CESTAT Mumbai Sets Aside ₹29.72 Lakh Demand Against Owens Corning, Bars SCN After Voluntary Payment

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 5 May set aside the order of the Commissioner (Appeals), Raigad, which had confirmed a service tax demand of Rs. 29.72 lakh along with interest and equal penalty against Owens Corning (India) Pvt. Ltd. in relation to rent-a-cab services received under the reverse charge mechanism.

Judicial Member Dr. Suvendu Kumar Pati held that once the company paid the entire service tax liability along with applicable interest and intimated the department in terms of Section 73(3) of the Finance Act, 1994, the department could not issue a show cause notice on the same issue. The Bench observed:

“It would be crystal clear that if such tax dues, as ascertained by the Central Excise Officer, has been paid by the assessee on the basis of his ascertainment or being pointed by the Department and it has been intimated in writing to the Central Excise Officer, the assessee shall not be served with any notice under Sub-section (1) which would also include its proviso that covers extended period.”

Owens Corning (India) faced proceedings following a CERA audit for the period 2013–14 to 2016–17, which alleged that the company had availed rent-a-cab services from Shalimar Transport Services without discharging service tax liability on the taxable value as required under Notification No. 30/2012-ST under the reverse charge mechanism.

Pursuant to the audit objection, the company deposited the entire service tax of Rs. 29.72 lakh along with interest of Rs. 13.34 lakh and informed the department through a letter dated 26 April 2018. Despite this payment being made prior to issuance of the show cause notice, the department issued a notice in August 2018 seeking recovery of tax, interest, and penalties.

Before the Tribunal, Owens Corning (India) argued that Section 73(3) bars issuance of a show cause notice where the taxpayer pays the tax along with interest before service of notice and intimates the department in writing.

The Tribunal noted that the Department itself acknowledged the payment in the show cause notice and adjudication order, establishing that the authorities were aware the entire liability had been discharged before initiation of proceedings. It further held that the statutory conditions under Section 73(3) stood satisfied, since the company had voluntarily paid the dues and duly intimated the department in writing.

The Bench also rejected the allegation of suppression of facts for invoking the extended period of limitation, observing that the transactions were already reflected in the books of accounts and were detected during audit, and therefore did not justify invocation of the extended limitation period. It held that issuance of the show cause notice itself was not sustainable in law once the conditions under Section 73(3) were fulfilled.

Accordingly, the CESTAT quashed the proceedings and granted consequential relief to the company.

For Appellant: Shri Aditya Jain, C.A.

For Respondent: Shri Arun Bhaskar, Superintendent Authorised Representative