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2026 Supreme(Online)(CESTAT) 2110
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
A.K. Jyotishi, Technical Member, Angad Prasad, Judicial Member
Team One India Pvt Ltd – Appellant
Versus
Commissioner of Customs, Central Excise and Service Tax – Respondent
Service Tax Appeal No. 26264 of 2013
For the Appellants/Petitioners: Lakshman Kumar K
For the Respondents: V.R. Pavan Kumar
Where receipts represent gross values inclusive of tax, the cum-tax benefit must be extended. Penalties under the Finance Act, 1994 cannot be imposed nor the extended period of limitation invoked without proof of fraud, collusion, or wilful suppression with intent to evade tax.
Headnote:The appeal concerns the imposition of service tax under the Finance Act, 1994, where the appellant challenged the order confirming tax demand and penalties. The court analyzed whether the appellant was entitled to the 'Cum-tax benefit' when the gross consideration received from customers was inclusive of service tax, and whether the invocation of the extended period of limitation was justified in the absence of fraud, collusion, or wilful suppression. The court determined that the appellant is entitled to Cum-tax benefit and that the extended period cannot be invoked simply for failure to pay tax without evidence of deliberate intent to evade. Key issues included the correct quantification of the tax demand, the availability of Cum-tax benefits, and the sustainability of penalties under Sections 76, 77, and 78. The Ratio Decidendi establishes that in the absence of positive evidence proving suppression or intent to evade tax, penalties cannot be sustained, and tax liability must be re-quantified on a Cum-tax basis if the gross receipts contained the tax component. The court emphasized that mere discrepancies in return filing without proof of wilful misstatements do not warrant extended limitation periods. The final outcome is that the appeal was allowed in part, the matter was remanded for re-quantification of the tax liability, and all penalties under Sections 76, 77, and 78 were set aside.
| Table of Content |
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| 1. summary of the case facts and initial order of the adjudicating authority. (Para 1 , 2 , 3 , 4 , 5) |
| 2. parties' contentions regarding cum-tax benefits and suppression allegations. (Para 6 , 7 , 8 , 9) |
| 3. court's determination that cum-tax benefits apply to gross receipts including tax. (Para 10 , 11 , 12 , 13) |
| 4. requirement of positive evidence for invoking extended period and suppressing facts. (Para 14 , 15) |
| 5. waiver of penalties under section 80 for reasonable cause. (Para 16 , 17 , 18) |
| 6. final order granting partial relief and remand for re-quantification. (Para 19 , 20 , 21) |
[ORDER PER: ANGAD PRASAD]
The present appeal has been filed by M/s Team One India Pvt Ltd., against the Order-in-Original No.37/2012-(Service Tax)-Commr. dated 31.12.2012, whereby, service tax amounting to Rs. 1,05,44,311/- along with interest under Section 75 of the Finance Act, 1994 has been confirmed and penalties under section 76, 77 and 78 of the Finance Act, 1994 have been imposed.
2. The facts in brief are that the appellant is engaged in providing Architect Services and was duly registered with the Service Tax Department. The records reveal that the appellant had been regularly filing ST-3 returns and discharging service tax liability on the amounts received from it’s clients. During Audit conducted in September, 2011, it was noticed that service had allegedly not been discharged on certain amounts representing the TDS deducted by customers while making payments to the appellant.
3. Consequently, Show Cause Notice dated 24.10.2011 was issued proposing recovery of service tax amounting to Rs. 1,05,44,311/- along with interest and penalties.
4. The Adjudicating Authority confirmed the proposals contained in the Show Cause Notice and imposed penalties under Section 76, 77 and 78 of the Finance Act, 1994.
5. Aggrieved by the said order, the appellant is before this Tribunal.
6. Learned Counsel for the appellant submits that the entire demand has been worked out on an erroneous assumption that the gross receipts reflected in the Bank Account represented taxable value exclusive of service tax. It is argued that the invoices issued by the appellant clearly reveal that the consideration received from customers was inclusive of service tax and therefore Cum-tax benefit is required to be extended. It is further submitted that while computing taxable value, the Department has ignored the TDS component deducted by clients and at the same time failed to grant Cum-tax benefit. According to the appellant, after inclusion of Tax Deducted at Source (TDS) component and grant of Cum-tax benefit, the actual liability works out substantially lower and the appellant had already discharged service tax of Rs. 74,23,440/- prior to Audit and a further amount of Rs. 20,50,142/- along with interest before adjudication.
7. Learned Counsel further submitted that there was no suppression of facts as all transactions were duly reflected in books of account and ST-3 returns. Reliance has been placed upon the following decisions:
i) CCE & ST, LTU, Bangalore Vs Adecco Flexione Workforce Solutions Ltd., [2011 (9) TMI 114 (Kar HC)]
ii) Sign Sites Publicities Vs Commissioner of Service Tax, Chennai [2017 (8) TMI 795 – CESTAT, Chennai]
iii) Tarachandra Engineering Pvt Ltd., Vs CCE, Vadodara-I [2015 (1) TMI 767 – CESTAT, Ahmedabad]
iv) Chennai Petroleum Corporation Ltd., Vs Commissioner of GST and Central Excise, Chennai [2023 (9) Centax 91 (Tri-Mad)]
v) Pushpam Pharmaceuticals Company Vs Collector of Central Excise, Bombay [1995 (78) ELT 401 (SC)]
vi) Continental Foundation Joint Venture Vs CCE, Chandigarh-I [2007 (216) ELT 177 (SC)]
vii) Uniworth Textiles Ltd., Vs CCE, Raipur [2013 (288) ELT 161 (SC)]
8. It is contended that in the absence of fraud, suppression or wilful misstatement, penalty under Section 78 cannot survive. It is further submitted that the delay in payment occurred solely due to severe financial constraints and delayed realization of dues fr
