TMI Blog2010 (7) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority. Appellant was engaged in the mining of iron ores under a contract entered into between them and one M/s. Sri Santhipriya Minerals Ltd. during the material period. They did not pay service tax on the amount collected from M/s. Sri Santhipriya Minerals Ltd., under the said contract for the period from 16-6-2005 to 31-12-2005. The Superintendent of Service Tax having jurisdiction over the appellant called for and examined the relevant agreement and, thereupon, required the appellant to pay service tax on the aforesaid amount. The appellant obliged this instruction of the superintendent and accordingly paid an amount of Rs. 3,56,460 towards service tax and education cess and an amount of Rs. 52,255 towards interest thereon. These payments were made on 23-12-2006. Later on, the Dy. Commissioner of Central Excise issued show-cause notice dated 22-2-2007 under section 73(1) of the Finance Act, 1994 proposing to appropriate the above payments towards demand of service tax and interest as also to impose penalties on the appellant under sections 76, 77 and 78 of the Act. In reply to this notice, the assessee mentioned their financial difficulties and also pleaded ignorance of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed on the assessee under sections 76, 77 and 78 respectively. In the present appeal against the Commissioner s order, the appellant s prayer is for setting aside the demand of service tax confirmed against them by the Dy. Commissioner as well as for vacating the penalties imposed on them by the Commissioner. 2. We have heard both sides. At the outset, the learned counsel has argued that the Dy. Commissioner s order should be taken as having merged with the Commissioner s order and, therefore, the appellant is entitled to challenge the demand of service tax as well. In this connection, he has heavily relied on the Hon ble Supreme Court s judgment in Kunhayammed v. State of Kerala 2001 (129) ELT 11 wherein the scope of the doctrine of merger was examined by their Lordships and landmark rulings were laid down in para 44 of their judgment, reproduced below : 44. To sum up our conclusions are : (i) Where an appeal or revision is provided against an order passed by a court, Tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejecting special leave petition or that the order of the Supreme Court is the only order binding as res judicata in subsequent proceedings between the parties. (vi) Once leave to appeal has been granted and appellate jurisdiction of Supreme Court has been invoked the order passed in appeal would attract the doctrine of merger; the order may be of reversal, modification or merely affirmation. (vii) On an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court the jurisdiction of High Court to entertain a review petition is lost thereafter as provided by sub-rule (1) of Rule (1) of Order 47 of the C.P.C. The learned counsel has particularly referred to clauses (i) and (iii) of the above para of the Apex Court s judgment and has argued that the order passed by the Dy. Commissioner should be deemed to have merged with the Commissioner s order in revisionary jurisdiction, under section 84 of the Finance Act, 1994 so much so that the assessee has become entitled to challenge the tax demand as well. 3. Learned JCDR has made an endeavour to distinguish Kunhayammed s case (supra) by submitting that section 84 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner could have exercised the power of revision. The Hon ble Supreme Court held that, as the order of registration was not appealable at all, it could not be said that the Income-tax Officer s order granting registration of the firm had merged in the appellate order passed by the appellate Commissioner. This was the decision of the Apex Court in the case of CIT v. Amritlal Bhogilal Co. AIR 1958 SC 868 which was followed by the Court in Kunhayammed s case (supra). In Kunhayammed s case (supra) the relevant ruling reads thus : Where an appeal or revision is provided against an order passed by a court, Tribunal or any other authority before superior forum and such superior forum modifies, reverses or affirms the decisions put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remain operative and is capable of enforcement in the eye of law. [Emphasis supplied] In the instant case, the Commissioner, as revisionary authority under section 84 of the Finance Act, 1994, did not want to disturb the Dy. Commissioner s decision on tax liability of the appellant and hence, in the show-cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n he issued the notice in January 2008. The argument is that the Commissioner should not have issued that notice, considering the fact that the assessee was not liable to pay service tax on the service of mining of minerals prior to 1-6-2007. These circumstances, according to the learned counsel, are relevant to section 80 of the Finance Act, which provides that, where an assessee shows reasonable cause for delay in payment of service tax, any penalty shall not be imposed on the assessee under section 76, 77 or 78 of the Act. According to the learned counsel, the aforesaid circumstances constituted reasonable cause for the purpose of section 80 and hence the penalties imposed on the appellant by the Commissioner should be vacated. In this context, the learned counsel has relied on the decision in the case of CCE v. Darmania Telecom [2009] 20 STT 98 (Punj. Har.) wherein the benefit of section 80 was given to the respondent by the Hon ble High Court after holding that the Commissioner as revisionary authority had no jurisdiction to impose any penalty on the party under section 78 of the Act in the absence of any finding of fraud, misstatement etc., against them by the original ..... X X X X Extracts X X X X X X X X Extracts X X X X
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