.05.2016.
(iii) The Principal Bench of this Tribunal in the case of Right Resource Management Service v Commissioner of CGST, Central Excise and Customs, Dehradun [(2024) 15 Centax 362 (Tri. Del)] has examined this issue from the point of Service Tax Law, which is similarly worded in Central Excise Law also. The relevant portion of the observation made by the Tribunal is as below:
“20. In case of short payment of tax, the relevant date from which the limitation is to be reckoned is the date on which the Return is filed. However, if no Return is filed, the last date for such filing the return is to be reckoned. The rationale behind this provision is self-evident. Once a return is filed with the officer, it comes within his knowledge and he can scrutinize it and raise demands from that date onwards. However, if the Return is not filed by due date, the officer need not wait endlessly and he can start action on the last date for filing the return. He can call summon or call for any documents he deems necessary and if necessary, raise a demand and take action. Evidently, if return is filed, the clock starts ticking from that date and if no return is filed, the clock starts ticking from the due date.
21. The case of the Revenue is that if the assessee files a return after the due date, such date must be reckoned as the relevant date because the section does not distinguish between the return filed by due date and return filed after due date. In our considered view, this section cannot be read in that manner. If the assessee does not file the return by the due date, the relevant date begins on the due date. Thereafter, even if the assessee files a return for that period belatedly, there is nothing in the law according to which the relevant date will change and a new relevant date will emerge. For instance, according to the learned authorised representative for the Revenue, for the half year ending September 2010, the due date for filing the return was 25 October 2010 but the assessee filed the return for this period after two years only on 1 November 2012. According to him, 1 November 2012 should be reckoned as the relevant date. In this example, for the period ending September 2010, the relevant date began on 25 October 2010 and the demand has to be raised within the normal period or, as the case may be, extended period of limit from this date. There is no provision to change the relevant date by any subsequent development such as, in this case, the assessee filing the return on 1 November 2012.
22. The proposition of the Revenue that the relevant date in this case must be 1 November 2012 cannot also be accepted because it would mean that the assessee would be worse off by filing the return with delay than by not filing it at all.
23. Thus, the proposition of the department that the date on which the return is filed after the due date should be reckoned as the relevant date cannot be accepted because (a) once the assessee does not file the return by the due date, the relevant date sets in and there is no provision in the law to modify this relevant date by any subsequent events including filing of the returns; and (b) because it results in absurdity because the assessee will be worse off by filing the return late than by not filing it at all. Hence it needs to be rejected and we do so. The Constitution Bench of Supreme Court in the Commissioner of Customs v. Dilip Kumar & Company 2018 (361) E.L.T. 577 (SC) held that in interpreting statutes based on plain language, absurdity should be avoided. Paragraph 20 of the judgment is as follows;
” 20. In applying rule of plain meaning any hardship and inconvenience cannot be the basis to alter the meaning to the language employed by the legislation. This is especially so in fiscal statues and penal statues. Nevertheless, if the plain language results in absurdity, the Court is entitled to determine the meaning of the word in the context in which it is used keeping in view the legislative purpose. Not only that, if the plain construction leads to anomaly and absurdity, the court having regard to the hardship and consequences that flow from such a provision can even explain the true intention of the legislation. Having observed general principles applicable to statutory interpretation, it is now time to consider rules of interpretation with respect to taxation.”
36. In view of the above,
(a) we find that the relevant date for reckoning the limitation under section 73 in cases where no return is filed by the due date is the due date for filing the return and there is no provision for changing this relevant date even if the assessee files a return after the due date and the Commissioner was correct in reckoning the last date for filing of returns as the relevant date;
(b)……………………..
(c)……………………..
(d)……………………..
