TMI Blog2017 (8) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... ,62,728/- which stands paid by the appellant, liability on account of penalty and interest is also fastened upon the appellant. The legal position which is settled is that this service tax was not payable for the period in question i.e. July 9, 2004 to March 31, 2006 inasmuch as such a liability arises only w.e.f. April 18, 2006 after the insertion of the relevant charging Section 66A in the Finance Act, 1994. This legal position is not confined to only those who approached the Court but is a declaration of law. Equities would be balanced by not insisting on payment of penalty and interest. Thus, when the appellant approached belatedly, it may not be entitled to refund of service tax already paid but at the same time, the appellant should not be called upon to pay any interest and penalty levied on a tax which was not payable at all in law. The High Court, to this extent, committed an error by not dealing with this aspect of the matter and dismissing the writ petition in its entirety - appeal allowed - decided partly in favor of appellant. - Civil Appeal No. 10214 of 2017 - - - Dated:- 10-8-2017 - A.K. Sikri And Ashok Bhushan JJ. For the Appellant : Mr. Devendra Singh, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urcing of business of export of shoe- uppers for soliciting orders by the overseas agents on behalf of the appellant in foreign exchange. Simply put, the overseas agent was appointed by the appellant for securing export orders of shoe-uppers. On the orders which were so procured by the overseas agent and were given to the appellant, the appellant could make exports of shoe uppers. It is on these orders the appellant had paid commission to the foreign party. As per the respondent department, service tax was payable on the said commission as the said activity would come within the sweep of Business Auxiliary Service . That was a reason for issuing show cause notice and demand service tax from the appellant who was supposed to deduct the same on the payments made to a foreign agent. 5) The appellant had resisted the show cause notice by submitting its reply dated January 2, 2008 and stating that the liability of payment of service tax, on amounts being remitted to overseas agent, would not fall on the payment prior to June 16, 2005 in view of the inapplicability of The Finance Act, 1994. However, after the passing of the order by the Joint Commissioner on February 27, 2008 reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nistry of Finance, Department of Revenue after this Court had dismissed the Special Leave Petitions filed by the Department, challenging the orders of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on applicability of service tax prior to April 18, 2006. 7) It is thereafter that the appellant filed the writ petition in March, 2012. Learned counsel for the appellant submitted that the aforesaid reasons were genuine and provided due explanation for approaching the Court in March, 2012. It was also submitted that in the counter affidavit filed by the respondents in the High Court, respondents have admitted that service tax was not applicable to pending disputes. 8) The respondents, however, had contended that the case of the appellant would not be covered as it would not constitute a pending dispute because of the reason that the case of the appellant stood resolved on February 27, 2008 when the Joint Commissioner had passed the orders which had attained finality, in the absence of any statutory appeal preferred by the appellant. 9) From the aforesaid narration of facts, one thing is clear. The Joint Commissioner had passed the orders on February 27, 2008. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er discharge of the export obligation and after five years of the expiry of the license. Since in similar cases, such facility was granted pursuant to the orders passed by the High Court of Bombay that the petitioners made an application in the year 1986, which was rejected by the department. The petitioners thereafter approached the Supreme Court under Article 32 of the Constitution after one year of rejection. Dismissing the petition, this Court observed: 8. Petitioners are re-agitating claims which they had not pursued for several years. Petitioners were not vigilant but were content to be dormant and chose to sit on the fence till somebody else's case came to be decided. Their case cannot be considered on the analogy of one where a law had been declared unconstitutional and void by a court, so as to enable persons to recover monies paid under the compulsion of a law later so declared void. 12) In Haryana State Handloom Handicrafts Corporation Ltd. Anr. v. Jain School Society (2003) 12 SCC 538 , land acquisition proceedings were challenged after about two decades. The delay was sought to be explained on the grounds that some other party had challenged th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a couple of years on the ground that the same relief should be granted to him as was granted to the persons similarly situated who were vigilant about their rights and challenged their retirement. The Court held that: In view of the statement of law as summarized above, the respondents are guilty since the respondents have acquiesced in accepting the retirement and did not challenge the same in time. If they would have been vigilant enough, they could have filed writ petitions as others did in the matter. Therefore, whenever it appears that the claimants lost time or whiled it away and did not rise to the occasion in time for filing the writ petitions, then in such cases, the court should be very slow in granting the relief to the incumbent. Secondly, it has also to be taken into consideration the question of acquiescence or waiver on the part of the incumbent whether other parties are going to be prejudicated if the relief is granted. In the present case, if the respondents would have challenged their retirement being violative of the provisions of the Act, perhaps the Nigam could have taken appropriate steps to raise funds so as to meet the liability but by not asserting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh the said judgment minutely. There is no need to discuss the facts of that case in detail. Suffice is to mention that in that case, claim for refund of the tax paid was made which tax was paid by mistake under legislation and was subsequently held to be void. The writ petitions were dismissed on the ground of delay and the Supreme Court upheld the decision of the High Court. We, therefore, fail to understand how this judgment helps the appellant. If at all, ratio of that judgment goes against the appellant. 19) As pointed out above, insofar as present case is concerned, the appellant never challenged adjudicating orders dated February 27, 2008 and woke up only after the issue was settled in other cases. 20) Having said so, we find one peculiar thing in the instant case. Though the service tax levied for the period in question was to the tune of ₹ 11,62,728/- which stands paid by the appellant, liability on account of penalty and interest is also fastened upon the appellant. The legal position which is settled is that this service tax was not payable for the period in question i.e. July 9, 2004 to March 31, 2006 inasmuch as such a liability arises only w.e.f. April 18, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sharma v. Union of India , (1997) 6 SCC 721 : 1998 SCC (L S) 226] ). On the other hand, if the judgment of the court was in personam holding that benefit of the said judgment shall accrue to the parties before the court and such an intention is stated expressly in the judgment or it can be impliedly found out from the tenor and language of the judgment, those who want to get the benefit of the said judgment extended to them shall have to satisfy that their petition does not suffer from either laches and delays or acquiescence. 21) In a case like this, equities would be balanced by not insisting on payment of penalty and interest. Thus, when the appellant approached belatedly, it may not be entitled to refund of service tax already paid but at the same time, the appellant should not be called upon to pay any interest and penalty levied on a tax which was not payable at all in law. The High Court, to this extent, committed an error by not dealing with this aspect of the matter and dismissing the writ petition in its entirety. 22) As a result, this appeal is partly allowed by setting aside the demand qua interest and penalty. No costs. - - TaxTMI - TMITax - Service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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