Case Law Details
Parth Enterprises Vs Commissioner of CGST & C. Ex. (CESTAT Mumbai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, allowed the appeal filed against the Order-in-Appeal dated 06.10.2023 concerning service tax demand raised for financial years 2015-16, 2016-17, and 2017-18 (up to June 2017). The appellant, registered for providing taxable services including Legal Consultancy Services, Maintenance or Repair Service, and Construction of Residential Complex Services, was issued a show cause notice dated 21.12.2020 after the department compared data received from the Directorate General of Systems & Data Management with Income Tax returns. The department alleged non-payment of service tax on taxable services valued at Rs.11,31,000 for FY 2015-16, Rs.13,57,200 for FY 2016-17, and Rs.4,07,160 for FY 2017-18. A service tax demand of Rs.4,28,649 with interest and penalties was proposed.
The adjudicating authority partly dropped the demand and determined tax liability at Rs.1,63,995 after considering certain amounts received as salary income. However, the benefit of exemption under Notification No. 33/2012-S.T. dated 20.06.2012 was denied. The Commissioner (Appeals) upheld this order.
Before the Tribunal, the appellant stated that registration was obtained to secure a bank loan for providing taxable services. It was also submitted that due to an accident during 2016-17, the appellant remained bedridden and could not provide legal consultancy services to co-operative housing societies. The appellant contended that he fulfilled all conditions for availing the general exemption under Notification No. 33/2012-S.T., under which taxable services up to Rs.10 lakh in a financial year are exempt from service tax, subject to specified conditions.
The Tribunal observed that after deducting Rs.3,62,561 treated as salary income, the confirmed taxable value was Rs.7,68,439, which was below the threshold exemption limit of Rs.10 lakh. It further noted that the appellant was an individual providing Legal Consultancy Services only and there was no allegation of availing CENVAT credit or rendering services under a brand or trade name. Therefore, the appellant satisfied the conditions for availing the exemption notification.
The Tribunal also held that the finding of the lower authorities that the appellant had already availed exemption in 2014-15 due to service tax registration was unsupported by evidence and lacked legal basis. Since the aggregate taxable value remained below the exemption threshold, the Tribunal concluded that there was no requirement for payment of service tax. The impugned order was accordingly set aside and the appeal was allowed.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal has been filed by M/s Parth Enterprises, Dombivli East (herein after, for short, referred to as ‘the appellant’) assailing against the Order-in-Appeal No. KKS/159/Appeals/Thane/TR/2023-24 dated 06.10.2023 (herein after, referred to, as ‘the impugned order’) passed by the Commissioner of GST & Central Excise (Appeals-Thane), Mumbai.
2. The brief facts of the case are that the appellant is a service provider duly registered with the jurisdictional Service Tax authority vide Service Tax Registration No. AFPPP5913BSD001 for providing taxable services viz., Legal Consultancy Services, Maintenance or Repair Service, Construction of Residential Complex Services etc. The jurisdictional Service Tax authorities on the basis of data received from Directorate General of Systems & Data Management compared with the Income Tax (IT) Returns filed by the appellant for financial year 2015-16 had come to conclusion that the appellant has provided taxable services of value Rs.11,31,000/- on which they had not discharged the service tax liability. For the subsequent years 2016-17 and 2017-18 (up to June, 2017), it was also indicated in the IT returns that the appellant has provided taxable services valued at Rs.13,57,200/- and Rs.4,07,160/-, respectively. Since there was no ST-3 Returns filed, the department had also issued service tax demands for the aforesaid period on the basis of best judgement method. A Show-Cause Notice (SCN) dated 21.12.2020 was issued for demand of service tax of Rs.4,28,649/- along with interest under Section 73(1) of the Finance Act, 1994 and for imposition of penalties under Sections 77 and 78 ibid along with late fee. The show-cause notice dated 21.12.2020 was adjudicated by the original authority vide Order-in-Original dated 01.09.2022 wherein after perusal of the details submitted by the appellant, he determined the tax liability as Rs.1,63,995/- by dropping the demand of Rs.2,64,654/-, besides he imposing penalties under Sections 77 & 78 ibid and late fee of Rs.60,000/- on the appellant. However, he did not extend the benefit of exemption Notification No. 33/2012-S.T. dated 20.06.2012 claimed by the appellant. Being aggrieved with the order of the original authority, the appellant had preferred an appeal before the Commissioner (Appeals), who had rejected the appeal by upholding the order of the original authority vide Order-in-Appeal dated 06.10.2023 (which is impugned herein). Feeling aggrieved with the impugned order, appellant has filed this appeal before the Tribunal.
