The Principles of Natural justice has to be followed while adjudicating the matter and also while considering the appeal filed against the adjudication order. Providing an opportunity to the assessee to file a reply to the show cause notice or to present its case and opportunity of hearing are the key things which need to be seen for analyzing whether the principles of natural justice have been followed by the Authorities while concluding a matter or not. Any order passed without providing an opportunity of hearing or without giving an opportunity to the assessee for presenting its case and respond to the allegation made against him, would be an order passed in violation of principles of natural justice. In the similar way, considering all the submissions made by the assessee in its reply or in appeal is also a very important aspect which the Authorities has to follow while adjudication process or at Appellate Stage. The Authorities are under an obligation to consider all the submissions made before them, in order to pass a reasonable order. If all the contentions or submissions made by the assessee are not considered, it will also result in violation of principles of natural justice. Any order passed without considering all the submissions made by the assessee or without giving any finding on the submission made by the assessee would be considered as a 'Non-Speaking Order.' And, a 'Non- Speaking Order' is not maintainable in the eyes of law being in violation of principles of natural justice.
Further, a very more aspect which is to be seen in the case of small service providers, is the SSI exemption, which provided for exemption to the services provided if their turnover does not exceed a certain limit. Notification 6/2005 dated 01.03.2005 amended by Notification 8/2008 dated 01.03.2008 & 5/2012 dated 17.03.2012 provided for exemption to small scale service providers, if their turnover does not exceed the limits provided in the aforesaid notifications. However, the benefit of the notifications would not be available if the services were provided under a brand name or a trade name, whether registered or not, of another person.
Extended Period of limitation has already been discussed in the previous case laws in detail. It is to be noted that the extended period cannot be invoked if the assessee is disclosing the information in its books and the Income Tax Returns, which are public documents and easily accessible to the Revenue. Any demand confirmed beyond the period of limitation would be time-barred and liable to be dropped.
A matter was argued by our team contesting the demand on multiple grounds before the Hon'ble CESAT, Chandigarh. In this case, the Appellant was engaged in maintenance & handling of corporation owned and contractor operated (COCO) retail outlet site of M/s Indo British Petroleum Ltd., Panipat, from where petroleum products, mainly motor spirit and High-Speed Diesel were sold. For said arrangement, an agreement was entered between IBP Co. and the appellant. Revenue entertained a view that the services provided by the Appellant are covered under 'Business Auxiliary Services' under Section 65(19) of the Act. On the behalf of the Appellant, it was argued by our team that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and law and moreover, in mechanical manner without appreciating the complete facts. It was submitted that the appellant entered into a contract with IBP Co. on 01.09.2005 and prior to that no services were provided by the Appellant. Further, the appellant is eligible for SSI exemption as the turnover was less than 4 lacs in a Financial Year from September 2005 to March 2007. Relying on the decision of Fifth Avenue Sourcing Ltd – 2023 (73) G.S.T.L. 93 (Tri. – Chennai); Shoppers Stop – 2018 (8) G.S.T.L. 405 (Tri.-Mumbai), it was submitted that the services provided by the Appellant would be covered under 'Business Support services' and not 'Business Auxiliary Services.' The word 'Commercial concern' was substituted by any person in the Finance Act, 2006 in the definition of BAS and therefore, the demand prior to that is liable to be dropped. Lastly, relying on few case laws, it was submitted that the appellant is duly reflecting the receipts in ITR filed, so extended period cannot be invoked against the appellant. On the behalf of the revenue, the findings of the impugned order were reiterated.
The Hon'ble Bench after considering the submissions made and the various judgments relied upon by the Appellant, found that prima facie, the demand confirmed is wrong as the appellant was rendering the services from 01.09.2005 only, which is clear from the agreement entered. Further, the Appellant is entitled to SSI exemption in view of the decision of Commissioner of Central Excise, Chandigarh Vs. Loan Zone, wherein in identical facts, it was held that the service is not provided to independent persons but to service recipient who is itself brand owner. Further, extended period cannot be invoked simply on the ground that there was no payment of tax and no return was filed when the Appellant is duly disclosing its receipts in the ITR filed, which shows that there was no intention to evade payment of tax and moreover, the issue of services provided by the commercial concern and individual in Business Auxiliary Service was in dispute and lot of confusion was there during the relevant time. It was also found by the Hon'ble Bench that order-in-appeal as well as the order-in-original were passed in a mechanical manner and the grounds raised by the appellant were not considered by the Authorities concerned. Both the orders were passed without appreciation of complete facts.
The Hon'ble Bench in view of the discussions and observations held that the entire demand is barred by limitation and the appellant was also entitled to the SSI exemption. Therefore, the impugned order was set aside and the appeal was allowed with consequential relief to the appellant.
Case details — Sarvan Kumar S/O Inder Singh v. CCC, Rohtak
Forum — CESTAT
Case No. — dated 17.10.2023 in ST/1593
Represented by — CA Atul Kumar Gupta