CESTAT rulings favor Sant Roadlines and Royal Enfield in tax disputes

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has issued significant rulings in favor of Sant Roadlines and Royal Enfield regarding tax demands and penalties.

In a case involving Sant Roadlines, the Chandigarh Bench addressed whether providing trucks on a kilometer basis to logistics providers constituted the supply of tangible goods. While the Tribunal determined the activity was taxable as the supply of tangible goods because the appellant retained possession and control of the vehicles, it ruled that the appellant held a ‘bona fide belief’ that its services were not taxable. As a result, the Tribunal held that the extended period of limitation could not be invoked to recover the service tax.

Separately, the Chennai Bench of CESTAT allowed three excise appeals filed by Royal Enfield, a unit of Eicher Motors Limited. The Tribunal found that a penalty of Rs. 4.75 lakh imposed on a demand of Rs. 15.81 lakh exceeded the statutory ceiling of approximately Rs. 1.58 lakh and was therefore imposed without authority of law. The dispute involved CENVAT credit related to service stations, marketing, and branch offices.