ST - Whether decision of CESTAT in refusing to recall Final Order for purpose of hearing appeals 'together' was correct in law even after admitting and correcting mistake - substantial question of law left open: HC
By TIOL News Service
NEW DELHI, NOV 13, 2017: THIS is a Revenue appeal.
The respondent is a manufacturer of ready mix concrete (RMC) and registered with the department for rendering services under the category, "Goods Transport Service".
They supplied RMC in vehicles specially designed for transportation to the site where construction took place. The vehicles used for this purpose had facility for pumping ready mix concrete from the container, on the vehicle, to the work site and the material was so supplied by pumping, for which, pumping charges were collected.
Alleging that service tax liability was attracted on "pumping charges", under the category, "Transportation of goods through pipeline or conduit", proceedings were initiated against the respondent, demanding service tax, amounting to Rs.23,27,306/-, for a period from 16.06.2005 to 31.12.2006, apart from interest and penalty.
The original authority by an order dated 16.07.2007 confirmed the tax demand but dropped penalty on the ground that the disputed service was newly brought into tax net and that there was confusion about its scope.
The assessee appealed before the Commissioner(A) who by order dated 27.07.2009 set aside the order-in-original on the grounds that the said activity was not covered by the said entry.
In the mean time, alleging that the order-in-original is erroneous since it did not impose any penalty, revisionary proceedings were initiated u/s 84 by Revenue and penalty of Rs.25 lakhs was imposed u/s 78 of FA, 1994 by an order dated 27.03.2009.
This revisionary order imposing penalty was challenged by the assessee before the CESTAT.
Observing that the department had not filed any appeal against Order passed by the Commissioner(A), the CESTAT vide order dated 11.02.2014 held that when the demand for tax itself is not sustainable, there cannot be any penalty imposed.
Alleging that this order is erroneous inasmuch as department had filed an appeal viz. ST/505/09 and which was pending before Tribunal, a ROM application was filed by the CST, Chennai before the CESTAT and resultantly the CESTAT corrected the mistake in its order by mentioning thus -
"4. On perusal of Final Order, I find neither the appellant nor the Revenue has brought out this fact before the Tribunal that appeal filed by the Revenue against the OIA dated 27/07/2009. Therefore, this Tribunal at para-2 while discussing the facts of the case stated that the Department has not filed any appeal against this order of Commissioner (Appeals). As seen from the records that appeal No.ST/505/09 is still pending for disposal. Therefore, Tribunal while recording the facts at para-2 that there is no appeal filed against the order of the Commissioner (Appeals) is appear to be an omission.
5. However, I hold that by correcting the mistake the order of the Tribunal cannot be altered as it would amount to reviewing its own order. There are series of Apex Courts, High Courts judgments wherein it has been held that Tribunal has no power to review its own order. Further, I find that the revenue appeal and the appellant appeal are two independent proceedings against two different order passed by two different authorities under different provisions of the Act. Accordingly, the rectification is limited to the correction of facts appearing at para-2 of the order. The last sentence at para-2 instead of "The department has not filed any appeal against this order of the Commissioner (Appeals)" should be read as "Department filed appeal against OIA No. 32/2009 dated 27.07.2009".
The above is Miscellaneous Order No.40352 of 2015, CESTAT, Chennai dated 13.02.2015.
In the present appeal before the Madras High Court, Revenue challenges the CESTAT Final Order dated 11.02.2014 on the following substantial question of law -
"Whether, in the facts and circumstances of the case, the decision of CESTAT in allowing the appeal filed by the respondent was correct in law?"
The Miscellaneous Order dated 13.02.2015 is also challenged on the following substantial question of law -
"Whether, in the facts and circumstances of the case, the decision of CESTAT in refusing to recall the Final Order for purpose of hearing the appeals together was correct in law even after admitting and correcting the mistake?"
When the aforesaid appeals came up for hearing before the High Court, the counsel for the appellant Revenue submitted that subsequently the CESTAT, Chennai, had passed Final Order dated 09.08.2017 in the matter of its Appeal No. ST/505/2009 and confirmed the order of the Commissioner (A) setting aside the demand of tax.
The High Court, therefore, observed -
"12. Having regard to the above subsequent development, we are of the view that there is no need to advert to the substantial questions of law, raised in the instant Civil Miscellaneous Appeals and at the same time, reserve the rights of the appellant to raise all tenable grounds and substantial questions of law, on the merits of the case, if any, appeal is filed, against Final Order No.41563 of 2017 in Appeal No.ST/505/2009, dated 09.08.2017."
Reserving the rights of the appellant in both the appeals, the instant Civil Miscellaneous Appeals were dismissed and the substantial questions of law, raised in both the appeals, were left upon.
(See 2017-TIOL-2381-HC-MAD-ST)
