CESTAT Delhi Flags Judicial Indiscipline by lower authorities, Refers Case to CBIC

South Eastern Coalfields Limited Vs Commissioner of Central Excise and Service Tax (CESTAT Delhi)

The recent ruling by the Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in the case of South Eastern Coalfields Ltd. vs Commissioner of Central Excise has raised pertinent questions regarding Service Tax refund issues and judicial discipline. This article provides a detailed analysis of the case, highlighting the key facts, legal arguments, and implications of the tribunal’s decision.

The case involves two appeals concerning the same issue of Service Tax refund, adjudicated by two different Commissioners. South Eastern Coalfields Ltd. (SECL), engaged in coal mining, filed a refund claim following a Tribunal order that exempted them from service tax liability under Reverse Charge Mechanism (RCM). Despite previous orders favoring SECL, subsequent adjudications rejected their refund claim, leading to legal disputes.

The tribunal observed that the original adjudicating authorities exceeded their jurisdiction and violated judicial discipline by re-adjudicating issues already settled by previous orders. The tribunal emphasized that SECL’s activity of coal transportation within its mining area did not constitute Goods Transport Agency (GTA) service, as previously determined. The authorities’ decision to classify the activity as GTA service contradicted established legal precedents and lacked merit.

Furthermore, the tribunal highlighted the significance of adhering to judicial discipline and respecting the finality of previous tribunal orders. The authorities’ failure to abide by previous rulings resulted in unwarranted legal proceedings and administrative inefficiencies. The tribunal’s decision to set aside the impugned orders underscores the importance of upholding legal principles and ensuring consistency in judicial decisions.

FULL TEXT OF THE CESTAT DELHI ORDER

Present order disposes of two appeals. Issue involved being same and appellant is also same in both these appeal. The facts are same except that two different Commissioners have adjudicated the same show cause Notice. The relevant facts are as follows:

1.1 The appellant in the present case is engaged in mining of coal at their mines and thereafter to sell the same. For the said purpose, the appellant availed various services including the service of transportation of coal within and outside their mining area. Initially, the Headquarters of the appellant at Bilaspur was served with a Show Cause Notice No. 19847 dated 20.11.2006 for demand of service tax on GTA Services under Reverse Charge Mechanism (RCM). The Order-in-Original confirming the said demand has been set aside by this Tribunal vide its Final Order No. 53209/2014 dated 13.08.2014 holding that since the transporters rendering services within the mines are not issuing consignment notes, the said services provided to M/s. South Eastern Coalfields Ltd. (hereinafter referred as M/s. SECL)cannot be said to be a GTA Service and M/s. SECL cannot be made liable to pay service tax under RCM as recipient of GTA Service.

1.2 Pursuantto the said final order dated 13.08.2014, the appellant filed the refund claim for Rs.1,03,91,677/-on 29.07.2015. The said refund claim was proposed to be rejected vide Show Cause Notice No. 413 dated 28.08.2015 alleging that the refund claim is filed after the expiry of time limit prescribed for the same. The said proposal was confirmed vide Order-in-Original No. 11/15-16 dated 21.09.2015. In an appeal against the said order Commissioner (Appeals) vide Order-in-Appeal No. 248-16-17 dated 22.11.2016, remanded the matter back to the original adjudicating authority. Subsequent to the said remand order department undertook two different sets of adjudication, which are as follows:

2. We have heard Shri Rajeev Agarwal, learned Advocate for the appellant and Ms. Jaya Kumari, Authorized Representative for the department.

3. Learned counsel for the appellant has mentioned that the issue involved in the present appeal is no more res integra. The transportation of coal within the mine area is held to not to be taxable under the “Goods Transport Agency”. It is also mentioned that the orders have been passed in sheer ignorance of judicial discipline. The Commissioner (Appeals) while remanding the matter vide order dated 22.11.2016 has already held that the activity in question is not classifiable as Goods Transport Agency. The matter was remanded for a very limited purpose of verification of the documents already on record or to be produced additionally by the appellant. The order holding the same activity as GTA contrary to the said earlier order is absolutely illegal and unwanted for, same is liable to be set aside. Reliance has been placed on the following decisions:

(i) South Eastern Coalfields Ltd. Vs. Commissioner of C.Ex., Raipur reported as 2016 (41) S.T.R. 636 (Tri.-Del.)

(ii) Commissioner of C.Ex., Cus. & S.T., Bilaspur Vs. South Eastern Coalfields Ltd. reported as 2016 (41) S.T.R. 608 (Chhattisgarh)

(iii) South Eastern Coalfields Ltd. Vs. Commissioner of C.Ex., Raipur reported as 2017 (47) S.T.R. 93 (Tri.-Del.)