(e) the normal period of limitation was 18 months up to 13-5-2016 and 30 months thereafter and the 30 months limitation will apply to all the past periods also except those which have already expired by 135-2016 under the previous limitation of 18 months;”
(iv) The above decision was challenged by the Revenue by filing Central Excise Appeal No. CEXA 05 of 2024 before the Hon’ble Uttarakhand High Court. The said revenue appeal has been dismissed by the Hon’ble Uttarakhand High Court by Order dated 01.04.2025 as withdrawn due to monetary limit. Therefore, the above decision of the Tribunal is a good law as on date.
(v) That although the return for April 2015 has been filed on 26.05.2015, the last date for filing the return was 10.05.2015 which would be considered as ‘relevant date’ in terms of Section 11A, Explanation 1(b). One year from the relevant date of 10.05.2015 expired on 10.05.2016 and therefore, the demand cannot be raised by issuing the Show Cause Notice dated 24.05.2016. Further, since the demand which was already dead on 10.05.2016 could not be revived by considering the subsequent amendment on 14.05.2016 whereby the normal period of limitation of one year has been increased to two years. Reliance in this regard is placed upon the decision of the Hyderabad Bench in the case of Aveco Technologies Pvt. Ltd. vs Commissioner of Cus., Hyderabad [2018 (362) E.L.T. 624 (Tri. Hyd.)] as also upheld by the Hon’ble Supreme Court.
5.2. On the basis of the above submissions, the appellant prays for setting aside the demand for the month of April 2015 as being beyond normal period of limitation, the demand of interest on central excise duty on the element of Royalty, if payable, as well as the demand of central excise duty on Stowing Excise Duty. On the other hand, the Ld. Authorized Representatives of the Revenue appearing before us have reiterated the findings in the impugned order. In particular and without prejudice, it is their contention the appellant is liable to pay central excise duty on the element of Royalty for the normal period of limitation. As regards the contention of the appellant that for computing the duty liability for the normal period of limitation on the element of Royalty, the due date for filing the Return for the month of April 2015 is to be considered as the ‘relevant date’, the Revenue has submitted as under: –
(i) It is an admitted fact that the appellant has filed the ER-1 Return for the month of April, 2015 on 26.05.2015. As per Section 73(6) of the Finance Act, 1994, the ‘relevant date’ is to be computed from the date on which the Return is filed. Thus, the relevant date for the purpose of computing the demand for the normal period has to be considered as 26.05.2015, being the date of filing of the Return.
(ii) That if the limitation is computed by considering the ‘relevant date’ as 26.05.2015, then the demand for the period from April, 2015 to 14th June, 2015 shall be within the normal period of limitation.
(iii) The contentions raised by the appellant on this score are therefore without any merit.
7. Heard both sides and perused the records of the case.
8. We find that the main issue in the present appeal pertains to the leviability of central excise duty on the elements of ‘Royalty’ and ‘Stowing Excise Duty’ collected by the appellant from their customers during the period from April, 2015 to 14th June, 2015.
8.1. We find that the issue as regards central excise duty liability on the elements of ‘Royalty’ and ‘Stowing Excise Duty’ has already been settled in a catena of decisions. It would be pertinent to refer to the decision rendered by this Tribunal in the case of M/s. Central Coal Fields Ltd. v. Pr. Commissioner of C.G.S.T. & C.X., Ranchi &ors. [Final Order Nos. 75511-75521 of 2026 dated 12.03.2026 in Excise Appeal Nos. 75646 to 75656 of 2020 – CESTAT, Kolkata], wherein an identical issue has been examined by the Tribunal. In the aforesaid case, while relying upon the ratio of the decisions in the cases of M/s. Mahanadi Coalfields Ltd. v. Commissioner of C.Ex., Cus. &S.Tax, Rourkela [Final Order No. 75699 of 2025 dated 11.03.2025 in Excise Appeal No. 75808 of 2016 – CESTAT, Kolkata] and M/s. Eastern Coalfields Ltd. v. Commissioner of C.Ex., Bolpur [Final Order Nos. 75656-75666 of 2025 dated 11.03.2025 in Excise Appeal No. 75694 of 2015 – CESTAT, Kolkata], under identical facts and circumstances, it was held that excise duty is payable on ‘Royalty’ only for the normal period of limitation, by setting aside the demand for the extended period of limitation, and also that no duty of excise is payable on ‘Stowing Excise Duty’. In absence of any decision to the contrary available on record, we do not find any reasons to deviate from the above view expressed by this Tribunal in M/s. Central Coal Fields Ltd. (supra). Therefore, respectfully following the ratio laid down in the decisions cited supra, we uphold the demand of central excise duty on the element of ‘Royalty’ to the extent it pertains to the normal period of limitation and set aside the entire demand of central excise duty on the element of ‘Stowing Excise Duty’.
