CESTAT Quashes Ex Parte Service Tax Order Against Export-Oriented IT Service Provider

The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside an ex parte service tax order passed against a Nashik-based IT service provider and remanded the matter for fresh adjudication after holding that the assessee’s reply to the show cause notice was not considered and that principles of natural justice were violated. The bench of Dr. Suvendu Kumar Pati (Judicial Member) noted that the appellant had indeed filed a reply to the show cause notice, though belatedly, after conclusion of the hearing. However, the Tribunal observed that there was nothing on record to establish proper service of notice upon the appellant. It further took note of the fact that jurisdiction had shifted from Nashik to Nagpur after issuance of the show cause notice and that the Nagpur Audit Deputy Commissioner had passed the Order-in-Original without considering the assessee’s submissions. The appeal was filed by Shri Ganesh Ambadas Sandhan, proprietor of Sandhan Infotech, against an Order-in-Appeal dated 27 February 2025 passed by the Commissioner (Appeals), CGST & Central Excise, Nashik. The matter was heard by Dr. Suvendu Kumar Pati, Member (Judicial), who delivered the final order on 7 May 2026. The appellant contended that it was a 100% export-oriented unit providing services exclusively to a client situated in the United Kingdom, namely M/s Storm Internet Ltd. According to the appellant, since the services rendered were exported services and no service tax was payable, there was no statutory requirement to obtain service tax registration under Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules. The assessee further argued that a detailed written submission had already been filed before the adjudicating authority through email on 25 March 2023. However, despite this, the Order-in-Original recorded that no reply had been submitted to the show cause notice till the date of passing of the order. The appellant also pointed out that although the adjudication order referred to three hearing dates, there was no material on record showing proper service of hearing notices upon the assessee. It was argued that the adjudication proceedings had been conducted entirely in the absence of the appellant, thereby violating the principles of natural justice. The assessee sought setting aside of both the Order-in-Original and the appellate order which had affirmed it. On the other hand, the Department defended the appellate order and argued that the appellant had failed to furnish evidence regarding export of services and had also not obtained service tax registration for providing such services. The Revenue therefore contended that the Commissioner (Appeals) had rightly upheld the adjudication order. The Tribunal specifically referred to Section 73(2) of the Finance Act, 1994, which mandates that the adjudicating authority must consider the representation made by the noticee before determining service tax liability. The Bench held that in the present case, the assessee’s representation was not considered at all, making the order legally unsustainable. The Bench further observed that service of notice under Section 73 also includes cases involving invocation of the extended period, making proper service and opportunity of hearing even more crucial. Since the appellate authority had confirmed the adjudication order without addressing these procedural lapses, the Tribunal held that the impugned orders could not survive either in law or on facts. The CESTAT allowed the appeal by way of remand and directed the original adjudicating authority to undertake de novo adjudication after considering the appellant’s submissions and after granting a proper opportunity of personal hearing with due notice. Case Details Case Title: Shri Ganesh Ambadas Sandhan Versus The Commissioner Of CGST & Central Excise, Nashik Commissionerate Citation: JURISHOUR-1215-CES-2026(MUM) Case No.: Service Tax Appeal No. 86440 Of 2025 Date: 07.05.2026 Counsel For Appellant: G.P. Pingle, Consultant Counsel For Respondent: Dhananjay Dahiwale Click Here To Read Order Read More: Electricity Is “Not Goods”? Hyderabad And Chandigarh CESTAT Rulings Reveal Two Different Legal Routes Under Cenvat Credit Law

CESTAT Quashes Ex Parte Service Tax Order Against Export-Oriented IT Service Provider

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