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Dismisses Rs 21.92 Crore Service Tax Demand Against Millennium Beer Industries
The has dismissed the revenue's appeal against the setting aside of a Rs 21.92 crore service tax demand on Millennium Beer Industries Ltd, ruling that the cannot be invoked without specific allegations of fraud or suppression. The Division Bench of Justices Nitin B. Suryawanshi and Abasaheb D. Shinde also applied the , noting that the revenue had accepted an identical decision in a similar taxpayer's case.
Background of the Service Tax Dispute
The case arose from an agreement dated , under which Millennium Beer Industries manufactured and sold alcoholic beverages on behalf of United Breweries Ltd (UBL), following UBL's instructions. The initiated an investigation in 2010 and issued a show cause cum demand notice on , seeking Rs 21,92,03,724 in service tax for the period between , and , along with interest and penalties.
The adjudicating authority confirmed the demand, but the ) at Mumbai set it aside, holding that the notice was barred by limitation. The revenue then appealed to the High Court.
Revenue’s Challenge and Respondent’s Preliminary Objection
The argued that the effective date of amalgamation between Millennium Beer and UBL should be the date the issued the certificate of incorporation (), not the appointed date under the scheme of amalgamation (). The revenue contended that the demand was not time-barred because the arrangement had never been disclosed to the department.
In response, Millennium Beer raised a preliminary objection: the revenue had accepted the tribunal's decision in the case of , which involved substantially identical facts and demands. The High Court agreed, citing the 's rulings in and —both emphasizing that the revenue cannot take different stands in almost identical cases.
Legal Analysis: Limitation and Consistency
The court examined the provision for appeal under , which requires a . It found no such question existed here. On the limitation issue, the court relied on the ’s decision in , which holds that the under (or analogous provisions) applies only when the show cause notice contains specific and explicit allegations of .
The judgment noted that the show cause notice did not contain the requisite averments. “The appellant has not been able to prove that any fraud, collusion or suppression of facts is attributed to the Respondent with intent to evade the payment of excise duty,” the bench observed. Consequently, the notice issued on —almost two years after the transaction period—was barred by the normal one-year limitation.
Key Observations from the Judgment
The court underscored two critical principles:
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On extended limitation: “In light of ratio laid down by the Hon'ble Apex Court in the case of Uniworth Textiles Ltd.. . . the appellant could not have invoked the against the Respondent.”
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On revenue consistency: “We are of the considered view that the is sacrosanct in revenue matters and the revenue cannot be permitted to take different stand when the facts are almost identical.”
The judges also pointed out that the tribunal’s finding—that the transaction was disclosed and service tax on intellectual property services had already been paid—was a factual determination not shown to be or erroneous.
Final Decision and Implications
The High Court dismissed the revenue’s appeal in its entirety, concluding that it did not involve any . By applying the and reaffirming the strict requirement for invoking the , the decision provides a clear check against arbitrary revenue actions. It also reinforces that show cause notices must precisely allege the specific misconduct needed to extend the limitation period, and that the revenue must uniformly apply its stance in similar factual scenarios.
