Budget irons out incongruent review provisions under Service Tax

By TIOL News Service

NEW DELHI, JULY 06, 2009: THE Finance Act, 2005 saw the introduction of a concept called “Committee of Chief Commissioners/Commissioners” for review of Central Excise and Customs cases.  It was only by the Finance Act, 2007 that the service tax provisions saw a similar change.

Although most of the review procedures under Service Tax law are aligned to that of the Central excise, one of the exceptions is the treatment to an order-in-original passed by an officer subordinate to Commissioner, if the same is not acceptable to the Commissioner on account of its lack of legality or appropriateness.

While section 35E of the Central Excise Act, 1944 prescribes a departmental appeal being filed against such order before the Commissioner (Appeals), section 84 of the Finance Act, 1994 prescribes revision of such orders by the Commissioner, which amounted to recalling the order and re-adjudicating it.

Needless to mention this exercise entailed a couple of requirements that were to be scrupulously followed –

+ A show cause notice was invariably required to be given and the matter heard;

+ No order could be passed by the Commissioner of Central Excise in respect of any issue if an appeal against such issue is pending before the Commissioner of Central Excise (Appeals);

+ No order could be passed after the expiry of two years from the date on which the order sought to be revised has been passed.

Predictably, this long drawn out exercise was proving to be a pain and out of sync with the review procedure in vogue on the Central Excise side.

So, after receiving a couple of requests from the field formations and the trade, the review procedure in respect of service tax orders passed by an officer subordinate to the Commissioner is being aligned with that prevalent under the Central Excise side. Section 84 and section 86 of the Finance Act, 1994 would be welcoming amendments within its fold after the enactment of the Finance (No. 2) Bill, 2009.

Incidentally, the proposed amendment in section 84 carries an Explanation that any order passed by the adjudicating authority (subordinate to the Commissioner) before the date on which the Finance (No.2) Bill, 2009 is enacted would continue to be governed by the existing provisions.

All said and done, the proposed Explanation is the icing on the cake.