Veesons Energy Systems Pvt. Ltd Vs Commissioner of GST and Central Excise (CESTAT Chennai)
In a significant ruling concerning the interplay between the Insolvency and Bankruptcy Code (IBC) and indirect tax proceedings, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Chennai, has dismissed a service tax demand against Veesons Energy Systems Pvt. Ltd. The Tribunal concluded that the demand, which was not formally claimed by the department during the corporate debtor’s liquidation process, could not be pursued, citing the principles laid down by the Supreme Court and the Tribunal’s own procedural rules.
The case, Veesons Energy Systems Pvt. Ltd. Vs. Commissioner of GST and Central Excise, highlights the critical necessity for government departments to register their claims within the stipulated insolvency resolution or liquidation framework, failing which, their demands may stand extinguished.
Background of the Service Tax Demand
Veesons Energy Systems Pvt. Ltd., based in Trichy, was engaged in manufacturing boiler parts and agro waste boilers, alongside rendering taxable services such as “Consulting Engineering Service,” “Erection, Commissioning and Installation Service,” and “Business Auxiliary Service.” The company was also registered as a service recipient for “Transport of Goods by Road” and as an “Input Service Distributor.”
The dispute originated when tax authorities observed that Veesons Energy Systems had allegedly not paid service tax under “Goods Transport Agency Services” on freight amounts paid to M/s. Gaerish Logistics (P) Ltd., Chennai, a C&F Agent handling their export goods. A Show Cause Notice (SCN) was issued on October 4, 2013, demanding Rs. 1,74,515 for the period January 2011 to October 2011, contending that the company was not eligible for exemption under Notification No. 18/2009-ST due to non-submission of consignment notes. Veesons Energy Systems maintained its eligibility for the exemption, arguing that M/s. Gaerish Logistics was a C&F agent whose non-taxable transactions included ocean freight and container transportation charges.
