Back
2025 Supreme(Online)(CESTAT) 7
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
Sanjiv Srivastava, Member (Technical)
Matrix Design Works – Appellant
Versus
Commissioner of Central Excise & CGST, Noida – Respondent
FINAL ORDER NO.70843/2025
Important Points
Subject
Taxation - Service Tax
Act Referred
CGST Act, 2017: S.142, S.174, S.173
Special Economic Zones Act, 2005: S.26, S.51
Indian Evidence Act, 1872
Constitution of India, 1950: Art.265
Headnote
(B) Taxation - Exemption notifications - Interpretation - Standalone exemptions under special legislation (SEZ Act) not subject to conditions in general tax law notifications (Finance Act); non-compliance with forms/declarations irrelevant where SEZ Rules complied with; no legal authority to levy tax absent charging section not overridden by SEZ Act. (Paras 4.3, 9.1-9.3)
Facts of the case:
Discrepancies noted between income tax returns and service tax returns led to SCN demanding service tax on differential value, confirmed by OIO and upheld by Commissioner (Appeals) for non-submission of procedural documents for SEZ exemption claim.
Findings of Court:
Impugned order set aside; appeal allowed; no findings on limitation as decided on merits.
Issues: Whether service tax demand sustainable despite SEZ exemption claim; whether procedural non-compliance under service tax notification defeats exemption under SEZ Act; applicability of extended limitation.
Ratio Decidendi: Exemption under Section 26 SEZ Act overrides Finance Act provisions per Section 51; conditions in service tax notifications (procedural) cannot restrict substantive SEZ exemption; levy impermissible without authority post-override, fulfilling Article 265 Constitution.
Result: Appeal allowed.
For the Appellants/Petitioners: Utsav Sahgal
For the Respondents: Santosh Kumar
SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.NOI-EXCUS-001-APP-342-24-25 dated 13/02/2025 passed by Commissioner (Appeals) Central Goods & Services Tax, Noida. By the impugned order following has been held:-
Order
In view of the aforesaid discussions and findings, the instant appeal No.54/ST/Noida/APPL/NOI/2024-25 dated 03.05.2024 filed by M/s Matrix Design Works, E-84, Sector-41, Noida (U.P.)-201301 falls to succeed and consequently rejected. Order-in-Original No.228/AC/ST/TPI/CGST/Div-I/Noida/2023-24 dated 29.02.2024 passed by the Assistant Commissioner, HQ, Technical, CGST Noida is upheld being legal and proper.‖
2.1 Appellant is registered with the Department under the Registration No.AFXPD9408HSD001 for providing taxable services as defined by Section 65B (44) of the Finance Act, 1994 read with Section 66B of the Act.
2.2 On the basis of third party information was received from Income Tax Department, discrepancies were noted on comparison of the ITR and ST-3 returns leading in payment of service tax as indicated in table below:-
2.3 Inquiries were made from the appellant and they were directed to furnish the details of payment of service tax along with copies of ST-3 returns & reason of difference of value as shown in service tax return & Income Tax return/Form 26AS. However, no response was received.
2.4 Show cause notice dated 26.03.2021 was issued to the appellant, asking them to show cause as to why:-
a. The Service Tax amounting to Rs.21,04,914/- (Rupees Twenty One Lakh Four Thousand Nine Hundred and Fourteen Only) should not be demanded and recovered from them under proviso to Section 73(1) of the Finance Act, 1994 read with Section 142 and Section 174 of CGST Act, 2017.
b. The due interest on the amount of Service Tax mentioned at (a) above should not be demanded and recovered from them under Section 75 of the Finance Act, 1994 read with Section 142 and Section 174 of the CGST Act, 2017.
c. Penalty should not be imposed upon them under Section 78 of the Finance Act 1994 for failure to pay service tax & suppressing the facts and value of taxable service with intent to evade payment of Service Tax.
d. Penalty should not be imposed upon them under Section 77(1)(c) of the Finance Act, 1994 read with Section 142 and Section 174 of the CGST Act, 2017 for not maintaining proper records.
2.5 The said show cause notice was adjudicated as per the Order-in-Original dated 29.02.2024 by holding as follows:-
ORDER
(I) I confirm the demand of Service Tax amount of Rs.21,04,914/-((Rupees Twenty One Lakh Four Thousand Nine Hundred Fourteen Only) including Cesses, and order to recover the same from M/s.Matrix Design Works, E-84, Sector-41, Noida- 201301 M/s Kuldip Kumar Sabhaerwal, 263, Sector- 37, Noida, Noida Complex, Gautam Budha Nagar, Uttar Pradesh-201301 under the proviso to Section 73(1) of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of the CGST Act, 2017.
(II) I order to recover the interest as applicable under Section 75 of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of the CGST Act, 2017 from the noticee on the above said amount of Service Tax as confirmed at (I) above.
(III) I impose a penalty of Rs.21,04,914/- (Rupees Twenty One Lakh Four Thousand Nine Hundred Fourteen Only)and order to recover the same from the noticee under Section 78 of the Finance Act, 1994 read with Section 142, Section 173 and Section 174 of the CGST Act, 2017. If the amount as determined under Section 73 above is paid within 30 days from the date of receipt of the order along with the interest payable thereon as per Section 75, penalty will be only 25% of the service tax determined under Section 73. The benefit of reduced penalty shall be available only if the amount of penalty so determined is also been paid within the period of 30 days from the receipt of the order.
(IV) I impose a penalty of Rs. 10,000/-(Rupees Ten Thousand Only) under Section 77(1)(c) of the Finance Act, 1944 r
