Mira Textiles and Industries Private Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)
The appellant, a manufacturer of corrugated paper cartons and paper trays, challenged the Order-in-Appeal dated 27.10.2016 concerning service tax liability under the reverse charge mechanism (RCM) on Goods Transport Agency (GTA) services for the period April 2012 to March 2014. The Revenue alleged that the appellant had failed to pay service tax under Notification No. 30/2012-ST dated 20.06.2012 after verification of its accounts.
The appellant submitted that, upon the short payment being pointed out, it paid the entire tax demand of ₹4,84,990. During adjudication, the demand was confirmed to the extent of ₹4,20,811 and an equal penalty was imposed under Section 78 of the Finance Act, while the balance amount deposited was appropriated towards interest, which was also paid. The Commissioner (Appeals) reduced the penalty to 50% under Section 78(1), but the appellant continued to challenge the invocation of the extended period of limitation and the penalty.
The appellant argued that there was no suppression or wilful misstatement because the entire demand had been computed from figures available in its balance sheet and profit and loss account. It further submitted that the position was revenue neutral since it was entitled to avail credit of the tax paid. The Revenue contended that the appellant had deliberately concealed information with intent to evade payment of duty.
The Tribunal observed that the demand had been worked out entirely from the appellant’s books of accounts and held that information derived from the assessee’s accounts cannot constitute suppression for invoking the extended period of limitation. It further found that the Revenue had failed to establish any positive act demonstrating an intention to evade payment of duty. The Tribunal also noted that the matter was revenue neutral.
Accordingly, the Tribunal held that invocation of the extended period was unsustainable and the demand for that period was time-barred. Since the appellant had already paid the amount and was entitled to credit, the Tribunal directed maintenance of status quo regarding the duty payment while permitting the appellant to avail credit of the amount paid. Finding no material to establish concealment or suppression, the Tribunal set aside the penalty imposed under Section 78, modified the order of the lower authority to that extent, and allowed the appeal.
Cases Discussed
- M/s. Sutherland Global Services Private Limited Vs. Commissioner of GST and C. Ex., Chennai (CESTAT Chennai), 2025 (7) TMI 74 – CESTAT CHENNAI
- Mahindra Reva Electric Vehicles Pvt. Ltd., (Formerly known as Reva Electric Car Company Pvt. Ltd., Vs. The Commissioner of Service Tax, Bangalore (CESTAT Bangalore), 2025 (7) 638 – CESTAT Bangalore
- M/s. ITC Limited Vs. Commissioner of GST & C. Ex., Coimbatore (CESTAT Chennai), 2025 (6) TMI 1967 – CESTAT CHENNAI
- M/s. Vendanta Ltd., Vs. Commissioner of GST & C.Ex., Tirunelveli (CESTAT Chennai), 2023 (9) TMI 1063 – CESTAT CHENNAI
- M/s. Para Enterprises Private Ltd (Formerly M/s Pioneer Wincon Private Ltd.,) Vs. Commissioner of Service Tax (CESTAT Chennai), 2023 (9) TMI 812 – CESTAT CHENNAI
- Coface India Credit Management Vs Commissioner of CGST, Final Order No. A/85024/2023 dated 10.01.2023
FULL TEXT OF THE CESTAT CHENNAI ORDER
The appellant is a manufacturer of corrugated paper cartons and paper trays falling under heading number 4819 and 4823 of the Central Excise Tariff Act 1985 and is aggrieved by the Order in Appeal No. 104/2016-ST dated 27.10.2016. The appellant submits that during the period April 2012 to March 2014, the appellant had incurred freight charges for transportation of goods by road. It is the case of the revenue that during the course of verification of accounts of the appellant, it was noticed that they had not paid service tax under reverse charge mechanism (RCM) in terms of Notification Number 30/2012-ST dated 20.06.2012, for availing the services of a GTA.
