CESTAT Sets Aside ₹22.20 Lakh Auto Expo Service Tax Demand Against SIAM

Society of Indian Automobile Manufactures Vs Commissioner (CESTAT Delhi)

Balance-Sheet Differences Alone Cannot Sustain Service Tax Demand; Remand Directions Must Be Followed

Background: Auto Expo Receipts and an Earlier Remand

The Society of Indian Automobile Manufacturers, commonly known as SIAM, was registered under the Societies Registration Act, 1860 to promote and protect trade and industry, particularly the automobile industry.

The Department initiated proceedings concerning receipts classified under Club or Association Service and Business Exhibition Service. Five show-cause notices were adjudicated through a common order, which SIAM challenged before CESTAT.

By its order dated 4 June 2018, the Tribunal set aside the demand and penalties concerning Club or Association Service. The Business Exhibition Service component was remanded for a limited factual examination.

The earlier Bench observed that the Confederation of Indian Industry—CII, which actually organised the Auto Expo—appeared to have discharged service tax on the relevant exhibition revenue. The same amount could not be subjected to service tax twice.

However, differences remained between the revenue-sharing figures certified by CII and exhibition receipts appearing in SIAM’s balance sheets. SIAM attributed the differences primarily to grants received directly from the Government of India.

Scope of Remand: Verify and Reconcile the Difference

The 2018 order directed the adjudicating authority to consider CII’s certificates and the government grants claimed by SIAM while examining the Business Exhibition Service demand.

The purpose was therefore to ascertain the source and explanation of the differences. It was not an unrestricted direction to reconstruct liability without addressing the earlier findings concerning tax already discharged by CII.

Following remand, the adjudicating authority dropped the demands arising from four notices. Nevertheless, it confirmed ₹22,20,086, together with interest and proportionate penalties, concerning the notice dated 26 October 2012.

SIAM challenged this surviving demand.

Appellant’s Case: Accounting Differences Were Not Untaxed Services

SIAM contended that the authority had travelled beyond the scope of the remand and the show-cause notice.

It explained that the demand arose from balance-sheet entries concerning Auto Expo receipts and the timing of their recognition. It also relied on a Chartered Accountant’s certificate and the distinction between amounts recognised under the accrual method of accounting and amounts actually received.

The appellant maintained that CII had already discharged the service tax liability on the exhibition services. Accordingly, an unexplained comparison of accounting figures could not justify taxing the same revenue again.

The Department argued that the balance sheet for financial year 2011–12 differed materially from the Chartered Accountant’s certificate dated 15 February 2023. According to it, the appellant had not satisfactorily explained the discrepancy, and the demand on the differential amount was justified.

Chartered Accountant’s Certificate Could Not Be Summarily Discarded

CESTAT examined the remand directions and found that the adjudicating authority had rejected the Chartered Accountant’s certificate as insufficient evidence because other documents, such as invoices, had not been furnished.

The Tribunal disagreed with that treatment. Referring to Akasaka Electronics Ltd., 2016 (343) ELT 362, it recognised books of account, balance sheets and Chartered Accountant’s certificates as admissible evidence concerning their contents.

It found that the explanation accompanying the records addressed the difference between ₹7,67,82,684 recorded in the books and ₹7,83,73,680 in CII’s income certificate.

The authority had also failed to address the submission that the certificate reflected accrual-based recognition, whereas tax payments related to actual receipts.

The Tribunal’s reasoning required meaningful consideration of the supporting certificate and reconciliation rather than rejection merely because the evidence took an accounting form.

Failure to Address Earlier Findings Violated Judicial Discipline

CESTAT noted that the adjudicating authority remained silent on the earlier Tribunal’s observation that CII appeared to have fully discharged the tax and that the same amount could not be taxed again.

It accepted SIAM’s contention that the authority had travelled beyond the remand terms and failed to observe judicial discipline. The enquiry should have addressed the specified Auto Expo figures and the explanation concerning government grants.

The Tribunal drew support from the Kerala High Court’s decision in P. K. Vijayan v. T. A. Jayaprabha.

It further held that sole reliance on balance-sheet figures, without supporting evidence, was unacceptable, referring to Synergy Audio Visual Workshop Pvt. Ltd. v. Commissioner of Service Tax, Bangalore, 2008 (10) STR 578.

Decision of the Tribunal

CESTAT set aside the challenged adjudication order and allowed SIAM’s appeal. The surviving demand of ₹22,20,086 and its associated consequences therefore did not stand. The Tribunal granted final relief rather than directing another remand.

Author’s Comments

The decision reinforces that an accounting difference is the starting point of an enquiry, not proof of a taxable service. Differences may arise from recognition timing, grants or revenue-sharing arrangements and require transaction-level examination.

A Chartered Accountant’s certificate is relevant evidence, but the ruling should not be understood as making every certificate conclusive regardless of its basis or contrary material. Here, the certificate and explanation were considered alongside the earlier remand findings.

