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Service Tax - Case Laws
Showing 41 to 60 of 31129 Records
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2025 (4) TMI 1190
Wrongful availment of CENVAT Credit - scope of SCN - impugned order passed beyond the allegation in the SCN - HELD THAT:- At the time of issuance of show cause notice, the appellant could not produced all the documents to satisfy that they have correctly availed the Cenvat Credit on the capital goods, but while filing the reply to show cause notice, the appellant produced all relevant valid documents on which credit was availed under Rule 9(1)(f) of the Credit Rules and the original authority, after fully satisfied with the documents provided by the appellant, dropped the proceedings initiated in the show cause notice and allowed the Cenvat Credit.
It is pertinent to note that the original authority has observed that the appellant has submitted all the relevant/prescribed documents i.e. concerned bills of entry, invoices vide letter dated 04.10.2021 alongwith complete documents as Annexure 'A’ at the time of adjudicating process. Excess Cenvat Credit so availed at the time of audit was examined in terms of Rule 9 of Credit Rules and found relevant. The original authority has also observed that the bills of entry are in the name of Nando’s Bangalore and not in the name of the appellant, but the credit has been availed, apparently, on the basis of bills of entry and not on the basis of exporter’s invoice.
The substantial benefit cannot be denied merely on procedural infirmities as held by the Tribunal in the case of M/s Bharat Sanchar Nigam Limited [2008 (10) TMI 141 - CESTAT CHENNAI], wherein it has been held that a substantive benefit cannot be denied on a procedural or technical ground where the beneficiary has satisfied the substantive conditions for benefits.
It is also found that the appellant has produced the Chartered Accountant Certificate certifying that the head office at Bangalore has not availed Cenvat Credit on the import of goods and the same is also proved from the ST-3 returns filed by the appellant on record.
Conclusion - The denial on the sole ground of invoices being in the name of head office, is not justified.
The impugned order is not sustainable in law - Appeal allowed.
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2025 (4) TMI 1189
Availment of Cenvat credit on Service Tax paid on rent for a business premises (Himalaya Crown Apartment) that was not included in the appellant's ST-2 registration certificate - input services or not - HELD THAT:- On carefully going through the decision of this Tribunal in the case of 24/7 Customer Pvt. Ltd. [2013 (12) TMI 257 - CESTAT BANGALORE], it is understood that this Tribunal had allowed Cenvat credit of Service Tax paid to said appellants for Gurgaon office for the period for which Gurgaon office was not registered. Following the said precedent decision, the appellant is entitled for disputed Cenvat credit of Rs. 2,35,500/-.
Conclusion - The appellant is entitled to the disputed Cenvat credit on rent paid for the unregistered premises.
The impugned order is set aside - appeal allowed.
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2025 (4) TMI 1188
Classification of service - Renting of Immovable Property Service or not - transaction of transferring leasehold rights for a period of 99 years by the appellant to sub-lessees - levy of service tax under the category of Business Auxiliary Service (BAS), given the nature of the receipts involved - time limitation.
Classification of service - Renting of Immovable Property Service or not - transaction of transferring leasehold rights for a period of 99 years by the appellant to sub-lessees - HELD THAT:- The one time Premium received by the Appellant cannot be equated with rent payable on regular intervals for continuous use of the property. The difference between the Premium or Salami and the lease rent as envisaged in Section 105 of the Transfer of Property Act, 1882, has been dealt in the decision of the Hon’ble High Court in the case of AR KRISHNAMURTHY AND AR RAJAGOPALAN VERSUS COMMISSIONER OF INCOME-TAX, MADRAS [1980 (12) TMI 33 - MADRAS HIGH COURT]. From the decision, it is observed that the price paid for transfer of possession or the right to enjoy the property is called the ‘Premium or Salami’ and the periodical payments made for continuous use of the property under lease is called ‘rent’. The Applicant has received only a one-time payment as Premium and hence by relying on the above decision it becomes clear that the Premium received by the Appellant cannot be called as ‘rent’.
The difference between the ‘Premium’ and ‘Rent’ has been highlighted in the Judgment of the Hon’ble Supreme Court in the case of Commissioner of Income Tax v. The Panbari Tea Co. Ltd., [1965 (4) TMI 19 - SUPREME COURT]. From the aforesaid judgement, it is observed that consideration, i.e. one-time payment, in the form of Premium or Salami and consideration in the form of ‘rent’ connotes two different types of consideration.
In the instant case, the Applicant has not received any ‘rent’ from the sub-lessees. Accordingly, the premium or salami paid to the Applicant for transfer of right in the property, should not be exigible to the service tax.
The one time Premium/ Salami received by the appellant from the sub- lessee is not a consideration towards the taxable service of 'Renting of Immovable Property'.
Levy of service tax under the category of Business Auxiliary Service (BAS), given the nature of the receipts involved - HELD THAT:- The impugned Order does not specify under which clause of "BAS" the aforesaid charges would fall. Accordingly, it is held that demand of service tax confirmed under the category of 'BAS' is not sustainable without specifying the particular Clause under the definition of 'BAS'. Accordingly, the demand confirmed under the category of 'BAS' in the impugned order is not sustainable.
Time Limitation - HELD THAT:- In this case, the Show Cause Notice was issued after a period of 18 months. We also observe that the taxability on this issue has been subject matter of dispute at various forums. Also, it is a fact on record that the demand has been calculated from the audited financial statements. Thus, there is no suppression of fact with intention to evade the tax established in this case. Accordingly, the demand is also barred by limitation.
Since, the demand of service tax is not sustainable, the question of demanding interest and imposing penalty does not arise.
Conclusion - i) The one time Premium/ Salami received by the appellant from the sub- lessee is not a consideration towards the taxable service of 'Renting of Immovable Property'. ii) Demand of service tax confirmed under the category of 'BAS' is not sustainable without specifying the particular Clause under the definition of 'BAS'. iii) There is no suppression of fact with intention to evade the tax established in this case, the demand is also barred by limitation. iv) Since, the demand of service tax is not sustainable, the question of demanding interest and imposing penalty does not arise.
