Tax Appeal No. 51862 of 2015 · Afr High Court
Case Details
Page 1 of 21 (Tax Case No.93/2024) SISTA SOMAYAJULU Digitally signed by SISTA SOMAYAJULU Date: 2025.06.13 10:52:12 +0530 2025:CGHC:23373-DB AFR HIGH COURT OF CHHATTISGARH AT BILASPUR TAXC No. 93 of 2024 {Arising out of Final Order No.FO/ST/A/50550/2023-CU[DB] dated 26-4-2023 passed by the Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi, in Service Tax Appeal No.51862 of 2015} Judgment reserved on: 9-5-2025 Judgment delivered on: 12-6- 2025 M/s Saubhagya Tilak Hotels Pvt. Ltd., Opposite College of Dairy Technology, Labhandi, G.E. Road, Raipur (C.G.) ... Appellant versus Principal Commissioner of Central Excise, Central Excise Building, Dhamtari Road, Tikrapara, Raipur (C.G.) ... Respondent For Appellant : Mr. Rahul Tamaskar, Advocate on behalf of Mr. Bhishm Aluwalia, Advocate. For Respondent : Mr. Ashutosh Singh Kachhawaha, Advocate. Division Bench: - Hon'ble Shri Sanjay K. Agrawal and Hon'ble Shri Sanjay Kumar Jaiswal, JJ. Page 2 of 21 (Tax Case No.93/2024) C.A.V. Judgment Sanjay K. Agrawal, J. 1. This tax appeal preferred under Section 35G(1) of the Central Excise Act, 1944 was admitted for hearing on 24-7-2024 by formulating the following substantial questions of law: - “i. Whether Statement recorded contrary to provisions of Section 9D qualify to be Statement in Chief and can demand be confirmed relying upon such statements? ii. Whether CESTAT was correct in law to confirm demand relying upon statements recorded contrary to Section 9D and without cross examination of such witnesses? iii. Whether Hon’ble CESTAT was correct in law in holding that appellant has provided Mandap Keeper Services without evidence of provision of service and is liable to pay service tax on total receipts? iv. Whether Hon’ble CESTAT is correct in confirming the demand against the appellant without allowing abatement in value of service available in terms of Notification No.01/2006-ST dated 01.03.2006?” 2. For the sake of convenience, substantial question of law No.iii is reformulated as under: - “iii. Whether Hon’ble CESTAT was correct in law in holding that appellant has provided Mandap Keeper Services without evidence of providing service and is liable to pay service tax on total receipts?” 3. The aforesaid questions of law arise for consideration on the following factual backdrop: - Page 3 of 21 (Tax Case No.93/2024)
Legal Reasoning
4. M/s. Saubhagya Tilak Hotels Pvt. Ltd. – the appellant herein, was engaged in operating a non-air-conditioned restaurant (without alcohol service) and B2B supply of bakery and confectionary items during disputed period 2008-09 to 2010- 11 and during that period, service tax was not levied on non- AC and non-alcohol serving restaurants, and supply of bakery and confectionary was also sale of goods. As a consequence of search operation at the premises of the appellant on 24-12- 2011 conducted by a team of Service Tax Officers, the respondent entertained a view that the appellant has received amount in form of cash and cheques from multiple parties in relation to providing ‘Mandap Keeper‘s Services’ as defined under Section 65(105)(m) of the Finance Act, 1994 and accordingly, documents like bills, bank statements, payment vouchers, daily receipts, etc. were seized under panchnama
Legal Reasoning
dated 24-12-2011 (Annexure D). Statement of Mr. Satish Kumar Pachouri, Manager (Operations) of the appellant firm was recorded under Section 14 of the Central Excise Act, 1944 and thereafter, statement of Mr. Ashwin Sethi, Director of the appellant firm was also recorded under Section 14 on 3-4- 2012. Show cause notice was issued to the appellant on 16-4- 2013 demanding service tax amounting to ₹ 91,04,431/- along Page 4 of 21 (Tax Case No.93/2024) with applicable interest and penalty on ‘Mandap Keeper Service’ for the period from 2008-09 to 2011-12 and thereafter, on 26-6-2014, the respondent returned bills relating to Mandap Keeper Service except payment and receipt sheets as non-relied upon documents to the appellant. The appellant replied to the show cause notice on 13-11-2014 and specifically in paragraph 13 of the reply, demanded opportunity to cross-examine Mr. Satish Kumar Pachouri, Manager (Operations). The order in original dated 20-1-2015 passed by the Commissioner confirmed the demand of service tax and refuted the opportunity of hearing holding that Mr. Satish Kumar Pachouri was the employee of the appellant herein relying upon the decision rendered by the CESTAT, Bangalore in the matter of Shalini Steels Pvt. Ltd. v. Commissioner of Central Excise, Hyderabad1. 5. Feeling aggrieved and dissatisfied with the order in original passed by the Commissioner i.e. the adjudicating authority confirming the entire demand of service tax, the appellant herein has preferred appeal before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Principal Bench, New Delhi, however, by final and cryptic order dated 26-4-2023, the 1 (2010) 258 ELT 545 Page 5 of 21 (Tax Case No.93/2024) learned CESTAT dismissed the appeal finding no merit which has been sought to be challenged by the appellant / assessee by filing this appeal in which substantial questions of law have been formulated and set out in the opening paragraph of this order. A rectification application was also filed by the appellant before the CESTAT which has also been dismissed on 6-2-2024. 