Equally, payment of tax by one entity does not automatically settle every possible liability of another. The protection recognised here concerned the same exhibition revenue, which the earlier Tribunal had specifically addressed.

For practitioners, the strongest reconciliation connects the balance sheet, organiser’s certificate, government grants and tax-payment records while identifying precisely what the remand permits the authority to examine.

Cases Discussed

• Mormugao Port Trust Vs. Commissioner, 2017 (48) STR 69 — Relied on by appellant concerning the contention against taxing the same receipts again.
• CC, Ahmedabad Vs. Krishna Petrochemicals, 2014 (304) ELT 744 (T) — Cited by appellant on adjudication beyond the show-cause notice.
• Commissioner of Central Excise & Customs, Nasik Vs. D.J. Malpani, 2010 (258) ELT 185 — Cited by appellant concerning adherence to remand directions and judicial discipline.
• Toyota Kirloskar Motors Ltd. Vs. CCE, Bangalore, 2012 (286) ELT 690 — Cited by Revenue.
• CCE Vs. Indus Commission, 2010 (256) ELT 216 (Kar.) — Cited by Revenue.
• CCE Vs. Maruti Udyog Ltd., 2011 (274) ELT 321 (SC) — Cited by Revenue.
• Kerala State Electricity Board Vs. CCE, 2008 (9) STR 3 (SC) — Cited by Revenue.
• Akasaka Electronics Ltd., 2016 (343) ELT 362 — Relied upon by Tribunal on admissibility of books, balance sheets and Chartered Accountant certificates.
• P.K. Vijayan Vs. T.A. Jayaprabha, OP(C) No. 389 of 2015 (O) — Relied upon by Tribunal concerning judicial discipline and remand directions.
• Synergy Audio Visual Workshop P. Ltd. Vs. Commissioner of ST, Bangalore, 2008 (10) STR 578 (Tri.-Bang.) — Relied upon by Tribunal against sole reliance on balance-sheet figures without supporting evidence.

FULL TEXT OF THE JUDGMENT/ORDER OF CESTAT, NEW DELHI

1. M/s Society of Indian Automobile Manufacturers is a society registered under Society Registration Act, 1860 with effect from 27.05.1998 with the aim to promote and protect the trade, commerce, manufacture and industries of India particularly the automobile industry. The appellant is also registered with the Service Tax department for providing taxable service of “Club or Association Service” with effect from 08.11.2010. The aforesaid service had come into tax net with effect from 16.06.2005 but the appellant was rendering the same even prior the appellant got itself registered “Business Exhibition Service” were also being rendered by the appellant without being registered. Both being taxable services, the service tax, therefore, was not paid by the appellant. Based on these observations, a Show Cause Notice No. 251/2012-13 dated 26.10.2012 was served upon the appellants proposing demand of service tax of Rs. 57,49,132/- up to the period 30.09.2008 was served upon the appellant.

1.1 Prior also following show cause notices were issued:

2. We have heard Ms. Rupali Singh, learned Advocate for the appellant and Shri Rakesh Kumar, Learned Authorized Representative for Revenue.

3. Learned counsel for the appellant has submitted that the adjudicating authority has travelled beyond the scope of remand order and even the proposal of the show cause notice. It is submitted that the demand is calculated based on the balance sheet figure of the appellant showing the surplus which was received by the appellant for Auto Expo, 2012 at the time of Auto Expo, 2010 itself which was added in the income of the appellant for financial year 2011-12. Learned counsel also submitted that service tax liability on “Business Exhibition Service” has already been 2 discharged by M/s Confederation of Indian Industries who had actually organized the Auto Expos. Hence service tax on the same amount has wrongly been demanded from the appellant. Decision 3 in the case of Mormugao Port Trust Vs. Commissioner has been relied upon. The decision in the case of CC, Ahmedabad Vs. 4 Krishna Petrochemicals has also been relied upon, while alleging that original authority has committed an error due to travelling beyond the scope of show cause notice. Finally, it is submitted that directions of remand order were to be strictly complied with. The absence thereof, is violation of the judicial discipline. The order is liable to be set aside. Decision in the case of Commissioner of 5 Central Excise & Customs, Nasik Vs. D.J. Malpani is relied upon. With these submissions, the order under challenge is prayed to be set aside and the appeal is prayed to be allowed.