Appeal allowed.
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2025 (4) TMI 1187
Classification of services - management, maintenance or repair service or Commercial or Industrial Construction Service? - classification of services rendered post 01.07.2012 as 'works contract service' by the appellant - scope of SCN - extended period fo limitation.
Whether the services provided by the appellant during the period prior to 30.06.2012 are correctly classifiable as 'management, maintenance or repair service' or as 'Commercial or Industrial Construction Service' (CICS) for the purpose of service tax levy and abatement? - HELD THAT:- With effect from 01.07.2012, the Appellant classified the services in question as ‘Works Contract ’ Service and accordingly was discharging service tax. For the period post 01.07.2012, it has been alleged that the classification of the subject transaction as ‘works contract’ is incorrect inasmuch as the Appellant failed to submit any documentary evidence to substantiate discharge of VAT on the value of goods involved in the execution of goods. For the period post July 2012, even when the adjudicating authority accepted that the underlying agreements qualifies as ‘works contract services’, he has held that the valuation adopted by the Appellant in terms of Rule 2(A)(ii) of Service Tax Valuation Rules is incorrect since the Appellant is able to determine the value of VAT payable. Accordingly, it was held that the Appellant ought to have adopted Rule 2(A)(i), for determination of value of services.
Whether the classification of services rendered post 01.07.2012 as 'works contract service' by the appellant is correct? - HELD THAT:- Reliance placed on the decision in the case of Gainwell Commosales Pvt. Ltd. v. CCE & ST, Ranchi [2023 (6) TMI 1308 - CESTAT KOLKATA], wherein this Tribunal has held that if a contract involves supply of goods as well services prior to 01.07.2012, then such composite contract cannot be classified under management maintenance or repair ’service. It has been held that such contracts would more appropriately be classifiable under works contact service and thus, demand under management maintenance or repair ’service was set aside.
The demand of service tax confirmed in the impugned order for the period prior to 30.06.2012 under the category of ‘management maintenance or repair’ service is not sustainable. Accordingly, the appellant has rightly classified the said service under the category of ‘Commercial or Industrial Construction Service’ (CICS) and claimed abatement in terms of Sl. No. 10 of Notification No. 01/2006-ST dated 01.03.2006.
Scope of SCN - Demand of service tax confirmed for the period from period from July 2012 to September 2014 - HELD THAT:- The Ld. Commissioner has travelled beyond the scope of the Show Cause Notice and confirmed the demand on a ground which is not raised in the Notice. It is observed that nowhere in the Show Cause Notice was there any allegation or proposal with respect to the valuation of such services under Rule 2(A) of the Service Tax Valuation Rules. Once the allegation in the Show Cause Notice regarding the classification of the services in question has been decided, the Ld. Commissioner cannot travel beyond the proposals in the Show Cause Notice and confirm the demand. It is a settled principle of law and has been held in a number of decisions that when an order goes beyond the allegations mentioned in the Show Cause Notice, such order is violative of the principles of natural justice. Accordingly, the demand confirmed post June 2012, up to September 2014, is liable to be set aside on this ground alone.
Valuation of works contract under Rule 2A(ii)(c) of the Valuation Rules - HELD THAT:- Regarding the method of valuation adopted by the Appellant, we observe that as per the agreement between the Appellant and TSL, the Appellant is required to raise its invoice for the composite service at the beginning of each month based on agreed contract value. Hence, material requirements and details of such procurement is not known to the Appellant at the time of raising of invoice. Consequently, it is impractical to compute service portion of the contract in terms of Rule 2(A)(i) of the Valuation Rules since value of goods used toward rendering of services is not known at the time raising the invoice. In view of the above, the valuation cannot be done as per Rule 2A(i) of the Valuation Rules.
Rule 2A provides two methods of valuing the works contract service and entails a right upon the assessee to choose any method of valuation of works contract. Thus, it is at the discretion of the Appellant to choose the method of valuation as per their contract and convenience. Since the Appellant had not entered into the contract with intention of valuing the service and material elements separately, hence, the Appellant chose to determine value of goods under Rule 2(A)(ii), as it provides for a simplified and specific method of computation - the method of valuation adopted by the appellant as per rule 2(A)(ii) is in order. Accordingly, the demand confirmed in the impugned order on account of valuation of works contract by adopting Rule 2(A(i) of the Valuation Rules, is not sustainable.
Since the demand itself is not sustainable, the question of demanding interest and imposing penalties in the impugned orders does not arise.
Extended period of limitation - HELD THAT:- The present demands have been raised based on the information obtained from ST-3 returns and other documents submitted by the Appellant. In this case, the Department has failed to bring in any evidence to allege suppression of fact with intention to evade the tax. In the absence of any suppression of facts on the part of the appellant, the extended period of limitation is not invokable. Accordingly, the demand confirmed for the extended period is liable to be set aside on the ground of limitation.
Conclusion - i) The demand of service tax confirmed under the category of management, maintenance or repair Service’ for the period prior to 30.06.2012, is not sustainable. The services rendered by the appellant for the period from 2009-10 up to 30.06.2012 is rightly classifiable under the category of ‘Commercial or Industrial Construction Service’ (CICS), as classified by the appellant and the appellant are eligible for the abatement in terms of Sl. No. 10 of Notification No. 01/2006-ST dated 01.03.2006. ii) For the period post 01.07.2012, the service rendered by the appellant is rightly classifiable as ‘works contract service’. The demand of service tax confirmed in the impugned order by adopting Rule 2(A)(i) of the Valuation Rules is not sustainable and hence we set aside the same. The appellant has correctly opted for Rule 2(A)(ii) of Valuation Rules to discharge service tax on the works contract services rendered by them. iii) The demand confirmed by invoking the extended period of limitation is not sustainable. iv) No penalty is imposable on the appellant in the facts and circumstances of the case.
Appeal allowed.
