NOBLE CONSLIDATE GLAZING LTD vs CST CH -COMMISSIONER OF GST&CCE(CHENNAI OUTER)

IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI

Service Tax Appeal No. 41639 of 2016

(Arising out of Order-in-Appeal No. 322/2016 (STA – I) dated 9.6.2016
passed by the Commissioner of Service Tax (Appeals – I), Chennai)

M/s. Noble Consolidated Glazing Ltd. Appellant
st th
No. 323, Valyapathy Street, 1 Floor, 6 Block
Mugapair East, Chennai – 600 037.

Vs.

Commissioner of GST & Central Excise Respondent
Chennai North Commissionerate
26/1, Mahatma Gandhi Road
Nungambakkam, Chennai – 600 034.

APPEARANCE:

Shri N. Viswanathan, Advocate for the Appellant
Smt. O.M. Reena, Authorised Representative for the Respondent

CORAM

Hon’ble Shri P. Dinesha, Member (Judicial)
Hon’ble Shri M. Ajit Kumar, Member (Technical)

FINAL ORDER NO. 41138/2026

Date of Hearing: 04.05.2026
Date of Decision: 29.10.2026

Per M. Ajit Kumar,

Order-in-Appeal No.
This appeal is filed by the appellant against
322/2016 (STA – I) dated 9.6.2016 passed by the Commissioner of
Service Tax (Appeals – I), Chennai.
Brief Facts
2. The Appellant is engaged in the design, engineering, fabrication
and installation of façade and cladding systems, with M/s. Consolidated
Construction Consortium Ltd. (CCCL) being its major customer. The
Appellant provided façade fabrication and installation services for
airports at New Delhi, Mangalore, Trivandrum, Chennai and Dehradun,
classified under ‘Works Contract Service’. During audit, it was observed

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that the Appellant, being a wholly owned subsidiary of CCCL, had
provided taxable services to its associated enterprise and was required
to discharge service tax immediately upon credit or debit of the
consideration in its books of account. The Appellant was alleged to have
short-paid service tax of ₹ 10,90,151/- for the period June 2008 to July
2009. Although the Appellant claimed to have paid the amount, the
Adjudicating Authority found no evidence of such payment. A further
short-payment of ₹ 12,15,005/- was noticed by Audit for July and
August 2009, which the Appellant paid upon being pointed out by the
audit. The total alleged short payment thus amounted to 23,05,156/.
₹
The Adjudicating Authority, vide the Order-in-Original dated;
29.03.2013, confirmed the demand of service tax of ₹ 23,05,156/-
along with interest and imposed an equivalent penalty. The amount of
₹ 12,15,005/- already paid was appropriated towards the service tax
demand, and ₹ 2,373/- was appropriated towards interest. The
Appellant’s appeal before the Commissioner (Appeals) was rejected.
Hence, the present appeal.
3. The Ld. Advocate Shri N. Viswanathan appeared for the appellant
and Ld. Authorized Representative Smt. O.M. Reena appeared for the
respondent.
Appellant’s Submissions
3.1 The Ld. Advocate Shri N. Viswanathan submitted as follows:
A. The Appellant paid service tax upon receipt of payments from
CCCL under Rule 6 of the Service Tax Rules, 1994, as then applicable.
B. During the September 2009 audit, officers relied on the
Explanation inserted in the third proviso to Rule 6(1) to allege that tax
became payable upon book credit or debit in transactions with an

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associated enterprise. They overlooked that no book adjustments were
made for transactions with the parent company and did not consider
Board Circular F. No. 334/1/2008 dated 29.02.2008.
C. By letter dated 13.09.2009, the Department communicated audit
objections proposing service tax and interest, with four enclosures:
S.
No.
Period Tax Involved Interest Remarks
1. 10.05.2008-
31.07.2009

10, 90, 151/-

36,079/-

The annexure to the audit
admitted report to
payment of the tax on
10.09.2009 but quantified
the interest on the basis of
the date of adjustment

2. May & June 2009

54,304/-

1643/-


3. Jul & Aug 2009 12,38,492/-

2184/-

Annexure to the audit
notice only proposed the
demand for interest

4. 2007-08 and
2008-09
2373/-


5. Delayed filing of
returns

Late fee of Rs. 8000/-


D. After audit, the Appellant paid ₹2,373 as interest for 2007–08
and 2008–09 and filed the pending returns with a late fee of ₹8,000.
The Show Cause Notice dated 18.11.2011 demanded ₹23,82,947
(₹10,90,151, ₹12,38,492 and ₹54,304), with interest and penalties,
but ignored the payments of ₹10,90,151 on 10.09.2009 and ₹2,373 on
07.10.2009. It also invoked the extended limitation period and
proposed penalties, including under Section 78 of the Finance Act,
1994.
E. In its reply dated 17.02.2012, the Appellant submitted that the
Explanation applied only to book adjustments with an associated
enterprise. As tax was paid upon actual receipt, it was inapplicable.
The demands of ₹12,38,492 and ₹54,304 were also based on the gross

