TMI Blog2014 (2) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of Commissioner (Appeals) set aside - stay granted - Matter remanded back - Decided in favour of assessee. - Service Tax Appeal No. 56146 OF 2013 - Final Order No. 50590 /2014 - Dated:- 20-2-2014 - G Raghuram And Rakesh Kumar, JJ. For the Appellant : Sh. Jitin Singhal, Advocate For the Respondent : Shri Govind Dixit, DR PER : G Raghuram The assessee company has preferred this appeal. The Deputy Commissioner, Central Excise, Kanpur passed an order dated 28.03.2012 confirming service tax demand of Rs. 10,24,952/-, interest and penalties, including penalty of an equal amount as the assessed tax, under Section 78 of the Finance Act, 1994 (the Act). 2. Under an agreement with M/s DakshinanchalVidyutVitran Nigam Limited (DVVNL) the appellant was providing maintenance and repairs of old and damaged transformers. On allegation that during 01.04.2010 to 31.03.2011, the appellant failed to disclose the gross consideration received for having provided the taxable management, maintenance or repair (MMR) service to M/s DVVNL; had disclosed only labour charges received but not the gross value received, proceedings were initiated by the show cause notice dated 07.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting waiver of pre-deposit and the substantive appeal as well, by this order. 7. Section 83 of the Act enjoins application of certain provisions of the Central Excise Act, 1944 (the 1944 Act) to service tax. Section 35 F of the 1944 Act is one such provision which is made applicable to service tax matters. Section 35 F of the 1944 Act enjoins pre-deposit of tax, interest and penalties as assessed, when an appeal is preferred against an order, whether the appeal be preferred before the Commissioner (Appeals) or to this Tribunal. The first proviso to Section 35 F authorizes the appellate authority to dispense with the pre-deposit requirement, where the appellate authority is of the opinion that deposit of the duty/ tax demanded or penalty levied would cause undue hardship to an appellant but subject to such conditions as the appellate authority may deem fit to impose, so as to safeguard the interest of Revenue. Principles governing the exercise of discretion while granting waiver of pre-deposit or a stay are spelt out in several decisions, including decisions of the Supreme Court in Assistant Commissioner, Central Excise vs. Dunlop India Ltd. (1985) 19 ELT 22 (SC) ; Benera Valves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in an appeal preferred to him; and not against an (interlocutory) order of pre-deposit passed by that authority, in exercise of discretion under the first proviso to Section 35 F of the 1944 Act. Since it is the settled legal principle that an appellate remedy is a creature of the statute; and availability of an inherent appellate remedy shall not be assumed; and requires to be legislatively provided, it is legitimate to infer that no appellate recourse to this Tribunal is open to an assessee against an (interlocutory) order of pre-deposit passed by the Commissioner (Appeals), since such an order would not be a order, which by itself disposes of appeal on merits. The appropriate remedy available to an assessee aggrieved by an order of pre-deposit passed by the Commissioner (Appeals) would therefore be judicial review under Article 226 or a supervisory curative recourse under Article 227, of the Constitution. Precedents however appear to belie this empirical assumption. 11. We consider some of the precedents which consider whether an appeal lies to this Tribunal against an order of pre-deposit passed by the Commissioner (Appeals). 12. In Hindustan Lever Ltd. vs. CCE, Chennai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and such an order is an appealable order in terms of Section 35G of the Act. The High Court dismissed the writ petition, since an effective alternative remedy of appeal is available. 16. In its decision dated 31.07.2013, the Punjab and Haryana High Court in CWP No. 1672 of 2013, an appeal preferred by M/s Surya Pharmaceuticals and others, distinguished the judgment of the Madras High Court in Hindustan Levers Ltd vs. CCE, Chennai (supra) and concluded that an assessee, aggrieved by an order of pre-deposit passed by the Commissioner (Appeals) (under Section 35F of the 1944 Act) could prefer an appeal to the CESTAT. This conclusion was recorded on the basis that the requirement of pre-deposit and the discretion to waive pre-deposit under provisions of Section 35F is integral to the scheme of appellate powers conferred by Section 35 and Section 35A of the 1944 Act; and an order of pre-deposit passed under Section 35F is essentially an order passed in an appeal filed under Section 35 read with Section 35A. 17. In Mela Ram Sons vs. Commissioner of Income Tax, Punjab AIR 1956 SC 367 the issue was whether an order of the appellate Assistant Commissioner refusing to condone the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing revisional jurisdiction) has no such power; (c) the scheme of the Act does not foreclose or permit bypassing the appellate Commissioner's jurisdiction to deal with the substantive issues on merits; and (d) that on a harmonious construction of provisions of Sections 129(a) and 129(b) (d) of the 1962 Act, the issue whether a dismissal of an assessee's appeal by the appellate Commissioner for failure of pre-deposit, without having to examine the substantive issue on merit is sustainable in law, must be determined by the Tribunal. 