8.2. Further, in M/s. Central Coal Fields Ltd. (supra), as regards the levy of interest, in terms of the decision of the Principal Bench of the Tribunal in the case of M/s. South Eastern Coalfields Ltd. v. Commissioner of Central Excise & Service Tax, Raipur & connected appeals [Final Order Nos. 50227-50256 of 2026 dated 06.02.2026 in Excise Appeal No. 56177 of 2013 & ors. – CESTAT, New Delhi], it was observed that no interest is payable on account of the duty liability accrued towards ‘Royalty’. It is observed that in the above decision of in the case of M/s. South Eastern Coalfields Ltd. (supra), the Principal Bench of the CESTAT has taken cognizance of the judgement of the Hon’ble Supreme Court in the case of Mineral Area Development Authority v. Steel Authority of India [(2024) 21 Centax 313 (S.C.)] wherein the Hon’ble Apex Court has observed that equities will be balanced if the State Governments waive the outstanding interest accrued on the principal amount due from the assessee. The relevant observation of the Hon’ble Apex Court in the aforesaid judgement is reproduced below: –
“22. The total amount, that is the principal plus the interest, due by the assesses in the pending matters may be substantial in comparison to their total net worth. Steel Authority of India has stated on affidavit that retrospective application of MADA (supra) will lead to revival of cumulative demands to the tune of approximately Rupees three thousand crores from different States. The delay in the court proceedings should not be to the detriment of the assesses. Taking into consideration the lapse of more than three decades since India Cement (supra) and more than a decade since the matter was referred to a larger Bench, equities will be balanced if the State governments waive the outstanding interest accrued on the principal due from the assesses. This direction applies to all assesses, regardless of whether they have approached this Court or the High Courts challenging the validity of the relevant statutes.”
[Emphasis supplied]
8.2.1. Thus, in terms of the judgement of the Hon’ble Apex Court in the case of Mineral Area Development Authority (supra), we waive the interest liability arising on the central excise duty payable by the appellant on the element of ‘Royalty’ for the normal period of limitation.
9. Next issue to be decided is what is the normal period of limitation in this case. For that purpose, it is necessary to examine the arguments advanced by the appellant on as to what should be the ‘relevant date’ for the purpose of issuance of Show Cause Notice under the normal period of limitation. We find that the demand in the present case pertains to the months from April, 2015 to 14th June, 2015, for which the Show Cause Notice was issued on 24.05.2016. The contention of the appellant is that for the month of April, 2015, the due date for filing the ER-1 Return expired on 10.05.2015 and therefore if the demand notice is not issued by 10.05.2016, then the demand becomes a ‘dead’ demand, which cannot even be revived by the subsequent amendment on 14.05.2016 whereby the normal period of limitation has been increased. On the basis of the above submission, it is the case of the appellant that the demand for the month of April, 2015 will not come within the normal period of limitation.
9.1. In this connection, we have referred to the relevant provisions of Section 73 of the Finance Act, 1994. For ease of reference, sub-section (6) of Section 73 of the Act is reproduced below: –
“(6) For the purposes of this section, “relevant date” means, —
(i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid —
(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;
(b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder;
(ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof;
(iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund.”
