In Service Tax Appeal No. 1206 of 2011 - CESTAT - CESTAT (Hyderabad) sets aside demand for extended period and waives penalties on grounds of interpretational difficulties
Members R. Muralidhar (Judicial) & A.K. Jyotishi (Technical) [30-05-2023]

Read Order: Blaze Colour Laboratories v. Commissioner of Customs, Central Excise & Service Tax, Guntur

Chahat Varma

New Delhi, June 2, 2023: The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled in favor of Blaze Colour Laboratories (appellant), stating that the demand for the extended period cannot be imposed on them due to the matter being an issue of interpretation. The Tribunal allowed the appeal, setting aside the confirmed demand for the extended period along with interest. Additionally, considering that the issue arose due to interpretational difficulties, all penalties were waived.

In the matter at hand, the present appeals were on account of dispute as to whether cost of consumables used in the photocopying services was includible in the assessable value or not, while the service tax was to be paid.

The bench of R. Muralidhar (Judicial) and A.K. Jyotishi (Technical) noted that the issue as to whether the cost of consumables was includible in the assessable value or not was under dispute and was being litigated in various coordinate benches of the Tribunal, who have taken varying stands and decisions. The bench also noted that the matter had also gone up to the Supreme Court, which showed that even the coordinate benches were not on the same page on this issue.

The bench observed, “It is seen from the record that even in the Appellant’s own case, the Commissioner (Appeals) has agreed with the submissions of the Appellant that they are eligible to get abatement towards the cost of consumables used by them. This would mean that within the same Department the Adjudicating Authority has taken stand that the value of consumables is to be added and the Commissioner (Appeals) has taken stand that the same is not required to be added. Such being the case, it is clear that the issue is that of interpretation.”

The bench referred to the case of Nice Color Lab v. Commissioner of Central Excise, Jaipur [LQ/CESTAT/2023/703], wherein it was observed that when the law was declared against the assessee subsequently to the period involved, and when the earlier decision was in favour of the assessee, no suppression can be attributed to the appellant so as to justifiably invoke longer period of limitation.