CESTAT rules in favor of taxpayers in service tax and excise duty disputes

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has issued two significant rulings regarding tax demands in India.

In Chandigarh, CESTAT set aside a service tax demand of ₹1.04 crore against S. S. Cargo. The demand was based on a mismatch between ST-3 returns and Form 26AS/Income Tax Returns. The Tribunal ruled that a demand cannot be raised solely on such discrepancies without identifying the specific taxable service, recipient, and consideration. It also noted that services provided to body corporates attract reverse charge and that the appellant had not received proper personal hearing notices.

In Hyderabad, CESTAT quashed an excise duty demand of ₹7.04 lakhs against GR Power Switchgear Ltd. The dispute arose when the tax department treated a CENVAT credit reversal reimbursement as collected excise duty. The Tribunal held that the amount recovered from the buyer was a reimbursement of a statutory liability under the Cenvat Credit Rules, 2004, rather than excise duty, despite it being inadvertently labeled as such on invoices.