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2025 (4) TMI 1117
Liability of petitioner, as a subcontractor providing works contract services to pay service tax - failure to produce requisite documents and cooperate with the tax authorities affects the determination of service tax liability - HELD THAT:- In the present case, admittedly the petitioner has a remedy available under Section 35 (b) of the Central Excise Act, 1944 read with Section 86 of the Finance Act, 1994. The appeal is required to be filed within a period of three months from the date of impugned order before the Tribunal. The impugned order has been passed on 13.02.2024 and the same has been communicated to the petitioner vide Memo No. 535 dated 13.02.2024. The present writ application seems to have been presented in this Court on 26.07.2024, thus it is evident that much after expiry of the period of limitation for filing appeal before the Tribunal, the present writ application has been preferred.
This Court further finds that the petitioner was given personal hearing through its representative. Several dates were fixed one after another giving opportunity to the representative of the petitioner to produce the documents. The adjudicating authority has found that the noticee was providing taxable services to their various clients - It is the submission of the petitioner that there cannot be a double taxation, however, even on this point the adjudicating authority has discussed the matter, for this purpose the challans showing deposit of service tax by respondent no. 4 and respondent no. 5 have been taken into consideration.
Conclusion - i) The petitioner, as a subcontractor providing taxable works contract services, is liable to pay service tax notwithstanding submissions that principal contractors have paid tax on the overall contract value. ii) The writ jurisdiction is improperly invoked given the availability and non-exercise of the statutory appellate remedy within the prescribed period.
The writ jurisdiction was improperly invoked given the availability and non-exercise of the statutory appellate remedy within the prescribed period - Application dismissed.
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2025 (4) TMI 1116
100% EOU - Levy of service tax on Reverse Charge basis in respect of expenses incurred in foreign currency on business promotion and other activities - HELD THAT:- Reference was invited to the decision of the Tribunal in the Final Order No. 50314-50315/2018 dated 12.01.2018 [2018 (2) TMI 1408 - CESTAT NEW DELHI]. For the period 2006-2007 to June 2012 i.e. pre-negative era, wherein the issue was decided by the Tribunal in favour of the appellant, relying on the decision of the Tribunal in the case of Torrent Pharmaceuticals Limited Vs. Commissioner [2014 (12) TMI 41 - CESTAT AHMEDABAD] and Milind Kulkarni Vs. Commissioner [2016 (9) TMI 191 - CESTAT MUMBAI]. It was accordingly, concluded that the tax liability under BAS cannot be sustained as the actual expenses now sought to be taxed are only with reference to setting up, running and also expenses of that branch incurred by the appellant and not relating to any expenditure in their branches with reference to BAS.
The Final Order No. A/50314-50315/2018 of the Tribunal in the case of the appellant in [2018 (2) TMI 1408 - CESTAT NEW DELHI] was with reference to the pre-negative era, however, subsequently in the Final Order No. ST/A/52273/2018-CU(DB) dated 13.6.2018, the Tribunal considered the issue regarding tax liability of the appellant on the RCM in respect of amounts paid towards the branch offices which have been established in different country, for the period July 2012 to November 2013, i.e. post negative period in view of the provisions of Section 65B (44) read with Explanation 3(b) and Explanation 4 - For the subsequent period, December 2013 to August 2014, the Tribunal vide Final Order No. 51848/2021 dated 01.10.2021 [2021 (10) TMI 229 - CESTAT NEW DELHI] once again held that the conclusion in Milind Kulkarni that was relied upon in Kusum Healthcare Private Limited [2021 (10) TMI 229 - CESTAT NEW DELHI] to set aside the demand after introduction of „negative list‟ regime is applicable to the dispute before it and, therefore, set aside the demand being contrary to law.
Conclusion - No service tax liability arises on payments made by the appellant to its overseas representative offices for branch expenses.
The impugned order is set aside - appeal allowed.
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2025 (4) TMI 1115
Correctness in issuing SCN - appellant had made payment of service tax with interest prior to the issuance of the SCN - HELD THAT:- A bare perusal of sub-section (3) of section 73 of the Finance Act shows that where any service tax has not been paid, the person chargeable with the service tax may pay the amount of service tax chargeable on the basis of his own ascertainment before service of notice on him under sub-section (1) in respect of such service tax and inform the central excise officer of such payments in writing, who on receipt of such information, shall not serve any notice under sub-section (1) of section 73 in respect of the amount so paid. Sub-section (4) of the section 73 of the Finance Act, however, provides that nothing in sub-section (3) shall apply to a case where any service tax has not been paid by reason of fraud; or collusion; or wilful mis-statement; or suppression of facts; or contravention of any of the provisions of the Chapter or of the with intent to evade payment of service tax.
Applicability of sub-section (4) of section 73 of the Finance Act - HELD THAT:- The reasons for invoking the extended period of limitation under the proviso to section 73(1) of the Finance Act and the reasons for denying the benefit of sub-section (3) of section 73 of the Finance Act as contained in sub-section (4) are same. The appellant, in response to the show cause notice, clearly pointed out that the provisions of sub- section (4) of section 73 of the Finance Act could not have been invoked to deny the benefit of sub-section (3) of section 73 of the Finance Act.
The Commissioner (Appeals) has denied the benefit of sub-section (3) of section 73 of the Finance Act to the appellant. The Commissioner (Appeals) placed much emphasis on the fact that investigation was initiated against the appellant after the information was gathered by the Directorate General of Intelligence. The Commissioner (Appeals) also observed that since the appellant was working under a self-assessment scheme it was essential for the appellant to work out the tax liability appropriately and pay the same. It is for this reason that the Commissioner (Appeals) held that the provisions of sub-section (4) of section 73 of the Finance Act would not apply. This view taken by the Commissioner (Appeals) cannot be countenanced.
The Supreme Court and the Delhi High Court have held that suppression of facts has to be “wilful‟ and there should also be an intent to evade payment of service tax - In Pushpam Pharmaceutical Co. vs. Commissioner of Central Excise, Bombay 1[1995 (3) TMI 100 - SUPREME COURT], the Supreme Court examined whether the department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Central Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since “suppression of facts‟ has been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an intent to escape payment of duty.
