Supreme Court dismisses Fox Mandal’s plea over ₹3.9 crore service tax dispute

The Supreme Court on Wednesday dismissed a plea filed by law firm Fox Mandal & Co challenging the scope of remand ordered by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in a ₹3.9 crore service tax dispute under the pre-GST regime.

A Bench of Justices PS Narasimha and Alok Aradhe declined to interfere with the tribunal’s order, holding that no case was made out to expand or revisit the remand at the stage of a special leave petition.

The controversy stemmed from service tax proceedings initiated against the law firm for the period 2010–11 to 2014–15. The tax department had alleged irregular availment of CENVAT credit, non-payment of service tax on certain transactions and discrepancies between figures disclosed in returns and financial statements.

An adjudication order confirmed service tax of ₹2.99 crore along with recovery of ₹89.63 lakh in CENVAT credit, besides interest and penalties—taking the overall liability to approximately ₹3.9 crore.

Fox Mandal carried the matter to the CESTAT, which partly allowed the appeal and remanded key issues for fresh consideration by the adjudicating authority.

These included the denial of CENVAT credit, based on non-production of original invoices during audit, and the firm’s claim that certain services rendered to overseas clients qualified as “export of services” and were therefore exempt.

The tribunal observed that the credit claim could not be rejected without verifying documents subsequently produced and flagged that reliance on undisclosed departmental verification reports in rejecting the export claim raised concerns of procedural fairness.

However, it upheld a limited portion of the demand relating to service tax on sponsorship expenses, noting that the firm had itself recorded the payments as sponsorship in its accounts and had not substantiated its claim that they were donations.

Before the Supreme Court, the firm argued that while some components had been remanded, other aspects, particularly relating to service tax liability, had not been extended the benefit of reconsideration.

During the hearing, the Supreme Court observed that the remand ordered on certain issues was “correct” and saw no reason to interfere. The Court was also not inclined to broaden the scope of remand to cover additional components of the dispute.

Accordingly, the appeal was dismissed.

Fox Mandal was represented by advocate Surjendu Sankar Das.