3. Heard both sides and perused the case records. Also heard the plea made by the appellant in person, explaining the requirement for which he had to register with jurisdictional service tax authorities as well as the details of registration. The appellant submitted that he is registered with the jurisdictional Service Tax authorities in order to enable him to take bank loan for providing taxable services. However, due to an accident, he was bedridden during period 2016 to 2017 and could not provide the Legal Consultancy Services to the Co-operative Housing Societies. Further, he had also received certain amount as salary income, which was duly taken into account by the original authority in dropping the part of the demand raised in the show-cause notice. He pleaded that he is eligible for the general exemption provided under Notification No. 33/2012-S.T. dated 20.06.2012 and the same has not been extended by the authorities below. He stated that he fulfills all the requirements for availing the exemption benefit and thus, the taxable value of services, if such exemption is provided, would be below the threshold limit and there will be no service tax demand requiring him to pay, in his case.
4. Learned AR reiterates the order of the lower authorities.
5.1 On careful perusal of the facts on record, it transpires that the total taxable value for which the service tax demand was confirmed by the original authority is Rs.7,68,439/- [Rs.11,31,000 – Rs.3,62,561 (Rs.1,73,800 + Rs.1,88,761). On plain reading of the Notification dated 20.06.2012, it transpires that it is a general exemption provided in public interest by the Central Government in exercise of the powers vested with them under Section 93(1) of the Finance Act, 1994. The exemption is from the payment of service tax on the aggregate value of taxable services not exceeding Rs.10,00,000/- in any financial year applicable to all persons subject to certain exclusions and conditions specified therein. Accordingly, this notification shall not apply to a person who has provided services under a brand name or trade name. Further, the conditions for availing such exemption is that one should not avail the CENVAT Credit of service tax paid on input services and such threshold value would apply to one or more premises from which the taxable services were provided.
5.2 I find that the appellant is an individual providing taxable service of Legal Consultancy Service only. There is no allegation that he has availed CENVAT Credit of input services or was providing the taxable service under a brand name/trade name. Therefore, he fulfills the essential requirement of all the conditions and he is eligible for general exemption provided under Notification No. 33/2012-S.T. dated 20.06.2012. The finding of the original authority that the service tax registration on 15.01.2014 was allotted to the appellant in year 2014-15 and therefore, he has already availed the benefit of exemption for 2014-15, is nowhere substantiated and has no iota of evidence to support such claim. Therefore, such presumption given in the form of the findings, which was also confirmed by the first appellate authority is improper and lacks legal backing. Further, the total taxable value in the case of the appellant falls below the threshold limit of Rs.10 lakhs provided under the exemption Notification dated 20.06.2012. Therefore, I find that the impugned order upholding the confirmation of adjudged demands on the appellant by the original authority is not proper and justified.
6. If the exemption from service tax is provided for the aggregate value of taxable services, after considering for deduction of Rs.3,62,561 of amount received as salary, then the aggregate value for consideration of payment of service tax would be only Rs.7,68,439/-. Since, the aggregate value of taxable services are within the threshold limit of Rs. 10 lakhs for which exemption from payment of service tax has been provided under Notification No. 33/2012-S.T. dated 20.06.2012, I am of the considered view that there is no requirement for payment of service tax in the present case. Therefore, the impugned order dated 06.10.2023 is not legally sustainable.
7. In view of the above discussions and analysis, and in the result, the impugned order is set aside and the appeal is allowed in favour of the appellant.
(Order pronounced in open court on 29.04.2026)
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