The Bombay High Court has recently observed that the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), as the final fact-finding authority under the statute, must adjudicate all issues arising from the record.

Failure to consider a contention and render a finding on it amounts to failure to exercise jurisdiction, the court observed.

“The CESTAT, being the final fact-finding authority under the statute, was duty bound to adjudicate on all issues arising from the record. Its failure to consider the aforesaid contentions and not render findings thereon amounts to failure to exercise jurisdiction vested in it,” a Division Bench of Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla ruled.

The bench was hearing an appeal filed by Prima Private Limited against a March 2025 CESTAT order concerning CENVAT credit of ₹1,85,400 on input services used in relation to setting up its factory. The dispute also involved a consequential interest and penalty.

Prima had originally faced a dispute over ₹2,71,889 towards credit availed on GTA services. The company later contended that only ₹86,489 of this amount related to GTA services, while ₹1,85,400 related to input services used for the construction of its factory.

Prima argued that the ₹1,85,400 credit was eligible during the relevant period in June 2008. The order records that the company had raised this ground before the original authority, the first appellate authority and the CESTAT during the remand proceedings.

The original and first appellate authorities declined to entertain the ground, treating it as a new ground or evidence. The CESTAT, meanwhile, did not render any finding on the eligibility of the ₹1,85,400 credit and restricted its finding to the eligibility of CENVAT credit on GTA services.

In the earlier round of litigation, the CESTAT had held that the issue was interpretational in nature and that there was no reason to impose a penalty.

Despite that finding, the original authority imposed a penalty equivalent to the disallowed credit in January 2020. The first appellate authority upheld the penalty. The CESTAT did not render any finding on the imposition or confirmation of the penalty in the impugned order.

The Revenue's case was that the penalty issue had not been taken up in appeal before the first appellate authority and that the CESTAT had therefore correctly not considered it. Prima disputed this position.

After examining the record, the court found substance in Prima's contention that its submissions had not been considered by the lower authorities. The bench noted that the company had raised the eligibility of the ₹1,85,400 credit before the lower authorities both on merits and on the ground that the order travelled beyond the show-cause notice. No finding had been rendered on these aspects.

The court set aside the CESTAT's order to the extent it concerned denial of the ₹1,85,400 CENVAT credit and the consequential interest and penalty.

It remanded the matter to the CESTAT for fresh consideration of Prima's claim. The company was permitted to raise all grounds available in law, while both parties were to be given an opportunity to hear.

For Appellant: Advocate Prasad Paranjape, along with Advocate Sonakshi Singh, instructed by Lumiere Law Partners

For Respondents: Advocate Shruti D. Vyas, along with Advocate Saket Ketkar

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Case Title :  Prima Private Limited v. Commissioner of CGST, Central Excise and Service Tax, Pune-ICase Number :  Central Excise Appeal No. 78 of 2025CITATION :  2026 LLBiz HC(BOM) 461
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