6. Mr. Rahul Tamaskar, Advocate, appearing on behalf of Mr. Bhishm Aluwalia, learned counsel for the appellant, would submit that the author of relied upon documents receipt and expenditure sheets i.e. Accountant has not been examined in the entire investigation and furthermore, Mr. Satish Kumar Pachouri, whose statement has been heavily relied upon by the Revenue, though sought to be cross-examined by the appellant, but despite prayer having been made, he has not been allowed to be cross-examined which is violative of the procedure prescribed under Section 9D of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. Furthermore, the documents that have been returned being non-relied upon documents have also been relied upon to hold the appellant liable for service tax. Mr. Tamaskar, learned counsel appearing for the appellant, would lastly submit that relied upon Page 6 of 21 (Tax Case No.93/2024) documents are inconclusive to establish rendering of Mandap Keeper Services, as such, the impugned order passed by the adjudicating authority i.e. the Commissioner of Customs & Central Excise and affirmed by the appellate authority i.e. the CESTAT are liable to be set aside and the appeal deserves to be allowed. 7. Mr. A.S. Kachhawaha, learned counsel appearing for the respondent/Revenue, would support the impugned order and submit that on the basis of the statement of Mr. Satish Kumar Pachouri, employee of the appellant/assessee being Manager (Operations) as well as the documents brought on record, service tax has rightly been levied by the Commissioner of Customs & Central Excise which has rightly been affirmed by the appellate authority, as such, the concurrent findings of the two authorities are not open to interference in exercise of jurisdiction under Section 35G of the Central Excise Act, 1944 and the appeal deserves to be dismissed. 8. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection. Page 7 of 21 (Tax Case No.93/2024) 9. Though by order dated 24-7-2024, four separate substantial questions of law have been formulated, but substantial questions No.(i) & (ii) are both interlinked with each other, therefore, they are being answered together. Answer to Substantial Questions of Law No.(i) & (ii) 10.In this case, on 24-12-2011, search operation was conducted in the premises of the appellant under panchnama dated 24-12- 2011 and on the same day, statement of Mr. Satish Kumar Pachouri, Manager (Operations) of the appellant firm, was recorded under Section 14 of the Central Excise Act, 1944 and thereafter, on 3-4-2012, statement of Mr. Ashwin Sethi, Director of the appellant firm, was recorded under Section 14. Section 14 is the power of the Central Excise Officer to summon persons to give evidence and produce documents in inquiries under the Central Excise Act, 1944. By virtue of sub- section (3) of Section 14, every such inquiry under sub-section (1) of Section 14 shall be deemed to be a “judicial proceeding” within the meaning of Section 193 and Section 228 of the Indian Penal Code. However, it is the case of the appellant herein that while replying to the show cause as stated in paragraph 13, the assessee demanded cross-examination of Mr. Satish Kumar Pachouri stating that as the Revenue has heavily Page 8 of 21 (Tax Case No.93/2024) relied upon the statement of this witness recorded under Section 14 of the Central Excise Act, 1944, therefore, opportunity to cross-examine him should be given to the appellant/assessee which the Commissioner of Customs & Central Excise/adjudicating authority rejected holding that since Mr. Satish Kumar Pachouri, Manager (Operations), whose statement was recorded under Section 14 was the employee of the appellant/assessee and no specific reason was attributed requesting for such cross-examination, relying upon the decision rendered by the CESTAT, Bangalore in Shalini Steels Pvt. Ltd. (supra). On challenge being made by the appellant before the appellate authority CESTAT, the appellate authority has not recorded any specific finding in this regard. 11.Section 14 of the Central Excise Act, 1944 confers powers on the Central Excise Officer to summon persons to give evidence. Such statements are admissible in evidence. By relying upon these statements so recorded, the Central Excise Officer adjudicating the case may : (a) raised demand of Central excise duty; (b) confiscate any goods, plant or machinery, etc.; (c) levy penalties. In view of the aforesaid power and jurisdiction confers to the Central Excise Officer, the adjudicating proceedings are quasi-judicial in nature. [See :- T. Ashok Pai v. Page 9 of 21 (Tax Case No.93/2024) CIT, Bangalore2; Vinod Solanki v. Union of India and another3 and Kothari Filaments and another v. Commissioner of Customs (Port Kolkata) and others4. 12.In order to consider the plea raised at the Bar, it would be appropriate to notice Section 9D of the Central Excise Act, 1944, which states as under: - Relevancy of statements under certain “9D. circumstances.—(1) A statement made and signed by a person before any Central Excise Officer of a gazette rank during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains,— (a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the Court considers unreasonable; or (b) when the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. (2) The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a Court.”