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Continental Chemicals informed BSE that its appeal against a service tax demand from the Commissioner of CGST & Central Excise, Noida has been allowed in the company's favour by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Allahabad. The original dispute involved a service tax demand of about Rs. 5.27 lakh (Rs. 3.50 lakh on rental income for FY 2010-11 and Rs. 1.76 lakh under reverse charge mechanism for April 2010 to March 2013), along with penalties of Rs. 5.27 lakh and Rs. 5,000. CESTAT ruled that the show-cause notice was issued purely on the basis of an internal audit objection without any further investigation, making it unsustainable in law. The tribunal noted that the earlier order had confirmed the demand without giving a proper breakup.
This is a positive outcome for shareholders — no penalty or financial liability has been imposed on the company and there is no impact on its financial position. The win removes a long-pending tax demand and reduces any contingency overhang on the stock, though the absolute amount involved was relatively small.