4. While rebutting these submissions, learned Departmental Representative has impressed upon that while complying with the directions of the remand, the demand for previous four show cause notices has been dropped of CII’s certificates and the payment of tax by them to be duly corroborated by the Chartered Accountant certificate has duly been considered. However, for the financial year 2011-12 (the show cause notice dated 26.10.2012) a remarkable difference in the figures was noted in the balance sheet for financial year 2011-12 and the Chartered Accountant’s certificate dated 15.02.2023. The service tax demand of Rs. 22,20,086/- has rightly been confirmed on the said differential amount. The discrepancy has nowhere been explained by the appellant. Impressing upon no infirmity in the order under challenge. The present appeal is prayed to be dismissed. Learned Departmental Representative has relied upon the following decisions:

(i) Toyota Kirloskar Motors Ltd. Vs. CCE, Bangalore6;

(ii) CCE Vs. Indus Commission7’

(iii) CCE Vs. Maruti Udyog Ltd.8’

(iv) Kerala State Electricity Board Vs. CCE9

5. Having heard both the parties, we observe the impugned order to have been passed pursuant to the directions of remand vide Final Order of this Tribunal bearing No. 52124-52128/2018 dated 04.06.2018. We have perused the directions as below:

“11. So far as demand of service tax on the revenue from the Business Exhibition Service is concerned, we are of the view that from the record produced by the appellant it appears that service tax has fully been discharged by M/s CII (who has actually organized the auto-expo) in this case. Since the M/s CII have discharged their service tax liability, we are of the view that the same amount cannot be charged to service tax twice, however, there are some differences between the amount of revenue sharing certified by M/s CII and the amount which is shown as receipt from the such exhibition in balance sheets of the appellant for various financial years (which are also subject matter of the present show cause notices and order-in-originals). The learned Advocate has contended that the difference is primarily on account of certain grants received by them directly from the Government of India for promoting trade and industry. Since this is only a matter of fact which is to be verified by the field level officers, we are inclined to send the proceedings for denovo adjudication only on the question of service tax demand under category of Business Exhibition Service. We also direct the Original Adjudicating Authority that be needs to take into consideration the certificates issued by M/s CII as well as the other grants which the appellant is claiming to have been received from the Government of India for facilitating the exhibition of automobiles for the promotion of the trade and industry for the country.”

5.1 The perusal makes it clear that the only direction was ascertained about the difference between the revenue sharing certified by M/s CII and the amount shown as receipt from such exhibition in the balance sheet of the appellant. The appellant was required to prove that they had received some grants directly from the Government of India for promoting trade and industry and the noticed difference is primarily due to the said grants received. We observe that the adjudicating authority while adjudicating the plea of the appellant about grants received by them directly from the Government of India has relied upon the certificate of appellant’s/ Chartered Accountant. As no other document like invoice etc. was produced by the appellant except the balance sheet, the certificate has been denied to be the cogent evidence by the adjudicating authority while confirming the impugned demand.

6. We do not agree with the observations of the original adjudicating authority that the Chartered Accountant’s certificate is not the conclusive evidence. The law has otherwise been settled that the documents as that of books of account as well as the Chartered Accountant’s certificates are admissible into evidence vis- à-vis the contents therein. We draw our support from the decision 10 in the case of Akasaka Electronics Ltd. wherein it is held that books of account, balance sheets, Chartered Accountant’s certificate are sufficient admissible documents for proof of contents in those documents.

7. The said mention clearly explains the difference in amount recorded in the books of account i.e. Rs. 7,67,82,684/- and the amount in income certificate issued by CII’s i.e. 7,83,73,680/-. In addition the appellant had duly submitted that the said income certificate had been made based on accrual method of accounting i.e. the amount used to be booked whenever an invoice used to be raised whereas taxes were paid on the actual amount received. We observe that the original adjudicating authority is silent about the said submission. The aforesaid Final Order has already observed that the service tax liability seems fully discharged by M/s CII and that the same amount cannot be charged to service tax again. The impugned order is silent to this observation also.

8. Resultantly, we accept the submissions of the appellant that the original adjudicating authority has travelled beyond the terms of the remand order/the final order dated 04.06.2018. The only thing to be enquired was the figures of Auto Expo 2010 as the appellant 11 had submitted to be the grant directly from the Government. Thus it is held that the authority has failed to observe the judicial discipline. We draw our support from the decision of Kerala High 12 Court in the matter of P.K. Vijayan Vs. T.A. Jayaprabha. Also we hold the sole reliance on the balance sheet figures is also not acceptable in absence of any supporting evidence. We draw our support from the decision in the case of Synergy Audio Visual 13 Workshop P. Ltd. Vs. Commissioner of ST, Bangalore.

9. In view of the entire above discussion, we hereby set aside the order under challenge. Consequent thereto, the appeal stands allowed.

(Pronounced in open Court on 12.10.2026)

Notes:

1 the appellant

2 M/s CII

3 2017 (48) STR 69

4 2014 (304) ELT 744 (T)

5 2010 (258) ELT 185

6 2012 (286) ELT 690

7 2010 (256) ELT 216 (Kar.)

8 2011 (274) ELT 321 (SC)

9 2008 (9) STR 3 (SC)

10 2016 (343) ELT 362