21. In Baron International Limited vs. Union of India 2004 (163) ELT 150 (Bom.) , the High Court clearly ruled that the CESTAT has no inherent power to review its orders. This is also the well settled position see Harbhajan Singh vs. Karam SinghA.1966.SC. 641; D.N. Roy vs. State of Bihar (1970) 3 SCC 402; Patel NarshiJhakesshi vs. Pradyumnasinghji(1971) 3. SCC. 844; Mehar Singh Nanakchand vs. NaunihalJhakkar Das (1973) 3. SCC. 731; State of Assam vs. J.N. Roy (1976) 1 SCC 234; Major Chandra Bhan vs. LatafatUllah Khan (1979) 1 SCC 321; R.R. Varma vs. Union of India (1980) 3 SCC. 402; Gram PanchayatKauouda vs. Div. of Consolidation of Holdings ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karnataka High Court in M. I. Metal Sections Pvt. Ltd. vs. CCE, Bangalore 1995 (75) ELT 470 (Kar.) ; ruled that if as the result of a subsequent decision of the Tribunal any change in the correct legal position has been brought about, an appellant can move the Tribunal for modification of the order passed by the Tribunal. The High Court ruled that it is improper for the Tribunal to dismiss an appeal merely since an assessee failed to comply with the condition of pre-deposit ordered. When the appeal is listed for hearing, it will be open to an assessee / appellant to move the Tribunal, even at that stage, to address a plea that it could not comply with the (pre-deposit) order passed by the Tribunal, on account of financial difficulties or circumstances beyond its control; and where such a plea is raised the Tribunal shall have to consider its merits, ruled the High Court. 25. The Gujarat High Court in Amar Food Products vs. Union of India 2010 (259) ELT 490 (Guj.) considered the scope of Section 35F of the 1944 Act, and pointed out that where, subsequent to an order of pre-deposit, the decision of a Tribunal which was a basis for the pre-deposit was referred for consideration to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioners' dismissing appeals by assessees for failure of pre-deposit and considering merits of orders of pre-deposit earlier passed by appellate Commissioners. 30. While no uniform, or a wholly coherent norm could be culled out from the several decisions adverted to (supra), we are able to identify the following principles from the precedents, to the extent relevant and material for the purposes of the issues arising in the present case. The following principles, in our considered view emerge: (a) While considering an application for waiver of pre-deposit, the appellate Commissioner is required to avoid a mechanical and ritualistic approach. A waiver of pre-deposit application must be disposed of applying the principles set out in the judgments of the Allahabad High Court in ITC vs. Commissioner (Appeals) Meerut 2005 (184) ELT 347 (All.) and the A. P. High Court in CCE, Guntur vs. Sri Chaitanya Educational Committee 2011 (22) STR 135 (A.P.) . A summary of the principles governing the exercise of discretion in this area is set out in paragraph 14 of the judgment of the A.P. High Court; (b) The Commissioner (Appeals) has the power, authority and jurisdiction to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st a final order of the appellate Commissioner, (dismissing an appeal for failure of pre-deposit), the Tribunal shall not adjudicate upon the merits of the appeal. If the order of pre-deposit passed by the Commissioner (Appeals), in the given facts and circumstances is erroneous, the Tribunal is required to set aside the order of the appellate authority and remit the matter to the appellate Commissioner for denovo consideration, after passing an appropriate order as to pre-deposit. 31. Coming to the merits of the present appeal, the primary authority confirmed the demand of service tax, penalty and interest on the ground of non remittance of service tax on the gross consideration received for repair and maintenance of old/ damaged transformers, from DVVNL. The appellant had remitted service tax on the value of the labour charges received; but not on the value of replaced parts such as HV/LT leg coils, transformer oil and other goods used in the process of repair/ maintenance. The agreement between the parties catalogues a break-up of the total cost of repair and maintenance, under several heads such as labour charges and value of items to be replaced. The adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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