The provisions of sub-section (4) of section 73 of the Finance Act would not apply in the present case - The provisions of sub-section (3) of section 73 of the Finance Act would, therefore, apply. It is not in dispute that the appellant had deposited the entire amount of service tax with interest on 25.07.2014 much before the issuance of the show cause notice on 31.01.2017 and had intimated the department. In such a situation, the show cause notice under sub-section (1) of section 73 of the Finance Act could not have been issued to the appellant in view of the provisions of sub- section (3) of section 73 of the Finance Act.
The impugned order that adjudicates the show cause notice and confirms the demand would, therefore have to be set aside - It would, therefore, not be necessary to examine the contention raised by the learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts of the present case.
Conclusion - The SCN issued u/s 73(1) after the appellant had paid service tax and interest and informed the department is not maintainable under section 73(3).
The impugned order is set aside - appeal allowed.
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2025 (4) TMI 1114
Levy of service tax - declared service - incentives or volume discounts received by the respondent from media houses for achieving certain business targets - case of the Revenue is that the respondent had agreed to do an act for the media channels and print media and the incentive given by them to the respondent is the consideration for this obligation - HELD THAT:- It is found from the facts of this case that the respondent has no agreement with the media houses to meet any target nor is there any obligation on the media house to provide incentives/ discount. In fact, the respondent’s clients are the advertisers. They decide and approve the media plans suggested by the respondent. Therefore, the respondent has no discretion to get the advertisements published in a particular newspaper or broadcast through channels of its choice. The Respondent, therefore, cannot have an obligation to the media houses. All that is paid by the media houses is, if the respondent achieves particular target while carrying out its business for its clients, the media house gives some incentives.
Section 66E(e) covers as declared services only such cases where there is an obligation under an agreement on the assessee to carry out an act or to tolerate an act. Such is not the case here.
Conclusion - i) The demand of service tax on incentives received by the respondent under declared services was rightly rejected. ii) The extended period demand, interest, and penalties proposed by the Revenue were not sustainable.
The impugned order passed by the Commissioner is correct and calls for no interference. The impugned order is upheld and the appeal filed by the Revenue is dismissed.
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2025 (4) TMI 1113
Denial of benefit of N/N.12/2003 dated 20.06.2003 claimed in respect of the Outdoor Catering Services rendered by the appellant in respect of some of its customers - invocation of extended period of limitation.
Whether for the relevant period, the demand made on the appellant denying the benefit of N/N. 12/2003 dated 20.06.2003 claimed in respect of the Outdoor Catering Services rendered by the appellant in respect of some of its customers, is tenable? - HELD THAT:- The application of the N/N. 1/2006-ST is sought to be excluded “in cases” and the said N/N. 1/2006-ST does not prohibit the availment of the said notification if the service provider limits such availment to cases other than when N/N. 1/2006 has been availed. There are no provision in law that mandates that if a specific notification is issued, then it would be to the exclusion of the assessee availing the benefit of any other notification that is also available to the assessee. If the notification itself does not stipulate an explicit bar stating that the benefit under the notification is available only if it is availed to the exclusion of availing benefit under any other notification, we would be reluctant to read in any such implied prohibition, so as to deny the appellant herein the benefit of the N/N. 12/2003-ST claimed. It is also seen that this Tribunal has in a catena of decisions taken a view that there is no bar in availing benefit under more than one notification unless it is barred categorically.
The denial of the benefit of the N/N.12/2003-ST by the adjudicating authority for the reason that VAT is levied on the turnover and not on the value of the ingredients that go into the preparation of such food articles, cannot be countenanced as it is settled law that the measures employed for assessing a tax should not be confused with the nature of the tax - When the appellant is clearly indicating the value of the goods and materials separately in its bills and which is supported by the records maintained by the appellant, that would be documentary proof enough, particularly when the notification does not stipulate any specific document, the production of which alone, would amount to discharge of adducing documentary proof.
The adjudicating authority is determining that the VAT laws do not consider the appellant’s manner of accounting the value of the goods/materials sold as “sale” when there is a studied silence on the above averments of the appellant regarding the documentary proof that the appellant relies on pertaining to its compliance of state VAT laws and when there is no reliance seen placed on any official notice/letter of the VAT authorities denying the appellant’s discharge of its obligation under the State VAT Laws, or finding it wanting on any aspect, particularly when they are the authorities competent to determine the sufficiency of the appellant’s compliance of the state VAT laws.
The appellant is not eligible for the benefit of N/N. 12/2003-St dated 20-06-2003 and the consequent demand and imposition of penalty, cannot sustain and is liable to be set aside.
Whether the invoking of extended period of limitation is tenable? - HELD THAT:- The findings of the adjudicating authority are only that the appellant has misstated/suppressed relevant facts and that therefore the invocation of extended period is upheld. Absent any finding that such misstatement/suppression was willful and that such willful misstatement /suppression of facts was with intent to evade payment of duty, the adjudicating authority erred in upholding the invocation of extended period of limitation. It is also pertinent that there is no evidence let in of any positive or deliberate act on the part of the appellant with intention to evade payment of duty.
The appellant has stated in its grounds of appeal that its records were also verified during the previous audit dated 26-11-08 for the period April 05 to October 08. There is no allegation that the appellant is not regularly filing its returns or have not reflected the manner of its levy of service tax in its invoices. The present SCN is also issued placing reliance on the records of the appellant alone and not premised on any statements recorded or any other evidence indicating any willful suppression or misstatement of facts. In such circumstances, when the appellant was inspected and audit conducted and the audit queries replied to, there could not be a case of suppression and the Department could not have invoked the extended period of limitation - the finding of the adjudicating authority invoking the extended period of limitation is unsustainable and the demand made on the appellant invoking the extended period of limitation is untenable.
Conclusion - i) The denial of benefit under N/N. 12/2003-ST and the consequent demand for differential service tax and penalty are unsustainable and liable to be set aside. ii) The invocation of the extended period of limitation is improper in the absence of allegations or proof of willful misstatement or suppression with intent to evade tax.
The demand of duty, appropriate interest and penalty imposed by the original authority are untenable - Appeal allowed.
