Case Law Details
AIMS Industries Limited Vs Commissioner of CGST & Central Excise (CESTAT Ahmedabad)
CESTAT Ahmedabad allowed the appeal filed by AIMS Industries Limited and remanded the matter to the Commissioner (Appeals) for fresh adjudication after providing an opportunity to rectify procedural defects and hearing the case on merits. The dispute concerned service tax demand of ₹4,88,712 on retention or detention charges collected by the appellant from customers for delayed return of gas cylinders supplied along with industrial gas. The Department treated such charges as consideration for “Supply of Tangible Goods Service” under the Finance Act, 1994. The appellant argued that the cylinders remained under the effective control and possession of customers during the retention period and that the charges were merely to discourage unnecessary blocking of its assets. The appellant also relied on earlier decisions in its favour and other judicial precedents involving similar issues.
However, the Commissioner (Appeals) dismissed the appeal on technical grounds without examining the merits. The defects noted included absence of complete contact details, lack of proper disclosure of the authorized signatory’s designation, deficiencies in authorization documents, and inconsistencies in the appeal papers regarding the adjudicating authority. The Commissioner (Appeals) also noted that the appellant’s advocate had requested disposal without personal hearing despite multiple hearing dates being fixed.
CESTAT observed that the defects identified were curable in nature and should not have resulted in outright dismissal of the appeal without granting adequate opportunity to rectify them. The Tribunal noted that three personal hearing dates had been granted within a short span of seven days, which was contrary to principles of natural justice. Relying on earlier decisions including A R Thermosets Pvt Ltd and Bajaj Hindustan Ltd., the Tribunal reiterated that procedural defects such as missing signatures, authorization deficiencies, or filing irregularities are curable and cannot be treated as fatal defects warranting dismissal of appeals without hearing the appellant.
Accordingly, the Tribunal set aside the order of the Commissioner (Appeals) and remanded the matter with directions to permit the appellant to cure defects and thereafter decide the case afresh in accordance with principles of natural justice.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal has been filed by M/s AIMS Industries Ltd, GIDC Sachin, Surat (Appellant) against the impugned order dated 29.04.2014 of the learned Commissioner (Appeals). The appellants are engaged in supply of gas in cylinders. The appellant allows their customers to retain the cylinders free of charge for a specific period of time. Wherever there is a delay in return of empty cylinders by the customers, appellant charged a certain amount from them. The present demand of service tax pertains to that extra sum collected by the appellant treating the said activity as supply of tangible goods service. The appellant has mentioned that Learned Commissioner (Appeals) has dismissed the issue on technical grounds without discussing on merits.
2. vThe appellant was issued a show cause notice on 23.04.2012 covering the period from 16.05.2008 to 31.03.2012 for demanding service tax of Rs. 4,88,712/- under Proviso to Section 73(1) of the Finance Act, 1994 along with interest under Section 75 of the Finance Act. The said show cause notice was decided by the Assistant Commissioner vide order dated 16.01.2014 wherein he confirmed the above service tax amount along with interest and also imposed equal penalty under Section 78 and a penalty of Rs. 5000/- under Section 77 of the Finance Act, 1994. The appellants were also not successful in their appeal filed before the Learned Commissioner (Appeals), who rejected their appeal and confirmed the order of the Assistant Commissioner.
3. In their appeal, the appellant took the following grounds:-
- Their appeal has been rejected on technical ground instead of deciding the matter on merits. Revenue has demanded service tax on the amount collected as retention charges of cylinders towards supply of tangible goods service. Earlier also, in respect of their Ahmedabad unit and Daman unit, the revenue issued show cause notices for demanding excise duty by including the said retention charges in the value of gas supplied to the customers. Those matters have been settled by various decisions of the CESTAT in their favour.
- Cylinders are the property of the appellant for which they have incurred huge investment. They recover detention or retention charges so that the customers do not unnecessarily block their assets. For demanding service tax under “Supply of Tangible Goods Service”, it is essential that such goods including machinery, equipment and appliances are given to the recipient for use, without transferring right of possession and effective control of such machinery, equipment and appliances. In this case, during the period of retention, cylinders remain in possession of the customers with effective control vested in the said customer. Neither the appellant has possession nor effective control on such cylinders and therefore, service tax under the said service category is not recoverable from them.
In view of the above, they prayed for allowing the appeal by setting aside the impugned order. The appellant also enclosed copy of the agreement entered into with customer/dealers for supply of gas.
4. During hearing, Learned Advocate mentions that the matter has already been decided in following decisions as well as in appellant’s own case. He prayed for allowing the appeal by setting aside the impugned order.
- Appeal No. i) ST/922/2012/DB, ii) St/10500/2015-DB iii) E/11982/2018 & several connected matters in their case.
- Karnataka Oxygen Ltd. Vs. Stat Chennai – 2022(381) ELT 590(Mad).
- MSPL Ltd. Vs. CCE Belgaum – 2023(69) GSTL 289(Tri-.Bang). Also confirmed by Supreme Court in 2023(69) GSTL 225(Se).
