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2015 (6) TMI 787 - MADRAS HIGH COURT

2015 (6) TMI 787 - MADRAS HIGH COURT - 2015 (39) S.T.R. 795 (Mad.) - Rejection of declaration under VCES 2013 - Statutory provision of Appeal under VCES - Adjudicating authority vs Designated authority - Held that:- In similar circumstances, the Punjab and Haryana High Court, in its decision in M/s.Barnala Builders s case [2013 (12) TMI 568 - PUNJAB AND HARYANA HIGH COURT ] , has categorically held that the order passed under VCES is appealable. We are unable to accept correctness of instruction .....

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vs Designated authority - It is pertinent to note that though the second respondent has been described as a designated authority, however, a perusal of the order, dated 15.11.2013 passed by him clearly shows that he has dealt with the issue on merits regarding the eligibility of the assessee/petitioner to avail the VCES scheme and passed a detailed order, dated 15.11.2013 holding that since the petitioner had been issued with show cause notice dated 8.2.2012 demanding service tax of ₹ 21, .....

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opinion, would fall within the meaning of adjudication which is meant by settled law that giving or pronouncing a decision or order judicially and thereby, I have no hesitation to hold that the second respondent has acted as an adjudicating authority and not as a designated authority.

The remedy of appeal is a creation of a statute. In fact, making a provision of appeal is the statute is to give a hope of success to the aggrieved party who has been affected by the adverse order of the .....

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provision, it would be nothing to mean that the order passed by the authority has become final and conclusive for all the purposes and thereby, giving uncontrolled and unquestionable powers to the said authority by virtue of which, he becomes as monopoly over the statute and will certainly act in an arrogant manner.

Commissioner of Central Excise (Appeals) directed to take up the appeal preferred by the petitioner and dispose of the same in accordance with law - Decided in favour of .....

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td. granting lease of its premises for the said company on a monthly rent of ₹ 5,00,000/-. The 2nd respondent called upon the petitioner to pay service tax on the lease amount and issued a show cause notice to the petitioner alleging that the petitioner has violated Section 68, 69 & 70 of the Finance Act, 1994 (in short, the Act, 1994) and called upon to submit its explanation to the Additional Commissioner of Central Excise, Coimbatore. The petitioner submitted its reply stating that .....

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vice u/s 77[1][a] of the Act from the first day till the date of compliance along with penalty of ₹ 5,000/- u/s 77[2] and penalty of ₹ 21,44,299/- u/s 78 of the Act. 3. Aggrieved by the said order, the petitioner preferred an appeal and the 1st respondent vide order dated 27.08.2013, modified the said order by allowing the deduction of the tax. In the meantime, the Government introduced a onetime scheme known as Service Tax Voluntary Compliance Encouragement Scheme, 2013 [ in short, .....

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original order passed was modified on appeal. Despite reply, the 2nd respondent passed an order dated 15.11.2013 rejecting the declaration of the petitioner holding that show cause notice has been issued during the subject period and as such the petitioner is not eligible to avail the benefit of the scheme as per Section 106[1] of the Act and by relying on the Board's circular No.169/4/2013-St dated 13.05.2013. 4. Aggrieved by the rejection of the declaration by the 2nd respondent, the peti .....

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T dated 08.08.2013. Unless the appeal is taken on file by the 1st respondent, the petitioner would be denied an opportunity to challenge the correctness of the order passed by the 2nd respondent and the petitioner would be left with no remedy. Hence the Writ Petition. 5. A counter affidavit has been filed on behalf of the respondents. The sum and substance of the counter affidavit is that the Commissioner (Appeals) returned the appeal filed by the petitioner against order of rejection, dated 15. .....

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Scheme and admittedly, in the case of the petitioner, there had been an order of adjudication dated 28.3.2013 by the Additional Commissioner of Central Excise, confirming the service tax liability of the petitioner as demanded in the show cause notice dated 8.12.2012. Therefore, when there had been a notice demanding service tax liability from the petitioner, the petitioner is not entitled to file a declaration under the VCES. Though VCES introduced by way of amendment made by the Finance Bill, .....