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2025 (4) TMI 1112
Nature of transaction - sale or service - activity of providing "Take Away" or "Pick Up" food services by a restaurant - HELD THAT:- The issue is no more res-integra and has been decided by the Tribunal in the case of M/s Bikanervala Foods Pvt. Ltd. V/s Commissioner of CGST, Customs & Central Excise, Delhi-East [2024 (6) TMI 504 - CESTAT NEW DELHI] where it was held that 'Since the facts of the present case are absolutely identical and give rise to the issue of taxability of sale of food items through “Take Away” or “Home Delivery”, the activity is clearly of sale of food and does not involve any service element and, therefore, following the ratio of the judgements referred above, the activity of sale of food items by “Take Away” or “Home Delivery” by the appellant is not liable to service tax.'
Conclusion - The activity of sale of food items by 'Take Away' or 'Home Delivery' by the appellant is not liable to service tax.
Appeal allowed.
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2025 (4) TMI 1098
Applicability of service tax - late payment charges recovered from UPPCL under Section 66E(e) of the Finance Act, 1994 - agreeing to obligation to tolerate the situation of delayed payment - HELD THAT:- In the case of Madhya Pradesh Poorva Kshetra Vidyut Vitran Co. Ltd. Versus Principal Commissioner CGST and Central Excise Bhopal [2022 (4) TMI 773 - CESTAT NEW DELHI] Tribunal has held that 'it is not possible to sustain the levy of service tax on the amount collected by the appellant for late payment surcharge, meter rent and supervision charges.'
In the case of South Eastern Coalfields Ltd. V/s Commissioner of Central Excise & Service Tax, Raipur [2020 (12) TMI 912 - CESTAT NEW DELHI] has held that 'It is, therefore, not possible to sustain the view taken by the Principal Commissioner that penalty amount, forfeiture of earnest money deposit and liquidated damages have been received by the appellant towards “consideration” for “tolerating an act” leviable to service tax under Section 66E(e) of the Finance Act.'
Conclusion - i) The services related to transmission and distribution of electricity are naturally bundled in the ordinary course of business and are required to be treated as provision of the single service of transmission and distribution of electricity which gives the bundle its essential character. ii) Penalties and liquidated damages are safeguards to enforce contractual compliance and cannot be construed as taxable consideration for tolerating an act or situation under Section 66E(e).
There are no reason to interfere with the impugned order and the same is sustained - The appeal filed by the Department is dismissed.
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2025 (4) TMI 1069
Refund of pre-deposit made by the appellant under a different registration number - mentioning a wrong Service Tax Code (STC) on the pre-deposit challans - HELD THAT:- The Principal Bench of this Tribunal in the case of Sahara India TV Network vs. Commissioner of Central Excise and Service Tax, Noida [2015 (10) TMI 2037 - CESTAT NEW DELHI] held that 'In this case the wrong registration number happens to be of the appellant itself though belonging to its different unit. It could as well have been that by mistake the registration number of a different assessee was mentioned in which case it could not have been asserted that Service Tax was deposited in the account of that assessee whose registration number was wrongly mentioned in the challan (though its name did not appear therein) and not in the account of the person whose name was mentioned in the challan. Such mistakes can happen and it can scarcely be anybody's case that such mistakes are beyond rectification. In this case, the Assistant Commissioner, Service Tax in-charge of the appellant's Mumbai unit has categorically mentioned that the impugned amount of service tax (Rs. 25 lakhs) deposited has not been utilised towards paying service tax by the Bombay unit.'
In the instant case as well it is noted that the appellant had submitted the affidavit and a Chartered Accountant Certificate that the disputed amount has not been utilized nor any refund been taken. Hence, we hold that the instant case stands covered by this decision.
Similarly, in the case of Welspun Corp Ltd. vs. C.C.E. & S. T., Rajkot [2023 (2) TMI 780 - CESTAT AHMEDABAD], the Ahmedabad bench of this Tribunal was dealing with service tax liability which was wrongly paid in service tax registration of Head office instead of Service tax registration of manufacturing unit, the Tribunal relied on Trade Notice No. 03/2014-S.T. dated 10 July 2014 issued by Commissioner of Central Excise, Customs and Service Tax, Cochin Commissionerate read with Circular No.58/7/2003 (F.No.157/2/2003Cx.A) dated 20.05.2003 and held that the service tax paid under different registration but by the same company cannot tantamount to non-payment of service tax and Revenue was given liberty to make necessary adjustment in their account if required.
From the above circular it is clear that the discrepancy such as payment of service tax under wrong registration can be adjusted against the correct registration for which the service tax is actually due. Accordingly, in the light of the above circular, the department could have made the necessary adjustment while scrutinizing the said refund claim.
The Hon’ble Gujarat High Court in Devang Paper Mills Pvt. Ltd., Vs. UOI [2016 (1) TMI 389 - GUJARAT HIGH COURT] held that 'It is not even the case of the respondents that the petitioner had any other code by the number ADDCD7232FEM001 and for which there was separate manufacturing activity inviting separate duty liability. Indisputably, thus, the petitioner had singular duty liability for which the actual payment was also made. Under the circumstances, the impugned communication dated 05.05.2015 and notice dated 21.07.2015 are quashed. The respondents are directed to give credit of the duty paid by the petitioner for a sum of Rs.22.15 lacs by making necessary accounting entries on the basis that the same was paid at the relevant time. If there after any sum remains unpaid, it would be open for the Department to take further action in accordance with law.'
In view of the same, the Board’s Circular and the Trade Notice, the appellant is entitled for the refund of the pre-deposit.
Conclusion - The appellant is entitled for the refund of the pre-deposit.
Appeal allowed.
