M/S Radiant Security vs. The Commissioner Of CGST And Excise Kolkata North Commissionerate

Facts

The appellant, M/s. Radiant Security, filed an appeal before the Calcutta High Court against the final order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Kolkata. The appeal concerns service tax demand for the period 2007-08 to 2009-10. The appellant claimed that certain payment challans were not reflected in their ST-3 returns, leading to a discrepancy with their balance sheet figures. The CESTAT, in its order dated 26.06.2023, dismissed the appellant's appeal, though it reduced the penalty to 25%. The appellant contended that the authorities below had not properly verified the submitted challans and that the demand was barred by limitation. The CESTAT noted that the appellant could not produce copies of the challans before it, and given the period involved and the existence of another unit in Bhubaneswar, it was not feasible for the jurisdictional authorities to undertake extensive verification.

Held

The High Court held that the appeal filed by the assessee under Section 35G of the Central Excise Act, 1944 (as made applicable to Service Tax) did not raise any substantial question of law. The Court found that the matter was entirely factual, and the adjudicating authority, the first appellate authority, and the CESTAT had appreciated and re-appreciated the factual position. The CESTAT's finding that the appellant could not produce copies of the challans, and that it was not possible to take a view that the appellant themselves did not account for these challans for over three years, was based on the facts presented. The CESTAT's observation that the appellant's challans might have been used for the Bhubaneswar unit and that undertaking verification at this stage would be a huge task for jurisdictional authorities, given the period involved (2007-08 to 2009-10), was also considered. The Court concluded that since the appellant was not in a position to provide clear evidence, the CESTAT's decision to dismiss the appeal was justified. The CESTAT had already granted partial relief by reducing the penalty. Therefore, no substantial question of law arose for consideration.

Key Issues

1. Whether the difference between balance sheet figures and ST-3 return figures, based on bills received versus payments received respectively, can form the basis of a demand? (Relates to Section 73 of the Finance Act, 1994, as service tax provisions were applicable). The appellant argued that this difference is explainable by the nature of accounting (bills received vs. payments received) and should not automatically lead to a demand. The revenue contended that the discrepancy indicates non-accounted service tax. 2. Whether the CESTAT erred in not remanding the matter for verification of challans submitted by the appellant, which was allegedly admitted by the adjudicating authority? The appellant argued for remand to allow for proper verification. The revenue did not record specific arguments on this point but implicitly supported the CESTAT's decision. 3. Whether the demand is barred by limitation, and if the CESTAT erred by not addressing this point? The appellant argued that the demand was time-barred. The revenue's stance was that the demand was valid. 4. Whether the CESTAT was justified in confirming the demand and imposing penalty despite the appellant claiming excess payment of service tax and producing evidence? The appellant argued that evidence of excess payment was produced and should have led to a different conclusion. The revenue contended for the confirmation of the demand. 5. Whether the CESTAT's order was perverse for not considering the production of documents and relying on the possibility of challans being connected to other units? The appellant argued that their documents were ignored and the CESTAT made an unsubstantiated inference. The revenue supported the CESTAT's findings. 6. Whether the CESTAT erred in dismissing the appeal without a specific finding on the non-existence of documents and on the pretext of verification difficulties? The appellant argued that the CESTAT's reasoning was flawed and biased. The revenue implicitly supported the CESTAT's decision. 7. Whether the CESTAT's order was otherwise bad in law and facts?