TMI Blog2017 (1) TMI 659X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, we find that the case may fall in the exceptional category for exercise of the power under Article 226 of the Constitution. The impugned order of the first appellate authority as well as the order of the Tribunal are set aside, on condition that the petitioner deposits the amount of 7.5% of the duty demanded and further pays cost of ₹ 25,000/- to the respondent, within a period of one month from the date of receipt of certified copy of the order. After the aforesaid condition is complied with, the matter shall stand restored on the file of the Commissioner (Appeals) with a further direction that he shall consider the appeal on merits in the light of the observations made by this Court in the above judgment and after giving opportunity of hearing to all concerned. - Writ Petition No. 13917 of 2016 (T-CESTAT) - - - Dated:- 4-7-2016 - Jayant Patel and B. Sreenivase Gowda, JJ. Shri N. Anand, Advocate for the Petitioner. Shri Jeevan J. Neeralgi, Sr. CGSC, for the Respondent. ORDER [Order per : Jayant Patel, J.]. - Leave to challenge the order dated 31-12-2012 passed by the Commissioner of Service Tax. 2. Mr. Neeralgi, learned Counsel t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J. Neeralgi, the learned Senior Central Government Standing Counsel for the respondent. 7. The learned Counsel for the petitioner mainly contended that the case of the petitioner is covered by the decision of Delhi High Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India, reported in 2013 (29) S.T.R. 9 (Del.), whereby the Delhi High Court has found that by virtue of Rule 5(1), the expenses which are incurred by service provider for the service of the consumer cannot be said as valid and the service tax cannot be levied on the said amount. He submitted that so far as the service tax on the amount charged by the petitioner to his customer for the service provided, the tax is already paid and nothing is outstanding. He submitted that by reason of the amount reimbursed by the client towards expenses under the value of service, the tax is assessed by the first appellate authority. He submitted that, if the decision of the Delhi High Court is considered, the order of the original authority cannot stand in the eye of law. However, on the point of limitation, he submitted that, it is true that as per the department, the order was communicated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m or not, he submitted that nothing is brought to the notice by the Department whether the view of the Delhi High Court is reversed or not. He submitted that this is not an exceptional case, where this Court may exercise the power under Article 226 of the Constitution for interfering with the order of the original appellate authority. 9. It may be recorded that, against the order passed by the CESTAT initially CA 49/15 was preferred, but the said appeal was withdrawn with a view to prefer writ petition under Articles 226 and 227 of the Constitution, in view of the decision of Full Bench of High Court of Gujarat in the case of Panoli Intermediate (India) (P) Ltd. v. Union of India - (2015) 51 GST 750/59 = 2015 (326) E.L.T. 532 (Guj.). Hence, the present petition. 10. We may record that, this Court in the above decision, in the case of Phoenix Plasts Company, had observed thus : 7. As such, in our view, the matter may arise for consideration by segregating it into two parts : one is the exercise of power by the statutory authority hearing appeal within the scope and ambit of the statute and the other is the exercise of power by this Court under Article 226 of the Constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scretion to condone the delay in 30 days. But the learned Counsel for the petitioner placed reliance upon the another decision of the Division Bench of this Court in the case of Amitara Industries Ltd. v. Union of India decided on 30-1-2013 passed in SCA No. 6069/11 and contended that as per the view taken in the said decision, the delay can be condoned beyond the period of 90 days provided there is a good case on merits and the learned Counsel for the petitioner also relied upon other decisions of this Court including the decision in the case of D.R. Industries Ltd. v. Union of India - 2008 taxmann.com 183. The Division Bench hearing SCA No. 18542/14 found that the matter is required to be referred to the Larger Bench for decision. Hence, the aforesaid questions were formulated and the matter has been referred to the Larger Bench. 3. It may be recorded that when SCA No. 13530/14 came up before the another Division Bench of this Court, it was brought to the notice of the said Bench that the question involved in the petition for the period of limitation has been referred to the Larger Bench in SCA No. 18542/14. Under the circumstances, the said SCA No. 13530/14 has been listed be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filing the appeal, since in exercise of the power under Article 226 of the Constitution, this Court would not compel the authority to exercise power otherwise than provided under the statute, but the power under Article 226 of the Constitution can be invoked for challenging the order passed by the original authority, under the aforesaid stipulated circumstances namely, as that of the order passed without jurisdiction or by assuming the jurisdiction which is not possessed or the exercise of power in excess of the jurisdiction or by crossing the limits of the jurisdiction or that there is flagrant disregard to the law or the rules of procedure or violation of principles of natural justice or there is failure of justice or the order has resulted into gross injustice. Therefore, while considering the second aspect, the Writ Power under Article 226 of the Constitution could be exercised subject to the aforesaid self-imposed restriction in exercise of the power under Article 226 of the Constitution on a well guided principle. 11. We need to now further consider as to whether the present case would fall in any of the categories, which may call for exercise of power under Article 226 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are removed without putting them to use. Admittedly, in the present case capital goods have been used for a period of more than 7 to 8 years. As such, interpretation given by the authorities below would lead to absurd results if an assessee is required to reverse the credit originally availed by them at the time of receipt of the capital goods, when the said capital goods are subsequently removed as old, damaged and unserviceable capital goods. This would defeat the very purpose of grant of facility of Modvat credit in respect of capital goods and would not be in accordance with the legislative intent. 13. The Delhi High Court in the matter of Harsh International (Khaini) Pvt. Ltd. v. Commissioner of Central Excise reported in 2012 (281) E.L.T. 714 (Del.), after referring to the various judgments held as under : In the present case the appellant purchased the capital goods in the periods between 2003 and 2005 and used them in its factory till they were sold to M/s. Harsha International (Khaini) Pvt. Ltd., in June and July, 2007. Thus the capital goods were used for a period of 2 to 4 years. They cannot, therefore, be stated to be sold as such capital good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Gujarat in case of Panoli Intermediate (India) (P) Ltd. (supra). Hence, the petition under Article 226 of the Constitution could be maintained and it was a fit case to exercise power under Article 226 of the Constitution to interfere with the order of the first appellate authority and the interference not being made, has resulted in failure of justice. But at the same time, even if it becomes a case for exercise of the power under Article 226 of the Constitution, the Court may ensure that no litigant or the assessee takes any undue benefit of the power under Article 226 of the Constitution. If the case is considered in favour of invoking the appellate power, the requisite condition would be to deposit 7.5% of the duty demanded. Further, it cannot be said that the appellant was vigilant about its right to pursue the matter in time and there is delay also in filing this appeal. If the appellant has not pursued the remedy well in time, though we may keep in mind the real merits of the matter, the appellant cannot get away from paying appropriate cost, by way of compensation, by the delay caused in pursuing the litigation up to this Court. Hence, we find that even if the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in view of the order which we may pass herein after, but suffice it to observe that in view of the decision of the Delhi High Court, there was a strong case on merits on the part of the petitioner to be considered by the taxing authority. Unfortunately the decision of the Delhi High Court though was specifically brought to the notice of the original authority in the reply to the show cause notice, in the impugned order of the original authority, there is no reference whatsoever. Under these circumstances, we find that the case may fall in the exceptional category for exercise of the power under Article 226 of the Constitution. 12. On the aspect of invoking of the appellate power, we find that same view as was taken by this Court in the above referred decision in the case of Phoenix Plasts Company case deserves to be taken for both purposes, namely one for the requisite tax demanded and for cost of ₹ 25,000/- to the respondent, particularly because, so far as the litigation is concerned, respondent cannot be faulted with, may be on account of non-communication to the petitioner by its staff, but the delay has occurred beyond the outer limit provided by the statute. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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