[Emphasis supplied]
9.2. As per the above provisions, it is clear that in respect of cases where a periodical Return is to be filed under the rules, showing particulars of Service Tax paid during the concerned period therein, then the date of filing such Return shall have to be considered as the ‘relevant date’ for the purposes of limitation under Section 73 of the Finance Act, 1994.
9.3. We find that the appellant has relied upon the decision in the case of M/s. Right Resource Management Service v. Commissioner of CGST, Central Excise and Customs, Dehradun [(2024) 15 Centax 362 (Tri.-Del)] to contend that when a Return is filed in a delayed manner, the ‘due date’ of filing such Returns has to be considered as the ‘relevant date’ for the purposes of the Act. We find that this submission of the appellant is against the statutory provision enshrined in Section 73 of the Finance Act, 1994. Section 73 is very categorical, stating that in cases where a Return is filed, the relevant date is to be computed from the “date on which such return is so filed”. Thus, if a return is filed in a delayed manner, then also, the date of actual filing of the return is the ‘relevant date’ not the ‘due date’ for filing such return.
9.4. The above said view has been expressed by the Hon’ble High Court at Patna in the case of M/s. Indian PAC Consulting Pvt. Ltd. v. Union of India [(2023) 10 Centax 396 (Pat.)]. The relevant observations made by the Hon’ble High Court in the aforesaid judgement are as under: –
“6. We would first consider the contention raised of the notice being barred by limitation. The argument with respect to limitation is based on Section 73(1) of the Finance Act, 1994. Section 73(1), which came into effect from 28-5-2012, enables a notice to be served on the person chargeable with the service tax, which has not been levied or paid or which has been short levied or short-paid within a period of 18 months from the relevant date. The relevant date discernible from Section 73(6) is the date on which the return is filed or the date prescribed under the Rules, if no return is filed. It has also to be noticed that when there is an allegation of short levy or short payment or erroneous refund on the grounds of (a) fraud, (b) collusion, (c) willful mis-statement, (d) suppression of facts; or (d) contravention of any of the provisions of this Chapter or the rules made thereunder with intent to evade payment of service tax, then the period of limitation is five years which period stands substituted for eighteen months as seen from the proviso to sub-section (1) of Section 73.
7. The assessment years, as we notice is of the years 2015-16 to 2017-18. The demand-cum-show cause notice itself, at page-11 in the 28th paragraph, indicates that the noticee filed ST-3 return for the period April, 2015 to September, 2015 on 25-72016 while returns for the remaining relevant periods were filed thereafter. Hence, in terms of the provisions of Section 73(6) (i) (a) of the Act, the earliest relevant date in the present case is 25-72016 for the purpose of calculation of period of limitation under the proviso to Section 73. The notice issued on 20-7-2021, thus, comes within the five-year period, especially when the allegation is of willful mis-statement and suppression of facts.
8. Limitation, as in any case, is a mixed question of fact and law. Looking at the law, the relevant provision is Section 73 of the Finance Act, 1994. Section 73 provides for a notice on the person chargeable to the service tax, for reason of absence of levy or payment or short levy or short payment or an erroneous refund, within eighteen months from the relevant date. Insofar as an allegation of fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the Chapter in which is included section 73 or Rules made thereunder, with intent to evade payment of service tax, the words ‘eighteen months’ shall stand substituted as ‘five years’. The relevant date is available under sub-section (6) of Section 73 which is extracted hereunder :-
“(6) For the purposes of this section, “relevant date” means,-
(i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid —
(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;
(b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder;
(ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made there under, the date of adjustment of the service tax after the final assessment thereof;
(iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund.”
9. The relevant date as provided in clause (a) and (b) of the above extract indicates it to be the date on which the return is filed, if a periodical return is mandated in the rules made under this Chapter and where no periodical return is filed, the date on which such return is filed under the said Rules.