- Express Engineers and Spares Private Limited vs. Commissioner of CGST Ghaziabad – 2022 (64) GSTL 112(Tri.-All)
- K-Air Specialty Gases Private Limited vs CCE Pune – 2017(4) GSTL 379(Tri-Mumbai).
- Metheson K Air India Private Limited Vs. CCE and ST Pune – 2018 (18) GSTL 438(Tri-Mumbai).
- Satishkumar and company vs. CCE Nagpur, – 2019(22) GSTL 269(Tri-Mumbai).
5. Learned AR mentioned that the nomenclature or intended purpose does not change the nature of the transaction. By allowing the customers to retain cylinders beyond the free period for a fee, the appellant is providing a taxable service and the said amount is includable in the consideration amount. He also mentions that for supply of tangible goods service, the right of possession and effective control must remain with the provider, which in this case, is with the appellant. As per the contract entered in to between the appellant and their dealers (copy enclosed in appeal book), the customer merely has physical custody of cylinders till he consumes the gas but the effective control is with the appellant. In view of the above, learned AR prayed for upholding the order of the lower authority and rejecting the party’s appeal.
6. Heard both the sides and seen the case records. We find that learned Commissioner (Appeals) has dismissed party’s appeal on the following grounds:-
a. Bare address of the Company/Advocate is given in the appeal papers and no other contact information like telephone number or mobile number or email address is given.
b. In appeal proforma ST-4, it is declared that Mr Yogen V Mahadevia, Advocate from Vadodara is engaged for the appeal and the notices may be sent to him at his Vadodara address. ST-4 is signed by the authorised signatory without disclosing his name and designation in the company and is also signed by the above Advocate. There is also no authority as given by the Company to such person, to sign ST-4 and ST-5 appeal on behalf of the company.
c. 3 dates for personal hearing on 22.04.2014, 24.04.2014 & 29.04.2014 were given but learned Advocate in response requested for granting unconditional stay or dispose the appeal without any personal hearing.
d. In the appeal papers, dispute has been shown between AIMS Industries Ltd. Vs. Deputy Commissioner, Central Excise, Customs and Service Tax divisions, North Daman, whereas, order is passed by Assistant Commissioner, Central Excise Division-V Surat-I Commissionerate. Such fundamental mistakes in basic legal document like Vakalatnama is not acceptable and appeal not maintainable.
6.1 Learned Commissioner (Appeals) has dismissed the appeal filed by the party for above defects without going into merits of the case. The defects as pointed out above, are no doubt, of curable nature and those should have been got cured by giving the opportunity to the appellant. Rejection of appeal for curable defects is not desirable in the interest of justice. The fact show that three opportunities of personal hearings have been granted within a time gap of just 7days which is also against the principles of natural justice. We find that this Tribunal in the case of A R Thermosets Pvt Ltd Vs. Commissioner of Customs, Mundra reported at 2024 (388) ELT 224 (Tri.-Ahmd.) has held that when deficiency in the appeal filed before the Commissioner (Appeals) is curable, the same could have been corrected and these cannot be a ground for rejection of appeal itself. Relevant para 5 of the said order is reproduced below:-
U5. It is seen that Custom House Agent cannot file appeal under his signature and authorization. Such signature or authorization can be made only if the importer is not in India at the material time and the Custom House Agent or any other person duly authorized for filing appeal in terms of Rule 3 of Customs Appeal Rules, 1982. This deficiency should have been pointed out by the Commissioner (Appeals) to the appellant and the same could have been corrected. This cannot be a ground for rejection of appeal itself. In the interest of justice, we set aside the impugned order and remand the matter back to the Commissioner (Appeals) to treat this as a defect and offer an opportunity to the appellant to correct the same in terms of Rule 3 of the Custom Appeals Rules, 1982.”
6.2 Cestat Delhi in the case of Bajaj Hindustan Ltd Vs. Commissioner of Central Excise, Allahabad reported at 2002 (419) ELT 529(Trib-Del.) also ruled that- Defect in the filing of the appeals, on account of the non-signatures of the appellants on the memo of appeal and the verification, was curable and not a fatal for throwing away their appeals on that technical ground without hearing them.” Para 3 of the Said order is reproduced below:-
U3. Even if it is accepted that the grounds of appeals were not signed by the appellants themselves as per the requirement of Rule 213(2) of the Central Excise Rules but were signed by their Counsel, still there is nothing on the record to suggest that the Commissioner of Central Excise (Appeals) ever afforded any opportunity to the appellants to remove this defect. The defect in the filing of the appeals, on account of the non-signatures of the appellants, on the memo of appeal and the Verification, was curable and not a fatal for throwing away their appeals on that technical ground without hearing them Therefore, on the face of it, we are of the opinion that the order of the Commissioner (Appeals) is bad in law. The Commissioner (Appeals) should have in the interest of justice given the appellants an opportunity to remove the defect, by putting their signatures on the memo of appeals and the Verification, especially when the appeals were signed by their Counsel to whom they had authorised to file the same.”
6.3 In view of the above, we remand the matter to learned Commissioner (appeals) to give opportunity to the party to rectify defects/shortcomings in their appeal and thereafter, the matter may be decided afresh by following the principles of natural justice.
7. The appeal is allowed by way of remand.
(Pronounced in the open court on 23.04.2026)
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