Commissioner Of Service Tax Kolkata, Presently Known As Comm. Of CGST And Cx,Kol South Commissioner vs. M/S Wacker Metroark Chemicals PVT LTD
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The Commissioner of CGST & CX, Kolkata South Commissionerate (Revenue) filed an appeal before the Calcutta High Court against an order dated 10.10.2023 passed by the Customs, Excise and Service Tax Appellate Tribunal (Tribunal). The appeal challenged the Tribunal's decision concerning a demand of service tax, education cess, and secondary & higher education cess amounting to Rs.1,12,87,367/- raised against M/s. Wacker Metroarch Chemicals Pvt. Ltd. (Petitioner). The Revenue sought to recover these amounts, along with interest and penalties, under various provisions of the Finance Act, 1994. The Revenue also faced a delay of 327 days in filing the appeal.
Held
The High Court condoned the delay of 327 days in filing the appeal, exercising its discretion despite the explanation not being fully satisfactory. However, upon examining the impugned order, the Court noted that the total demand of service tax including cess was Rs.1,12,87,367/-. The Court found that this amount was well below the monetary limit fixed by a Circular issued by the Board for pursuing appeals before the High Court. Consequently, the Court held that the Revenue could not pursue this appeal. The appeal was accordingly disposed of on the ground of low tax effect. The substantial questions of law raised by the Revenue were expressly left open and not decided. The stay application was also disposed of.
Key Issues
1. Whether the amount of service tax (Rs.1,09,59,738.00), Education Cess (Rs.2,19,195.00), and Secondary & Higher Education Cess (Rs.1,08,434.00) should be demanded and recovered from the petitioner under proviso to Section 73(1) of the Finance Act, 1994? 2. Whether interest on the demanded amount should be recovered from the petitioner under Section 75 of the Finance Act, 1994? 3. Whether penalty should be imposed under Section 78 of the Finance Act, 1994 for alleged suppression of facts and violation of Sections 66 and 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994 and the Export of Service Rules, 2005? 4. Whether penalty should be imposed under Section 77 of the Finance Act, 1994 for failure to register with the Department for providing 'Business Auxiliary Service' as defined under Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994? Revenue's Contentions: The Revenue argued for the demand of service tax, cess, interest, and penalties based on alleged suppression of facts and non-compliance with statutory provisions. Petitioner's Contentions: The petitioner, through their learned Advocate, raised an objection that the appeal filed by the Revenue was below the monetary limit fixed by the Central Board.
Sections Cited
Section 73(1), Section 75, Section 78, Section 66, Section 68, Section 77, Section 69, Rule 6, Rule 4
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OD-1 IN THE HIGH COURT AT CALCUTTA SPECIAL JURI ICTION ORIGINAL SIDE
CEXA/14/2025 IA NO: GA/1/2025, GA/2/2025
COMMISSIONER OF SERVICE TAX KOLKATA, Presently known as COMMISSIONER OF CGST & CX, KOLKATA SOUTH COMMISSIONERATE VS M/s. WACKER METROARCH CHEMICALS PVT. LTD.
BEFORE :
THE HON'BLE THE CHIEF JUSTICE T.S SIVAGNANAM -A N D- HON'BLE JUSTICE CHAITALI CHATTERJEE (DAS) DATE : 17th July, 2025. Mr. Uday Shankar Bhattacharya, Adv. Ms. Ekta Sinha, Adv. …for appellant. Mr. Saurabh Bagaria, Adv. Mr. Indranil Banerjee, Adv. Mr. Subrata Mukherjee, Adv. …for respondent.
The Court : This is an appeal filed by the revenue under section 83 of the Finance Act, 1994 challenging the order dated 10.10.2023 passed by the Customs, Excise and Service Tax Appellate Tribunal, Eastern Zonal Bench, Kolkata (Tribunal) in Service Tax Appeal No.127 of 2012. The revenue has raised the following substantial questions of law for consideration.
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a) Why the amount of service tax to the tune of Rs.1,09,59,738.00, Education Cess to the tune of Rs.2,19,195.00 and Secondary & Higher Education Cess to the tune of Rs.1,08,434.00 should not be demanded and recovered from them under proviso to section 73(1) of the Finance Act, 1994 as amended ? b) Why interest on the demanded at (a) above at the appropriate rate should not be recovered from them under Section 75 of the Finance Act, 1994 as amended ? c) Why appropriate penalty should not be imposed upon them under the provisions of Section 78 of the Finance Act 1994 as amended for suppression of the fact as described hereinbefore as well as violation of the provisions of Section 66 and 68 of the Finance Act, 1994 as amended read with Rule 6 of the Service Tax Rules, 1994 as amended and Rule of the Export of Service Rules, 2005 as amended ? d) Why appropriate penalty should not be imposed upon them under the provisions of section 77 of the Finance Act 1994 as amended for failing to register with the Department for providing the said `Business Auxiliary Service’ as defined under Section 69 of the Finance Act 1994 as amended read with Rule 4 of the Service Tax Rules 1994 as amended ?
There is a delay of 327 days in filing the appeal. Though the explanation offered is not fully satisfactory, considering the facts of the case as also the 3
objection raised by the learned Advocate appearing for the respondent/assessee that this appeal is below the monetary limit fixed by the Central Board, we exercise discretion and condone the delay in filing the appeal. The condone delay application, IA NO: GA/1/2025, is allowed. As could be seen from the impugned order passed by the learned Tribunal, the demand of service tax including cess is Rs.1,12,87,367/-. If that be the case, the matter is well below the monetary limit fixed in the Circular issued by the Board and the revenue cannot pursue this appeal before this Court. Accordingly, the appeal stands disposed of on the ground of low tax effect and, consequently, the questions of law suggested are left open. The stay application, IA NO: GA/2/2025, stands disposed of.
. (T.S. SIVAGNANAM, CJ.)
(CHAITALI CHATTERJEE (DAS), J.)
SN/pkd. AR[CR]
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.