10. The Service Tax Rules, 1994 prescribe periodical returns by Rule 7 mandating a half yearly return in ST-3 or ST3A along with Form TR-6, in triplicate for the months covered in the half-yearly return. The prescription is that the half yearly return shall be filed by the 25th of the month following the particular half-year. Hence, in any financial year, the first half yearly return is to be filed on or before 25th of October and the next, on or before 25th of April. Rule 7C also prescribes the manner in which a delayed return can be filed, which is by payment of an amount; in the event of fifteen days delay being five hundred rupees; beyond fifteen days and within thirty days, one thousand rupees; and beyond thirty days one thousand rupees together with one hundred rupees for every day from the thirty first day till the date of furnishing the said return, subject to maximum of the amounts specified in Section 70 of the Act; which is twenty thousand rupees.
11. In this context, it has to be pertinently noticed that the relevant dates under clause (a) & (b) of subsection (6) of Section 73 is insofar as return filed within time as provided under the Rules or in the absence of any return being filed. Clause (c) of Section 73 (6) (i) provides for the relevant date to be the date on which service tax is to be paid under this Chapter or the rules made thereunder; in any other case. (emphasis supplied by us)
12. Hence, when there is a delayed filing of the return under Rule 7C of the Service Tax Rules, 1994, it has to be presumed that the amount specified in Rule 7C has been paid and so has the tax liability been satisfied. In that circumstance, the relevant date is the date on which the tax has been paid. As is evident from Annexure-17, for the period between April, 2015 and September, 2015 the assessee has filed an ST-3 Return on 25-7-2016 while returns for the remaining relevant period were filed thereafter. The limitation, hence, commences on 25-7-20216 and as on 25-7-2021, the date of demand-cum-show cause notice; the five year period, has not expired. The ground of limitation raised fails and we reject it.”
9.5. Further, we have perused the decision in the case of M/s. Right Resource Management Service (supra) cited by the appellant and it is seen that the above decision of the Hon’ble Patna High Court in the case of M/s. Indian PAC Consulting Pvt. Ltd. (supra) was not brought to the knowledge of the Bench and has not been considered while deciding the issue. In such circumstances, the said decision in M/s. Right Resource Management Service (supra) cannot be regarded as laying down a precedent for determination of the issue arising in the present case.
9.6. Therefore, in terms of the ratio laid down by the Hon’ble High Court in the decision cited supra, we are of the considered view that in cases where a Return is required to be filed as per the rules, the actual date of filing such Return shall be the ‘relevant date’ for the purpose of computation of the period of limitation under the Finance Act, 1994. It is not in dispute that the ER-1 Return for the month of April, 2015 was filed by the appellant belatedly on 26.05.2015 and therefore, the normal period of limitation for raising demands during the said period would expire on 26.05.2016. The impugned Show Cause Notice, being issued on 24.05.2016, is thus well within the normal period of limitation.
9.7. In view of the foregoing, we are of the view that the Show Cause Notice has been issued for the period from April, 2015 to 14th June, 2015 under the normal period of limitation. Accordingly, we hold that the demand of central excise duty confirmed on the element of ‘Royalty’ vide the impugned order for the period from April, 2015 to 14th June, 2015 is within the normal period of limitation and hence, the said demand is upheld.
10. In the result, we pass the following order: –
(i) The demand of central excise duty on the element of ‘Royalty’ to the extent it pertains to the normal period of limitation, is upheld. The demand of interest on the above duty payable by the appellant on ‘Royalty’ is set aside. While confirming the demand of central excise duty on ‘Royalty’, the demand for the normal period of limitation is upheld for the period from April, 2015 to 14th June, 2015.
(ii) The entire demand of central excise duty on the element of ‘Stowing Excise Duty’ is set aside.
11. The impugned order thus stands modified to the extended indicated hereinabove.
12. The appeal stands disposed of thus.
(Order pronounced in the open court on 23.06.2026)
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