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value, including service tax and VAT, although the correct tax had
already been paid.
F. The adjudicating authority accepted that the Explanation was
inapplicable and dropped the related demand and interest. Yet it
confirmed ₹10,90,151 for alleged lack of payment proof, despite the
audit annexure recording payment, upheld the extended period, and
imposed a penalty of ₹23,05,156.
G. The Commissioner (Appeals) dismissed the appeal partly
because the Appellant had not produced the Show Cause Notice
enclosure. That enclosure was the audit annexure recording the relied-
upon payment. The impugned order therefore causes a manifest
miscarriage of justice.
H. The dispute arose solely from the change in law governing the
timing and manner of service-tax payment to associated enterprises.
Once the amended provision was held inapplicable, the entire demand
should have been dropped.
I. The audit annexure expressly recorded payment of ₹10,90,151
on 10.09.2009. The adjudicating authority’s decision to drop interest
on that amount also confirms payment; otherwise, there was no basis
to compute or drop such interest.
J. The extended limitation period was wrongly invoked because the
dispute concerned interpretation of an amended provision, with no
suppression, wilful misstatement, or intent to evade tax. The
Department knew of the issue by August 2009, and it was addressed
by October 2009 through payment of tax/interest and filing of returns.
The Show Cause Notice issued nearly two years later was therefore
time-barred.

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K. The Appellant therefore submits that the impugned order,
demand, and penalty are unsustainable and prays that they be set
aside and the appeal allowed.
Submissions made by the Respondent-Revenue
3.2 Ld. Authorized Representative Smt. O.M. Reena appeared for the
respondent. She submitted that:
A. Although the Explanation to the third proviso to Rule 6(1) of the
Service Tax Rules, 1994 applied to book adjustments between
associated enterprises and not to actual receipts, the assessee had
furnished no evidence that the amounts covered by the impugned
invoices had been received or that the corresponding service tax had
been paid. The demand was, therefore, confirmed. However, interest
of ₹ 2,664, computed from the invoice dates, was dropped.
B. As regards the delayed filing of ST-3 returns, the authority noted
that the returns had been filed and late fee of ₹ 8,000 paid, but
observed that compliance had followed the audit visit.
C. The extended period under the proviso to Section 73(1) of the
Finance Act, 1994, was invocable due to non-disclosure of relevant
facts and failure to file ST-3 returns until detection by audit. Relying
on Agam & Gem Laboratories, 1989 (38) E.L.T. 479 (T); Superior Air
Products, 2001 (136) E.L.T. 547 (T); Pahwa Chemicals Pvt. Ltd., 2002
(142) E.L.T. 106 (T); and Sanjay Industrial Corporation, 2003 (155)
E.L.T. 369 (T). Hence the demand with interest under Section 75 and
penalty under Section 78 was correct.
The ld. A.R. prayed that the appeal may be rejected.

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Analysis
4. Heard the parties to the dispute and perused the appeal records.
The present appeal challenges the order of the learned Commissioner
(Appeals) upholding the demand of service tax, interest and penalty
arising from the audit of the Appellant’s records.
5. The dispute principally concerns the demand of ₹ 10,90,151
under the Explanation to the third proviso to Rule 6(1) of the Service
Tax Rules, 1994, on the ground that the Appellant had not discharged
service tax upon credit or debit of consideration in its books of account
as an associated enterprise. The Appellant submitted that the
Explanation to the third proviso to Rule 6 of the Service Tax Rules,
1994, applied only where transactions with an associated enterprise
were accounted for through book adjustments. Since the Appellant
accounted for the transactions only upon actual receipt of consideration
and discharged service tax accordingly, the said provision was
inapplicable.
6. The adjudicating authority accepted that the Appellants
explanation. Nevertheless, it confirmed the demand of ₹ 10,90,151 on
the ground that the Appellant had not produced evidence establishing
receipt of the consideration and payment of the corresponding tax.
7. We have considered the rival submissions. The Hon’ble Supreme
Court in Easland Combines, Coimbatore Vs Collector of Central
Excise, Coimbatore [(2003) 3 SCC 410; 2003 (152) E.L.T. 39 (S.C.)]
clarified that mere non-payment of duty or failure to obtain
registration, in the absence of fraud, suppression or wilful
misstatement, is insufficient to attract the extended period of
limitation. This principle was reaffirmed in Uniworth Textiles Ltd. Vs

