By TIOL News Service

BANGALORE, NOV 29, 2016: THE appellant assessee is a private limited company and is engaged in the business of surveying apart from rendering 'Consultancy Service' and 'Construction Supervision for Highways', etc. During the course of audit, the appellant furnished information, records, documents and copies of contracts/agreements, bills etc. as required by the authorities. After completion to audit, the Department issued a letter dated 04.12.2002 to the appellant stating that the activities of the appellant would fall within the ambit of ‘Consulting Engineer' and asked the appellant to pay service tax @ 5% of the gross amount realized from 7.7.1997 onwards. Subsequently, a Show Cause Notice was issued demanding Service Tax and in adjudicating, the demand was confirmed with interest, but penalty was waived as per the provisions of Sec 80.

Aggrieved by the same, the appellant filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) partly allowed the appeal by setting aside the demands relating to (i) Land survey and related activities from 26.2.2002. (ii) Turnkey projects involving design consultancy work and (iii) Consulting services which are composite in nature involving design consultancy and auxiliary services. The demand on pure consultancy was however, upheld along with interest.

Aggrieved by the said order, the Department filed appeal before the Tribunal.

After the order of the Commissioner (Appeals), the Respondent-Commissioner proceeded to issue a ‘review show-cause notice' in exercise of powers under Section 84 of the Finance Act, 1994 proposing to review the Order-in-Original passed by the Deputy Commissioner of Central Excise and the same was adjudicated. Aggrieved by the same, the assessee filed appeal before the Tribunal.

The assessee contended that the Deputy Commissioner lacked jurisdiction to decide the case on monetary limits and also on the ground that the action of department in filing appeal before the Commissioner (A) and simultaneously passing review order under Sec 84 is not correct.

After hearing both sides, the Tribunal held:

+ The Deputy Commissioner lacks jurisdiction to pass the order and all the proceedings before him is void ab initio. Secondly, the order passed by the Deputy Commissioner is also bad in law as he did not have the pecuniary jurisdiction to pass adjudication order at the relevant time which is clear from the Board's circular dated 1.10.2003. Further, by "Doctrine of Merger", the order passed by the Deputy Commissioner no longer survive and therefore, to review an order which does not exist in law is not permitted by law, more so when review order is passed much after order passed by the Commissioner (Appeals). The Department has also filed appeal against the Order-in-Appeal. In view of these facts and circumstances, it is held that the impugned order is bad in law and the same is set aside. Also, there is no merit in the Department's appeal filed against the Order-in-Appeal and the same is dismissed and the assessee's appeal is allowed.

(See 2016-TIOL-3084-CESTAT-BANG)