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see complies with Section 106, he can proceed under Section 107 for submitting the declaration as prescribed in it. In this case, Section 106 itself prevented the petitioner from filing declaration under the scheme for availing the benefits. The second respondent acted as designated authority and he is not empowered to decide any lis. Therefore, the order of the first respondent returning the appeal is valid in law and therefore, the respondents sought for dismissal of the writ petition. 6. Hear .....

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the Act, 1994 including the provision for appeal is applicable to the scheme. Therefore, he contended that the as against the order of rejection of declaration under the Scheme, an appeal would lie under Section 85 of the Act, 1994. In support of his contentions, the learned counsel relied upon a decision of the Punjab and Haryana High Court rendered in M/s.Barnala Builders & property Consultant versus The Deputy Commissioner of Central Excise & Service Tax, Dera BHassi and others in Civ .....

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ting authority. He pointed out that since the petitioner has made declaration in order to avail benefit under the VCES itself has been rejected on the ground that a show cause notice was already issued in respect of the tax dues and therefore, in terms of Section 106(2) of the Act, 1994 and in view of the clarification given in Board s Circular No.170/5/2013-ST, dated 8.8.2013, no appeal would lie before the first respondent. Therefore, the learned counsel sought for dismissal of the writ petiti .....

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eferred by the petitioner under Section 85 of the Act, 1994 would not lie since the said provision provides appeal only as against the orders passed by the adjudicating authority and in the present case, the 2nd respondent who passed rejection order, cannot be construed as an adjudicating authority, but only as a designated authority. 11. In similar circumstances, the Punjab and Haryana High Court, in its decision in M/s.Barnala Builders s case, (cited supra), has categorically held that the ord .....

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ng that such an order is not appealable. We are unable to accept correctness of instructions issued by the Central Board of Excise and Customs, for the simple reason that after incorporation of the Service Tax Voluntary Compliance Encouragement Scheme into the Finance Act, all other provisions of the Act except to the extent specifically excluded, apply to proceedings under the scheme. The impugned order passed by the Deputy Commissioner of Central Excise and Service Tax would necessarily be app .....

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der, cannot be construed as an adjudicating authority , but only as a designated authority. 13. Section 85 of the Act, 1994 is relevant and it reads as under: 85. Appeals to the Commissioner of Central Excise (Appeals).- (1) Any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals). (2) Every appeal shall be in the prescribed form and shall be verified in the presc .....

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ppeal to the Commissioner of Central Excise. It is pertinent to note that the word adjudicating authority has not been defined in the Act, 1994. However, Section 2(a) of the Central Excises and Salt Act, 1944 which deals with the definitions, defines "adjudicating authority" as under : "Adjudicating authority" means any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central B .....

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der Section 2(a) of the Central Excises and Salt Act, 1944 would equally apply to the Act, 1994. Now it is to be seen that whether the second respondent, the Assistant Commissioner of Central Excise, has acted as an adjudicating authority or as a designated authority? 17. It is pertinent to note that though the second respondent has been described as a designated authority, however, a perusal of the order, dated 15.11.2013 passed by him clearly shows that he has dealt with the issue on merits re .....

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not entitled to avail the said scheme. Therefore, when the authority, the second respondent herein has given such a categorical finding on going through the facts and circumstances of the case by applying his mind, his decision, in my considered opinion, would fall within the meaning of adjudication which is meant by settled law that giving or pronouncing a decision or order judicially and thereby, I have no hesitation to hold that the second respondent has acted as an adjudicating authority and .....

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section 105 of the Finance Act, 2013. Therefore, when the said scheme itself is construed as part and parcel of the Finance Act, all other provisions of the Act except to the extent specifically excluded would automatically apply to proceedings under the scheme and consequently, I am of the view that the order, dated 15.11.2013 passed by the Assistant Commissioner of Central Excise, the second respondent herein is appealable under Section 85 of the Act, 1994. 19. The remedy of appeal is a creat .....

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