Whether CESTAT was justified in upholding demand solely on the basis of the statement of the employee?

PJ/Case Laws/2012-13/1412

Case: - GODAVARI KHORE CANE TRANSPORT CO. Versus COMMR. OF CENTRAL EXCISE

Citation: - 2013 (29) S.T.R. 31 (Bom.)

Brief facts: - The employee of the assessee during the course of recording statement had admitted and expressed willingness to pay service tax, in the affidavit-in-reply to the show-cause notice, the liability to pay service tax was specifically denied and even before the adjudicating authority it was contended that service tax was not leviable. Though documentary evidence in that behalf was not produced before the adjudicating authority, the same was produced before the CESTAT and argued that the levy of service tax for the period involved herein is unjustified. However, the CESTAT based on the statement of the employee of the assessee has upheld the levy of service tax without considering the merits of the case and without considering the documents furnished by the assessee.

Appellant’s Contention: - The Ld. Counsel for the appellant-assessee states that the assessee is agitating the issue of leviability of service tax not with a view to seek refund of the tax paid but with a view to agitate the levy of interest and penalty. Counsel for the appellant-assessee, on instructions, states that if on merits levy of service tax is held not leviable and consequently it is held that interest and penalty is not leviable, then, the assessee would not claim refund of service tax already collected and paid to the Revenue. The statement is accepted.

Reasoning of Judgment: The Hon’ble High Court held that It is well established in law that it is open to the assessee to demonstrate on the basis of the documentary evidence that the statement recorded is erroneous. Therefore it would be just and proper to set aside the impugned order of the CESTAT dated 28th April 2011 [2012 (26) S.T.R. 310 (T)] and restore the appeals to the file of the CESTAT for fresh decision on merits. Accordingly, the impugned order of CESTAT in so far as it relates to confirming the duty, interest and penalty is quashed and set aside and the matter is restored to the file of CESTAT for fresh decision on merits. It is made clear that if on remand the CESTAT comes to the conclusion that the service tax is not leviable for the disputed period and consequently interest and penalty is not leviable, then and in that event the assessee shall not claim refund of service tax already collected and paid to the Revenue. It is further made clear that the order of the Tribunal in deleting the penalty in one appeal being not disturbed, the same would attain finality. All contentions of both the parties are kept open and the Tribunal shall not confirm the interest and penalty in the remaining two appeals merely because the assessee has subsequent to the initiation of proceedings collected and paid the service tax to the Revenue.

Decision:- Appeal disposed off.

Comment:- The substance of the case is that every decision should be given after considering the submissions made by the appellant and examining the facts of the case in totality.

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PJ/Case Laws/2012-13/1412

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