Supreme Court Stays CESTAT Order Against Prism Johnson In ₹11.25-Crore Service Tax, CENVAT Credit Case

The Supreme Court on Monday, issued notice and granted an interim stay on an order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi against listed building materials company Prism Johnson Limited.

The tribunal had upheld a service tax demand of about Rs 11.25 crore and denied CENVAT credit of around Rs 7.70 crore in related excise proceedings.

A bench comprising Justice J.B. Pardiwala and Justice Vijay Bishnoi passed the order after hearing senior counsel for the appellant. The Court directed that the impugned CESTAT order shall remain stayed in the meantime.

"In the meantime, the impugned order(s) shall remain stayed from its operation," the court said.

The appeals arise from CESTAT's final order dated January 10, 2025. The Tribunal had dismissed the service tax appeals filed by Prism Johnson Limited and its officials while partly allowing the excise appeals.

On the service tax side, the tribunal held that the company had rendered taxable mining services to the mining leaseholder without obtaining registration or paying service tax. It concluded that consideration flowed indirectly through the differential pricing of limestone sold at rates lower than the market price.

On the excise side, the tribunal upheld the denial of CENVAT credit taken on services relating to mining and transportation of limestone. It held that such services did not qualify as “input services” used in or in relation to the manufacture of cement.

While the tribunal restricted recovery of CENVAT credit to the normal period of limitation and set aside personal penalties imposed under Rule 26(2)(ii) of the Central Excise Rules, it confirmed its core findings on taxability and inadmissibility of credit.

For Appellant: Senior Advocate Arvind Datar, Kavin Gulati with Advocates Vivek Sharma, AOR, and Saumya Mehrotra,