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2025 (4) TMI 1068
Levy of service tax - Business Support Services - appraising chares collected - HELD THAT:- The issue involved in this appeal involving identical facts has already been decided in the case of M/S. THE RASIPURAM AGRICULTURAL PRODUCERS CO OP. MARKETING SOCIETY LTD. (S. NO. 318) VERSUS COMMISSIONER OF GST AND CENTRAL EXCISE, SALEM [2024 (2) TMI 200 - CESTAT CHENNAI] wherein it has been held 'the appellant is borrowing the money from the bank on its account and in turn lending it to their farmer members on interest. The services rendered by the appellant are relatable only to its members and not to the bank and the charges collected for appraising jewels before sanctioning of loans are in the nature of cost incurred by the appellant for sanctioning of loans. As such, there is no BSS rendered in the instant case. As such, we hold that the demands raised under the impugned orders demanding service tax under “Auctioneer Service” and BAS are not maintainable.'
The impugned Order-in-Appeal cannot be sustained and ordered to be set aside - Appeal allowed.
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2025 (4) TMI 1067
Construction of a new building or civil structure or a part thereof, primarily for the purposes of commerce or industry - Works contract services of construction rendered to education institutions and government office buildings - construction of medians can be considered as works contract in respect of roads or not - time limitation.
Whether the works contract services of construction rendered to education institutions and government office buildings can be treated as construction of a new building or civil structure or a part thereof, primarily for the purposes of commerce or industry? - HELD THAT:- The adjudicating authority has misdirected himself in rendering the finding that it is the bounden duty of the assessee to ensure that they satisfy the conditions set out for making any claim regarding exempted services. Admittedly, the Department is seeking to tax the services of the appellant as “works contract service” under clause ii(b) of the explanation to Section 65(105)(zzzza), as being “construction of a new building primarily for the purposes of commerce or industry”.
Unlike a statutory exemption notification issued in exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, prescribing conditions, the circulars issued by CBEC are under Sec. 37B of the Central Excise Act, 1944, as applicable for the purposes of service tax vide Sec. 83 of Finance Act, 1994 and are instructions and directions issued to the central excise officers for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties. The Hon’ble Supreme Court has held in CCE, Bolpur v Ratan Melting & Wiring Industries, [2008 (10) TMI 5 - SUPREME COURT], inte-alia, that so far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions.
The definition of taxable service of works contract under Section 65(105)(zzzza) of the Act excludes works contract “in respect of” roads. The phrase “in respect of” indicates ‘in connection with,’ ‘as regards’, or ‘with reference to’, in its grammatical sense. There is no dispute that the work entrusted with the appellant is that of construction of center-medians in Coimbatore on Highways No.67 (Trichy Road). The Adjudicating Authority concedes the same. However, the service tax is sought to be levied on the ground that such service is rendered to an Advertising Agency who in turn is engaged in providing advertising which is done in pure commercial considerations.
Tribunal in M/s. RGP Construction versus The Commissioner of CGST & Central Excise, Salem, [2024 (7) TMI 1168 - CESTAT CHENNAI]. Therefore, considering the aforesaid decisions of this Tribunal which are binding, the demand of service tax on the works contract services rendered by the appellant to educational institutions that has been upheld in the impugned OIO cannot sustain and is therefore hereby set aside.
Whether the construction of medians can be considered as works contract in respect of roads? - HELD THAT:- The definition of works contract service, while excluding works contract in respect of roads, does not contain any stipulations as to the identity of the service recipient, much less the nature of the service recipient’s business considerations, and the said contention of the Adjudicating Authority is extraneous in determining the appellant’s entitlement to the exclusion from the ambit of the definition as claimed.
When the work carried out by the appellant is indisputably conceded as that of constructing center-medians on Highway No.67 (Trichy Road), and since ‘center-medians’ essentially demarcate and divide the road, the works contract undertaken by the appellant of constructing center medians is clearly a “works contract in respect of roads” so as come within the exclusion specified in the definition. The service tax demand on this activity of the appellant is unsustainable and is therefore set aside.
Whether the demand is barred by limitation? - HELD THAT:- The appellant’s claim that it has not discharged service tax on the works contract services of construction rendered to educational institutions on a Bonafide belief taking note of the clarifications issued by the Board as per the Circular dated 17-09-2004 cannot be discounted. There is no positive act of wilful suppression or misstatement of facts by the appellant that has been established by the Department. In these circumstances, it is found that the adjudicating authority has grossly erred in invoking the extended period of limitation. The demand is therefore time barred and the issue of limitation is answered in favour of the appellant.
Conclusion - i) The demand for service tax on construction services rendered to educational institutions and government buildings, holding that such constructions do not fall within the taxable ambit of works contract services primarily for commerce or industry. ii) Since center medians demarcate and divide roads, their construction falls within the exclusion. Therefore, the Tribunal held that the demand of service tax on construction of center medians is unsustainable and set it aside. iii) The extended period of limitation was wrongly invoked, and the demand is time-barred.
Appeal allowed.
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2025 (4) TMI 1066
Liability to service tax on CENVAT Credit availed for input services used exclusively for providing exempted services, specifically the commission paid for exempted insurance policies - CENVAT Credit for services rendered in the non-taxable territory of Jammu & Kashmir - Extended period of limitation.
CENVAT Credit for services rendered in the non-taxable territory of Jammu & Kashmir - HELD THAT:- From the License, it is seen that it is a general license to operate as an Insurance Agent. Such agent may procure Insurance business requiring Service Tax payment or which may be exempt from payment of Service Tax. Thus, this License is used as a whole and there are no separate Licenses issued for procuring taxable and exempt insurance business - It is observed that in respect of insurance of the person under Kisan Credit Scheme, the Service Tax is exempted.
Liability to service tax on CENVAT Credit availed for input services used exclusively for providing exempted services, specifically the commission paid for exempted insurance policies - HELD THAT:- When the input service is commonly used for providing both the taxable and exempt services, then the CENVAT Credit should either be reversed on proportionate basis in terms of Rule 6 (3A) or the assessee should pay six percent of the value of the exempted services in terms of Rule 6(3)(i) of the said Rules. Thus, there is no bar to take the CENVAT Credit in respect of commonly used input services, so long as one of these two options are followed by the assessee. The only bar is when the service is used exclusively for providing exempted services.
