The Commissioner Of Central Tax vs M/S. Conneqt Business Solutions Ltd
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Telangana High Court

The Commissioner Of Central Tax vs M/S. Conneqt Business Solutions Ltd on 11 June, 2024

              THE HONOURABLE SRI JUSTICE SUJOY PAUL
                               AND
     THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO


              CENTRAL EXCISE APPEAL No.2 OF 2024

JUDGMENT:

(per Hon'ble Justice Sujoy Paul)

Sri Dominic Fernandes, learned Senior Standing counsel

for the appellant and Sri Narendra Dave, learned counsel

representing Sri Lakshmi Kumaran Sridharan, learned counsel

for the respondent.

2. Heard on admission.

3. This appeal filed under Section 35 G of the Central Excise

Act, 1944 takes exception to the order of CESTAT, Regional

Bench, Hyderabad, in appeal No.ST/30206 of 2018 decided on

04.07.2023.

4. Learned counsel for the appellant submits that there was

a tripartite settlement between respondent Automobile

Companies and the Insurance Company. The case of appellant

is that although the invoices and the returns were available

showing the business and transaction between the Automobile

Companies and Insurance Company, in fact, it was a sham

arrangement. In order to bolster the said contention, it was

pointed out that the statements of officers were recorded by the

appellant, which shows that preparation of invoices and records

was a paper arrangement and in fact, no business had taken

place between the car manufacturers and the Insurance

Company.

5. Sri Dominic Fernandes, learned Senior Standing counsel

for the appellant by taking this Court to the appeal Memo and

substantial questions proposed submits that the learned

Tribunal has committed an error in one sidedly relying upon the

invoices and returns filed by the other side ignoring the

recorded statements of dealers. In addition, there were certain

emails on record to substantiate the same.

6. During the course of hearing, learned counsel for the

appellant fairly submits that admittedly, no action has been

taken by the appellant against the Insurance Company for the

same breach. No doubt, on this aspect, the Madras High Court

in M/s Modular Auto Limited Vs. Commissioner of Central

Excise, Chennai - North Commissionerate, Chennai 1 opined

that if no action is taken against the said Company, the one-

sided action taken against the other Company is not

permissible. It is fairly submitted that in a case of similar

2018-VIL-541-MAD-ST

nature decided by the Ahmedabad Tribunal in the case of

Newlight Hotels & Resorts Ltd. Vs. Commissioner of

C.EX.&S.T., Vadodara 2 similar view was taken. Against this

order of the Tribunal, the appeal of the appellant is pending

before the Hon'ble Supreme Court. In this view of the matter, it

cannot be said that the view of the Madras High Court in the

case in M/s Modular Auto Limited (1 supra) has attained

finality. It is submitted that the Tribunal has certainly erred in

deciding in favour the assessee and the appeal deserves to be

admitted on the following substantial questions of law:

1. Whether the decision of the CESTAT dated 04.07.2023 is correct in allowing the assessee's appeal despite his ineligibility for input services credited in terms of the CENVAT Credit Rules, 2004 and also

2. Whether the Tribunal was right in holding that unless and until the assessment made by the dealer is revised the credit at the recipient's end cannot be denied?

7. The other side opposed the prayer.

8. We have heard the parties on admission.

9. The learned Tribunal culled out the necessary facts in

para No.8 of the impugned order which reads as under:

2016(44) S.T.R. 258(Tri.-Ahmd.)

8. From the documentary evidence placed before us, there is no dispute that the Appellant, the car dealer and the insurance company have entered into Tripartite Agreement at the very first stage. These Agreements have been entered into much before the investigation/enquiries were initiated. Therefore, there is nothing to indicate that the veracity of such documents is liable to be questioned. This Agreement clarifies role of the car dealer and the acceptance letter from their side shows the details of activities being undertaken by them. Subsequent to 01.07.2012, the Invoices raised by any service provider need not specify as to under what category of service they are providing the services. In respect of the service recipient also so long as the service falls within the definition of input service in terms of Rule 2(I) of CCR 2004, they would be eligible to take the cenvat credit. The only condition being that the input service should not be under the exclusion list. It is nobody's case in the present proceedings that the invoices issued by the car dealers are not authentic or are not accounted for by them in the Returns filed within their jurisdictional offices. There is also no allegation that the Show Cause Notice to the effect that the services rendered under these invoices are not falling within the definition of Rule 2(I) of the CCR 2004. The entire case has been built on the ground that absolutely no service was rendered by the car dealers. For coming to this conclusion, the Department has relied upon only two Recorded statements of the dealers out of more than 100 dealers of the Appellant. Even these two officials have given a different version when they were cross examined. In such a case no evidentiary value can be placed on the Recorded Statements of these officials. Further there is no allegation coming up in the Show Cause Notice that TBSS have not recorded the transactions with car dealers in their books of accounts. It is not in dispute whether TBSS has paid the full invoice value along with the Service Tax to the car dealers. In such a case when they are accounting for the entire transaction in their books of accounts, it cannot be presumed that entire transaction is only on paper. The payments on both sides are through banking channels only.

It is not also the case of the Department that the person raising the Invoice has not paid the Service Tax shown in the Invoice to the Department. These car dealers are Service Tax assessees and have been filing their Returns with the Department. No questions have been asked nor any proceedings have been initiated against them by the jurisdictional authorities on any count.

(Emphasis supplied)

A plain reading of the findings in this order leaves no room for

any doubt. The respondent filed invoices and returns before

their jurisdictional offices and paid the service tax arising out of

it. The Tribunal clearly held that even in the show-cause notice,

there was no allegation that the services rendered under these

invoices were not falling within the ambit of Rule 2(I) of the CCR

2004. We find substance in the finding of the Tribunal. In

absence of making specific allegation in the show-cause notice,

the appellant cannot be permitted to make out a new case on

facts while passing the final order. The invoices and returns

were necessary documents which were admittedly filed before

the Jurisdictional Officer. Thus, necessary formalities and

compliances were made by the respondent.

10. The argument of Sri Dominic Fernandes is based on

certain recorded statements of dealers. However, the impugned

order shows that they took 'U-turn' during cross-examination.

In that event, if the Tribunal has disbelieved their statements, in

our opinion the Tribunal has taken a plausible view which does

not warrant any interference by this Court. In other words, the

said contention of the Tribunal is a finding of fact and does not

involve any substantial question of law.

11. It is not in dispute that certain High Courts including the

Madras High Court has taken a view that if no parallel action is

taken against one of the party to the tripartite settlement, no

action taken against the respondent. As on today, the

judgments of Madras High Court and other High Courts hold

good and have not been disturbed by the Hon'ble Supreme

Court. Thus, the Tribunal in our opinion has taken a plausible

view and no substantial question of law is involved in this

matter.

12. Resultantly, the appeal fails and is hereby dismissed. No

costs. Interlocutory applications, if any pending, shall also

stand closed.

___________________ JUSTICE SUJOY PAUL

_______________________________________ JUSTICE NAMAVARAPU RAJESHWAR RAO

Date: 11.06.2024 Bdr/Prv