Aircel Limited Vs The Commissioner of Central Excise and Service Tax (CESTAT Chennai)
CESTAT Chennai held that Revenue cannot take a different stand when the Revenue has accepted the principles laid down in a previous case. Accordingly, demand cannot be sustained.
Facts-
The appellant viz., M/s. Aircel Limited, Coimbatore is a provider of taxable service under the category of “Telecommunication Service”. They provide telecommunication service to all the subscribers in the areas comprised in the jurisdiction of the State of Tamil Nadu except Chennai City.
In respect of the subscribers comprised in the territorial jurisdiction of Chennai City, such service is provided by their associate company viz., M/s. Aircel Cellular Limited (hereinafter referred to as `ACL’).
In order to provide flexibility to customers, both M/s. Aircel Ltd. (appellant) and M/s. ACL introduced common recharge facility. As per the modus operandi, the amount due to each of these companies was settled between these companies through credit notes raised on each other.
M/s. Aircel Ltd., who is the appellant herein, had filed ST-3 returns for the period from 01.10.2007 to 31.03.2008 on 23.04.2008. Subsequently, they filed revised return for the same period on 03.07.2008 along with a letter dated 30.06.2008 wherein they had explained the circumstances under which the revised return was filed. They also furnished copies of the credit notes raised.
On perusal of the revised return, it appeared to the Department that the appellant had contravened the provisions of Rules 6(3), 6(4) and 6(4A) of the Service Tax Rules, 1994 since they had wrongly adjusted the excess paid Service Tax towards the payment of Service Tax pertaining to a latter period and on account of such wrong adjustment, there was short payment of Service Tax to the tune of Rs.2,19,36,614/-.
A Show Cause Notice No. 04/2009 dated 01.07.2009 was issued to the appellant proposing to demand the short-paid Service Tax along with interest and also for imposing penalties. After due process of law, the Original Authority vide order impugned herein confirmed the demand along with interest and also imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal.
The appellant has mainly relied on the decision rendered in the case of their associate company viz. M/s. ACL vide Order-in-Original No. 68/2011 dated 30.11.2011 on the very same issue. It has to be noted that the demand against the associate company M/s. ACL arises out of the other leg of the very same transaction.
Conclusion-
The Hon’ble Apex Court in the case of M/s. Birla Corporation Ltd. has held that the Revenue cannot take a different stand when the Revenue has accepted the principles laid down in a previous case.
The Learned Authorized Representative for the Department has not been able to counter the submission made by the Learned Counsel for the appellant that the Department has not appealed against the Order-in-Original dated 30.11.2011 passed in the case of the associate-company viz. M/s. ACL. We, therefore, have to hold that the issue being identical, is squarely applicable to the case before us.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts of the case are that the appellant viz., M/s. Aircel Limited, Coimbatore is a provider of taxable service under the category of “Telecommunication Service”. They provide telecommunication service to all the subscribers in the areas comprised in the jurisdiction of the State of Tamil Nadu except Chennai City. In respect of the subscribers comprised in the territorial jurisdiction of Chennai City, such service is provided by their associate company viz., M/s. Aircel Cellular Limited (hereinafter referred to as `ACL’). In order to provide flexibility to customers, both M/s. Aircel Ltd. (appellant) and M/s. ACL introduced common recharge facility. By such common recharge facility, when the subscribers of M/s. Aircel Ltd. visit Chennai, they can utilize the services of the dealers and distributors of M/s. ACL for the purchase of recharge cards/top-up cards. Similarly, when the subscribers of M/s. ACL visit places in the territorial jurisdiction of the State of Tamil Nadu other than Chennai, the subscribers can utilize the services of the dealers and distributors of M/s. Aircel Ltd. for the purchase of recharge cards/top-up cards. At the time of sale of the recharge cards/top-up cards, the respective dealers collected appropriate Service Tax due thereon from the customers and paid into the Government account every month. The amount due to each of these companies was settled between these companies through credit notes raised on each other.
2.1 M/s. Aircel Ltd., who is the appellant herein, had filed ST-3 returns for the period from 01.10.2007 to 31.03.2008 on 23.04.2008. Subsequently, they filed revised return for the same period on 03.07.2008 along with a letter dated 30.06.2008 wherein they had explained the circumstances under which the revised return was filed. They also furnished copies of the credit notes raised.
2.2 On perusal of the revised return, it appeared to the Department that the appellant had contravened the provisions of Rules 6(3), 6(4) and 6(4A) of the Service Tax Rules, 1994 since they had wrongly adjusted the excess paid Service Tax towards the payment of Service Tax pertaining to a latter period and on account of such wrong adjustment, there was short payment of Service Tax to the tune of Rs.2,19,36,614/-.
3. A Show Cause Notice No. 04/2009 dated 01.07.2009 was issued to the appellant proposing to demand the short-paid Service Tax along with interest and also for imposing penalties. After due process of law, the Original Authority vide order impugned herein confirmed the demand along with interest and also imposed penalties. Aggrieved by such order, the appellant is now before the Tribunal.
4.1 Learned Counsel Shri Raghavan Ramabadran appeared and argued on behalf of the appellant. He submitted that the appellant is engaged in providing telecommunication services to the subscribers in the State of Tamil Nadu excepting Chennai; M/s. ACL is a group company who had licence for providing telecommunication services to subscribers within Chennai only. That from August 2007, the appellant and M/s. ACL had introduced the facility of common recharge for each other’s subscribers whereby the appellant and M/s. ACL could sell Recharge Vouchers (RCVs) or Start-Up Kits (SUKs) to subscribers through their respective dealers so as to provide flexibility to their subscribers. To illustrate, the Learned Counsel for the appellant explained that when subscribers of M/s. ACL travel within the telecommunication circle of the appellant, they could recharge or top-up using RCVs sold by the appellant through its dealers and vice versa. The diagrammatic representation of the flow of transaction, as given by the Learned Counsel for the appellant, is as under:-
situation-
