M/s. K. Balakrishnan, Balu Cables Vs Assistant Commissioner of GST & Central Excise (Madras High Court)

Madras High Court heard a petition by K. Balakrishnan challenging an order that imposed a service tax liability of ₹23,10,156 for the financial years 2016-17 and 2017-18 (up to June 2017). The case arose after tax authorities identified discrepancies between the petitioner’s income tax returns and service tax (ST-3) returns. Despite being issued a show cause notice and follow-up communications, the petitioner did not respond, leading to the final order demanding service tax payment.In defense, the petitioner argued that he was not required to obtain a service tax registration, citing exemptions under Notification No. 8/2008-ST, amending Notification No. 6/2005-ST. He claimed his turnover during the disputed period was below the exemption threshold and, therefore, not subject to service tax. The petitioner sought to quash the demand, asserting that the order was erroneous. Additionally, he expressed willingness to deposit 25% of the disputed amount for appeal, exceeding the statutory requirement of 7.5% under Section 35F of the Central Excise Act, 1944, applicable through Section 86 of the Finance Act, 1994.The revenue department, however, argued that the petition should be dismissed due to procedural lapses and legal precedents. The department relied on Singh Enterprises v. Commissioner of Central Excise, Jamshedpur & Ors. [(2008) 3 SCC 70] and Assistant Commissioner (CT) LTU, Kakinada & Ors. v. Glaxo Smith Kline Consumer Health Care Ltd. [2020 SCC Online SC 440] to support its stance that such appeals are time-barred and not maintainable.After reviewing the case, the court acknowledged the petitioner’s status as a small business entity and noted that he might have a valid case on merits. In light of this, the court allowed the petitioner to file a statutory appeal before the Appellate Commissioner within 30 days, subject to a 25% pre-deposit of the disputed tax amount. The court clarified that this deposit would not affect the petitioner’s rights in the appeal.The High Court further directed the Appellate Commissioner to decide the appeal within six months, ensuring that the petitioner would be given a fair hearing. With these directions, the writ petition was disposed of, closing all related miscellaneous petitions. This ruling reaffirms procedural fairness in tax disputes while ensuring compliance with appellate requirements.