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Commissioner of Central Excise, Raipur [2013 (288) E.L.T. 161
(S.C.)], wherein the Hon’ble Supreme Court, relying on Easland
Combines (supra), held that the invocation of the extended period
requires a positive act indicative of wilful default. We find that, apart
from the fact that the short-payment was pointed out during audit,
there is nothing to establish a deliberate attempt to evade payment of
service tax. The extended period of limitation is, therefore, not
invocable. Consequently, the penalties imposed on the basis of the
alleged suppression or wilful default cannot be sustained.
8. Once the adjudicating authority held that the Explanation to Rule
6(1) did not apply where consideration was actually received, the
decisive question was whether the Appellant had, in fact, received the
consideration and discharged the corresponding tax. The Appellant
relies on the audit annexure as acknowledging payment of ₹ 10,90,151
on 10.09.2009. The Commissioner (Appeals) rejected the appeal on
the ground that the relevant enclosure to the show cause notice had
not been furnished. The Appellant has consistently contended that the
tax dues referred to in the adjudication order had already been paid
upon the short-payment being pointed out by the Department’s audit
team.
8.1 We find that the annexure to the Audit Report has been enclosed
with the appeal memorandum. The table in Annexure I records the
balance service tax payable as ₹ 10,90,151 and states that the “service
tax not paid” was “now paid on” 10.09.2009. The record thus supports
the Appellant’s claim that this amount had been paid before issuance
of the show cause notice. The Order-in-Original also records payment
of ₹ 12,15,005, which was appropriated towards the service tax

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demand. The amounts of ₹ 10,90,151 and ₹ 12,15,005 are, therefore,
required to be treated as accepted and paid to the extent established
by the records. This being so, with no evidence of fraud etc, no SCN
should have been issued in the matter and the payments accepted as
settling the matter.
9. There is another aspect to the matter. Limitation ordinarily bars
the remedy for enforcing a liability but does not necessarily extinguish
the underlying tax liability. However, the continued existence of a tax
liability does not, by itself, confer an unrestricted power upon the
Department to determine or recover it beyond the period prescribed
by law. The distinction between the subsistence of a liability and the
availability of a remedy for its enforcement assumes significance in the
present case.
9.1 In M/s. Bhagwandas B. Ramchandani Vs British Airways
[Civil Appeal No. 4978 of 2022, decided on 29.07.2022], the Hon’ble
Supreme Court considered the distinction between limitation barring a
remedy and a statutory provision extinguishing the underlying right.
Similarly, in Punjab National Bank Vs Surendra Prasad Sinha [AIR
1992 SC 1815; 1992 SCR (2) 528], the Court recognised that a debt
does not cease to exist merely because the remedy for its enforcement
is barred by limitation.
9.2 An assessee may, therefore, voluntarily pay an amount towards
an outstanding liability even where the Department’s remedy for
compulsory recovery is barred by limitation. Such payment may
discharge the liability to the extent paid, but does not, by itself, revive
a time-barred remedy for recovery of the unpaid balance, unless
provided for in law. The sustainability of any remaining demand

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including the normal period, must be independently examined under
the applicable statutory provisions. In the present case, for the reasons
discussed above, the extended period of limitation is not invocable as
the entire amount pertains to the extended period, and any demand
falling beyond the applicable normal period is unsustainable.
10. For the reasons discussed above, the service tax already paid by
the Appellant shall be appropriated towards the corresponding tax
liability which is not disputed. Interest already paid shall likewise be
appropriated towards the interest liability. Any demand falling beyond
the normal period of limitation is unenforceable.
Conclusion
11. The impugned order is modified to the extent indicated above.
The amounts of service tax already paid shall be appropriated towards
the corresponding liability, and no further recovery of the tax so paid
shall be made. Any remaining demand that is barred by limitation is
set aside. The penalties imposed are also set aside for the reasons
recorded above. The Appellant shall be entitled to consequential relief,
if any, in accordance with law. The appeal is disposed of accordingly.

(Order pronounced in open court on 29.10.2026)




Sd/- Sd/-
( M. AJIT KUMAR ) ( P. DINESHA )
Member (Technical) Member (Judicial)




Rex