In the present case, from the documentary evidence it is clear that the Agent is providing both the services commonly. Therefore, the Invoice raised by him showing the Service Tax component may consist of both the taxable and exempt insurance services. This would fall under the category of common service and not under the category of exclusively exempt service. The Revenue has not brought in any specific evidence to show that the Insurance Agent is rendering services to such exempted product for which they have raised any Invoice showing the Service Tax payment thereon, which has been taken as CENVAT Credit by the appellant.
Extended period of limitation - HELD THAT:- There are considerable force in the arguments of the appellant about the non-applicability of suppression clause in their case. First of all, they are a reputed Public Sector Undertaking. They have filed all their statutory Returns under Service Tax and Income Tax and under the Companies Act provisions, before the respective authorities. Knowing fully well they are not in a position to maintain separate accounts, they have taken the CENVAT credit commonly accruing to them in respect of the taxable and exempt insurance services and have been regularly reversing the CENVAT Credit in terms of Rule 6 (3)(i), which is also reflected in the ST-3 Returns. Hence, no case whatsoever, has been made against the appellant for wilful suppression, with an intent to evade payment of Service Tax. Therefore, the confirmed demand to the extent of the extended period is legally not sustainable.
Conclusion - i) In respect of common input services, the appellants have been regularly reversing the CENVAT Credit in terms of Rule 6(3)(i) of CCR 2004. ii) The Department has not brought in any evidence to the effect that the appellant has taken CENVAT Credit in respect of any input service which is exclusively used in the provision of exempted services. iii) The documentary evidence brought in by the appellant shows that the Insurance Agent is authorized to take up both the taxable and exempted insurance services. iv) The confirmed demand to the extent of the extended period is legally not sustainable.
The appeal is allowed on merits and partly on account of time bar.
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2025 (4) TMI 1065
Condonation of delay in filing the appeal before the Commissioner (Appeal) - power of Commissioner (Appeals) to condone delay beyond the prescribed period - HELD THAT:- It is observed that the appeal was to be filed before the Commissioner (Appeal) within two months of the date of the receipt of the Order-in-Original by the appellant. As per the proviso Commissioner (Appeal) has been granted the power to condone delay of one month in filing the appeal on sufficient cause being shown. In the present case appeal was filed before the Commissioner (Appeal) after more than three months from the date of receipt of Order-in-Original. Hence, Commissioner (Appeal) has rightly held that appeal was filed beyond the prescribed period of limitation and has dismissed the same on this ground alone.
This issue is squarely covered by the decision of Hon’ble Supreme Court in the case of SINGH ENTERPRISES VERSUS COMMISSIONER OF C. EX., JAMSHEDPUR [2007 (12) TMI 11 - SUPREME COURT], wherein it has been held that Commissioner (Appeals) could not condone the delay beyond the 30 days in filing the appeal before him.
Conclusion - Admittedly the appeal has been filed beyond the period which could have been condoned by the Commissioner (Appeal). Hence present case is squarely covered by the decision of Hon’ble Supreme Court in case of Singh Enterprises.
There are no merits in this appeal filed by the appellant - appeal dismissed.
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2025 (4) TMI 1064
Levy of service tax on construction of residential complexes, particularly the period prior to and beyond 01.07.2010 - Demand calculation under the composition scheme as amended retrospectively by the Finance Act, 2017 - invocation of extended period of limitation.
Levy of service tax on construction of residential complexes, particularly the period prior to and beyond 01.07.2010 - HELD THAT:- The matter is no longer res-integra and demand will not sustain on this ground itself. Reliance is placed on various judgments cited by the appellant. For the period beyond 01.07.2010, it is on record that in terms of the amendment brought in Rule 2A retrospectively amended for the period beyond 01.07.2010, the amount payable would have to be re-calculated. Admittedly, this provision has not been taken into account while calculating the duty liability for the appellant during the relevant period. Therefore, we consider that this aspect needs to be remanded back to the Adjudicating Authority who shall take into account the amendment provision and recalculate the amount of duty recoverable from the appellant. Further, if any amount has been paid towards duty liabilities for the period for which the demand has been made, this also needs to be adjusted against recalculated demand.
Time Limitation - HELD THAT:- The appellant has a case in as much as during that period, apart from the fact that there were certain confusion about the leviability of service tax on construction services as well as on rental service and differing judgments, mode of calculation, allowing for composition scheme etc., were posing interpretational issues. Therefore, there was a genuine confusion prevailing during the relevant period. This gets further manifested when the Government itself brought retrospective amendment for the same period. In view of the same, it is found that in the absence of any other cogent and strong evidence clearly indicating any deliberate intent or attempt to evade the tax, the extended period is not invokable in the facts of the case.
Renting of immovable property - HELD THAT:- In respect of demand on renting of immovable property, many changes occurred in taxation of renting of immovable property during the relevant period. In many decisions including the Home Solutions Retail India Ltd., Vs Union of India decision of Hon’ble Delhi High Court [2009 (4) TMI 14 - DELHI HIGH COURT], it is held that 'Section 65(105)(zzzz) does not in terms entail that the renting out of immovable property for use in the course or furtherance of business of commerce would by itself constitute a taxable service and be exigible to service tax under the said Act. The obvious consequence of this finding is that the interpretation placed by the impugned notification and circular on the said provision is not correct. Consequently, the same are ultra vires the said Act and to the extent that they authorize the levy of service tax on renting of immovable property per se, they are set aside.'
Conclusion - i) Service tax was not leviable on construction of residential complexes prior to 01.07.2010, and retrospective amendments must be considered for the period thereafter. ii) Where retrospective amendments clarify legislative intent amid judicial conflict, extended limitation periods cannot be invoked absent evidence of deliberate evasion. iii) Renting of immovable property was not taxable service per se until retrospective amendments were introduced and upheld, thus demands and penalties for the disputed period are barred by limitation. iv) Recalculation of demand must reflect the amended valuation rules and adjust payments already made.
The invocation of extended period cannot be sustained and therefore, the demand has to be restricted within the normal period, along with interest applicable thereon - appeal disposed off by way of remand.