2. Upon being pointed out the appellant submits that the entire tax demand raised for Rs.4,84,990/- was recouped to the government. The learned advocate further submits that during the course of adjudication proceedings the adjudicating authority confirmed the demand of Rs. 4,20,811/- and imposed a penalty of equal amount in terms of Section 78 of the Finance Act. The learned advocate submits that the balance amount deposited by them was appropriated by the authorities towards interest liability, which they have now paid in full. It is his case that (a) the invocation of extended period in terms of provision Section 73 (1) of the Finance Act 1994 is misplaced as no information was concealed from the department and (b) the aforesaid demand raised was based on the figures indicated in their books of accounts viz., balance sheet and profit and loss accounts, available in public domain. The appellant strongly disputes invocation of penalty also in view of the stated position.
3. The Commissioner (Appeals), vide the impugned order, reduced the penalty imposed by the adjudicating authority to 50% in terms of the provisions of Section 78 (1). However, the grouse of imposition of penalty on the appellant still remains.
4. The learned AR for the revenue justifies the invocation of the penalty stating that the appellant had deliberately concealed the requisite information with intent to evade payment of duty.
5. Heard both sides and perused the records.
6. The contention of the appellant is twofold, (a), that there was no intent for any suppression or willful misstatement etc. and that no sooner the short levy was pointed out, the appellant had made it good along with interest, even before the adjudication of the matter. He submits that the information on which basis the demand has been raised has been culled out by the authorities from their books of accounts and it is a settled position that if the demand is based on balance sheet figures and other documents of the assessee, the demand for extended period on grounds of suppression through concealment with intent to evade payment of duty would not be sustainable.
7. The learned advocate has further pointed out that in any case the position is revenue neutral and they were entitled to avail the credit of the said duty paid which further only reinforces their contention, that there was no intent for evading the payment of duty. He submits that the said question is no more res integra and has been decided in a slew of cases. The appellant has placed reliance on the following case laws, in support of his arguments.
- M/s. Sutherland Global Services Private Limited Vs. Commissioner of GST and C. Ex., Chennai – 2025 (7) TMI 74 – CESTAT CHENNAI
- M/s. Para Enterprises Private Ltd (Formerly M/s Pioneer Wincon Private Ltd.,) Vs. Commissioner of Service Tax – 2023 (9) TMI 812 – CESTAT CHENNAI
- Mahindra Reva Electric Vehicles Pvt. Ltd., (Formerly known as Reva Electric Car Company Pvt. Ltd., Vs. The Commissioner of Service Tax, Bangalore – 2025 (7) 638 – CESTAT Bangalore
- M/s. ITC Limited Vs. Commissioner of GST & C. Ex., Coimbatore – 2025 (6) TMI 1967 – CESTAT CHENNAI
- M/s. Vendanta Ltd., Vs. Commissioner of GST & C.Ex., Tirunelveli – 2023 (9) TMI 1063 – CESTAT CHENNAI.
- Coface India Credit Management Vs Commissioner of CGST (Final Order No. A/85024/2023 dated 10.01.2023).
8. The fact that the authorities have worked out the impugned demand from the books of accounts of the appellant justifies the fact that there was no intent for suppression of the figures on part of the appellant. It is a central proposition in law that the information as derived from the accounts maintained by the assessee cannot be a substantive ground for invoking suppression and therefore invocation of extended period of limitation is uncalled for. The revenue has also failed to demonstrate any positive act on the part of the appellant in their charge for intent to evade payment of duty. Also, it is an admitted position that the situation in any which case would be revenue neutral. It is thus obvious that the question of invocation of extended period goes in favour of the appellant and the demand for the said period is therefore time barred. However, in view of the fact that the appellant has already made good the said amount and is entitled for credit thereto, the position being revenue neutral, and in order to give quietes to the dispute, I direct status quo ante to be maintained in the matter, as far as payment of duty is concerned. The appellant shall however be entitled to avail credit on the amount paid to the revenue towards duty on this count.
9. As there is nothing substantive to establish concealment of
information and suppression on part of the appellant, there is no justification in subjecting the appellant to penal liability. The same is therefore set aside. The order of the lower authority is modified to the said extent.
10.In the result, the appeal filed by the appellant is allowed, in the aforesaid terms.
(Order pronounced in the open court on 01.07.2026)
