Case Details: Commissioner of Service Tax, Kolkata Versus Electro Steel Casting Ltd. (2025) 31 Centax 325 (Cal.)
Judiciary and Counsel Details
- T.S. Sivagnanam, CJ. & Chaitali Chaterjee (Das), J.
- S/Shri Bhaskar Prasad Banerjee & Kaustuv Kanti Maiti, Advs., for the Appellant.
- Shri Niraj Baheti & Ms Sreeja Chakraborty, Advs., for the Respondent.
Facts of the Case
The petitioner was subjected to a service tax demand based on the differential between the ‘gross amount billed’ and the ‘gross amount realised’ as reflected in the returns filed. In the course of adjudication, the adjudicating authority appointed a chartered accountant to conduct a special audit under specified and restricted terms, primarily aimed at verifying G.L. codes. Pursuant to this appointment, the special audit report was submitted, which also took note of a reconciliation report provided by the petitioner. However, the adjudicating authority proceeded to confirm the demand without examining the contents of the special audit report or recording any finding in contradiction to the reconciliation submitted by the petitioner. The petitioner contended that this failure vitiated the adjudication proceedings. The matter was accordingly placed before the Calcutta High Court under Section 35G of the Central Excise Act, 1944, as made applicable to service tax matters via Section 83 of the Finance Act, 1994.
High Court Held
The Calcutta High Court held that the adjudicating authority, having exercised discretion to appoint a special auditor, was obligated to evaluate the audit report and form a reasoned conclusion on its contents. It further noted that the special audit had explicitly considered the reconciliation report submitted by the petitioner, and the absence of any counter-finding by the adjudicating authority rendered the demand unsustainable. The Court affirmed the Tribunal’s observation that the adjudicating authority had failed to address or negate the petitioner’s reconciliation, thereby undermining the basis of the demand. Consequently, the High Court concluded that the issue was purely factual and did not give rise to any substantial question of law warranting its consideration under Section 35G of the Central Excise Act, 1944.
List of Cases Reviewed
- Electro Steel Casting Ltd. v. Commissioner — (2025) 31 Centax 324 (Tri. – Kol.) — Affirmed [Para 1]