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2025 (4) TMI 1017
Levy of service tax - interior decoration service - appellant is undertaking orders for supplying, assembling, fixing, installation and erection of cubicles/modular furniture - wilful suppression of facts or not - extended period of limitation.
Whether for the relevant period, the demand made on the appellant for rendering Interior Decoration Services is tenable? - HELD THAT:- Since the services provided by the appellant in the instant case is of the nature of a composite works contract involving sale of goods as well as work and labour, and is clearly not a contract of services simpliciter, given the law laid down by the Apex Court in CCE v. Larsen and Toubro [2015 (8) TMI 749 - SUPREME COURT] and Total Environment Building Systems Pvt Ltd v. Deputy Commissioner of Commercial Taxes, [2022 (8) TMI 168 - SUPREME COURT], without going into further details of the dispute or quantification of tax liability, it is held that the impugned order to the contrary, confirming the demand of service tax liability on the appellants under the category of “interior decorator service”, cannot sustain and is liable to be set aside.
Whether the invoking of extended period of limitation is tenable? - HELD THAT:- There is no allegation that the appellant is not regularly filing its returns or have not reflected the manner of its levy of service tax in its invoices. In such circumstances, when the appellant was inspected and audit conducted and the audit queries replied to, there could not be a case of suppression and the Department could not have invoked the extended period of limitation, as has been held in a line of decisions, such as CCE, Bangalore v Pragathi Concrete Products (P) Ltd, [2015 (8) TMI 1053 - SC ORDER], Rajkumar Forge v UOI [2010 (8) TMI 796 - BOMBAY HIGH COURT], to cite a couple.
Conclusion - i) The demand for differential service tax on the appellant for the period April 2006 to February 2007 under the category of "Interior Decorator Services" is not tenable and is set aside. ii) The invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, is legally unsustainable in the absence of any allegation or evidence of wilful misstatement or suppression of facts with intent to evade tax, and the demand made beyond the normal limitation period is barred by limitation. iii) The demand of differential service tax, interest, and penalty imposed by the original and appellate authorities are quashed.
Appeal allowed.
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2025 (4) TMI 1016
Levy of service tax - Supply of Tangible Goods service - leasing of machinery to the lessee - extended period of limitation - HELD THAT:- Given that in this instance the appellant is leasing out certain machinery, it is only when the right to use the machinery is provided to the service recipient, without giving right of possession and right of effective control, the service would come within the ambit of the aforementioned service of supply of tangible goods.
What would constitute a transaction of the transfer of right to use goods was stated in the decision of Bharat Sanchar Nigam Ltd v. Union of India [2006 (3) TMI 1 - SUPREME COURT] by the Honourable Supreme Court, in the course of deciding the question of the nature of the transaction by which mobile phone connections are enjoyed, whether is it a sale or is it a service or is it both? The Hon’ble Apex Court has, inter-alia, dwelling on Article 366(29A), the legislative competence of the state to levy sales tax under Entry 54 List II of the Seventh Schedule and the powers of Central Government to levy service tax under Entry 97 of List I, elaborated upon a transaction of the transfer of right to use goods.
It is pertinent to note that while the SCN merely states that from the lease agreement it can be seen that the lessee has no legal right of possession and effective control of the machinery taken on lease from the taxpayer, yet it fails to put the appellant to notice as to which term exactly is being interpreted by the SCN issuing authority in this fashion, thereby rendering the charge vague and lacking in details. The Honourable Supreme Court in its decision in CCE, Bangalore v. Brindavan Beverages [2007 (6) TMI 4 - SUPREME COURT], has held that the show cause notice is the foundation on which the department has to build up its case and if the allegations in the show cause notice are not specific and are on the contrary vague, lack details and/or unintelligible that is sufficient to hold that the noticee was not given proper opportunity to meet the allegations indicated in the show cause notice.
Extended period of limitation - HELD THAT:- The appellant has consistently taken a plea before the lower authorities that the issue was that of interpretation and that the appellant was of the view that since they have paid VAT the transaction itself was not within the scope of service tax law. Therefore, in such circumstances, coupled with the fact that there has been no evidence let in of any positive act of willful suppression or misstatement of facts with intent to evade payment of duty that has been made by the appellant, the SCN dated 27-04-2012 for the period from April 2008 to March 2010 is also barred by limitation having been issued beyond the normal period.
Conclusion - i) Supply of tangible goods for use and leviable to VAT/sales tax as deemed sale of goods, is not covered under the scope of the service of supply of tangible goods and whether a transaction involves transfer of possession and control is a question of facts and is to be decided based on the terms of the contract and other material facts. ii) The demand of duty along with appropriate interest thereon and penalty imposed by the original authority, as upheld by the learned appellate authority, are untenable and cannot sustain.
Appeal allowed.
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2025 (4) TMI 968
Levy of service tax - renting of immovable property service - invocation of extended period of limitation - HELD THAT:- Admittedly the appellant did not pay the service tax during the relevant period. It is also indisputable that the Delhi High Court had vide its order dated 18-04-2009 in Home Solution Retail India Ltd, [2009 (4) TMI 14 - DELHI HIGH COURT] held that Section 65(105)(zzzz) does not in terms entail that the renting out of immovable property for use in the course or furtherance of business of commerce would by itself constitute a taxable service and be exigible to service tax under the said Act.
Admittedly, the jurisdictional range officer had deemed it fit only in November 2011, followed by a reminder in December 2011 to advise the appellant to pay the service tax rent on the rent received during 2008-2009 and it was only almost two years thereafter on 04.10.2013 that the SCN was issued invoking the extended period. Evidently, there was no protective SCN issued during the interregnum when the levy was held untenable by the Delhi High Court’s Judgement and clarity thereafter ensued only after the retrospective amendment introduced after the enactment of the Finance Bill 2010, which the appellant could not have the prescience to know. Hence, the appellant was justified in its contention that during the period the issue was debatable and therefore the question of sustaining the demand by invoking the extended period of limitation does not arise.
Conclusion - The demand is hit by limitation, the SCN dated 04.10.2013 having been issued well beyond one year from the relevant date.
Appeal allowed.
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