4. Learned Departmental Representative on the other hand has held that the adjudicating authority while passing the order under challenge has relied upon the decision of Hon’ble Supreme Court, wherein the similar activity in the similar set of circumstances is held to be a Goods Transport Agency. The said order is binding even on this Tribunal. Hence, there is no ignorance of principle of judicial discipline as is alleged. The decision of Hon’ble Supreme Court is law of land, hence, has rightly been followed by Commissioner (Appeals). Impressing upon no infirmity in the order under challenge, appeal is prayed to be dismissed.

5. Having heard the rival contentions and perusing the records, we observe and hold as follows:

5.1 The impugned show cause notice was issued on 28.08.2015 to deny the refund claim of Rs.1,03,91,677/- dated 29.07.2015. The said refund claim was filed subsequent to the final order of this Tribunal in appellant’s own case, however, their Headquarters at Bilaspur. Vide Final Order No. 53209 of 2014 dated 13.08.2014, the Tribunal held that the activity of transportation of coal within and outside of the mining areas of M/s. SECL cannot be said to a GTA Service and hence M/s. SECL was held not liable to pay service tax under RCM as recipient of GTA Service. The amount as claimed for refund was deposited by the appellant after the original adjudicating authority had confirmed the demand against M/s. SECL Headquarters with respect to the show cause notice dated 20.11.2006 as was issued to M/s. SECL.

5.2 It is observed that the final order of this Tribunal has set aside the department’s proposal of show cause notice dated 20.11.2006 about tax liability of appellant’s under RCM for rendering ‘Goods Transport Agency’ by holding that to fall within the ambit of the defined expression issuance of a consignment note is no-derogable ingredient. Since there were no consignment notes issued by the transporters while transporting coal within mine area from pitheads to Railway siding, the service received by appellants (M/s. SECL) cannot be called as GTA. Tax cannot be demanded under RCM. We also observe that department challenged said final order dated 13.08.2014 before Hon’ble High Court of Chhattisgarh vide decision dated 02.09.2015 matter was remanded back to the Tribunal for fresh adjudication. This Tribunal vide Final Order No. 52655/2016 dated 28.07.2016, while complying with the directions of remand, has held that tax liability under Goods Transport Agency Service cannot be sustained against the appellant. The department’s appeal against the order of Hon’ble High Court of Chhattisgarh is still pending consideration before Hon’ble Supreme Court, however, no stay against execution of order challenged is being announced by Hon’ble Supreme Court.

5.3 The impugned refund claim, however, was already filed by the appellant on 29.07.2015. It is with respect to this refund application that the impugned show cause notice dated 28.08.2015 was served upon appellant and is being adjudicated in the manner as discussed above.

5.4 We further observe that Commissioner (Appeals) while remanding the matter vide order dated 22.11.2016 has already held in compliance of earlier decisions as mentioned in preceding Para that the activity in question is not classifiable as Goods Transport Agency. However, he remanded back the matter to original authority for a very limited purpose of verification of the documents already on record or to be produced additionally by the appellant. It has been held in the said order that final order of Tribunal dated 28.07.2016 (after remand order from Hon’ble High Court of Chhattisgarh) has reaffirmed that since the transporters were not issuing consignment notes, the services rendered by them to M/s. SECL (company as a whole) were not classifiable under “GTA service” and therefore, the appellant is not liable to pay service tax under the RCM under GTA service. These orders have held that the same service received by the appellant, as GTA. The findings under both the said Order-in-Appeal are held to be contrary to the earlier orders as discussed above. Thus, are held to be absolutely illegal and unwanted for, same is liable to be set aside.

5.5 The impugned Order-in-Appeal is the outcome of directions for remand in said Order-in-Appeal dated 23.04.2018 in Appeal No. 52271 of 2018 and Order-in-Appeal dated 16.05.2018 in Appeal No. 52987 of 2018.

5.6 These observations are sufficient for us to hold that the issue which has been reopened vide the order under challenge about the impugned activity of transportation of coal within and outside the coal mine is or is not a Goods Transport Agency Service. The findings that this activity does not amount to Goods Transport Agency for want of consignment note vide Final Order dated 13.08.2014 has since attained finality.

5.7 Post the remand, the Hon’ble High Court of Chhattisgarh reaffirmedthe findings of Final Order No. 52655/2016 dated 28.07.2016 that since the transporters were not issuing consignment notes, the services rendered by them to M/s. SECL were not classifiable under GTA Service. Appellant was held not liable to pay service tax under RCM under GTA Service. Following are the findings of the Commissioner (Appeals) order dated 22.11.2016:

(i) The denial or refund on the ground that no order has been passed against the appellant is absolutely erroneous as the order of CESTAT dated 28.07.2016 is also in respect of entire M/s. SECL as a whole.

(ii) The appellant has contested the amount of service tax paid by them before the higher appellate authority, the payment cannot be treated as voluntary.

(iii) The refund claim is well within the prescribed time limit of one year from the relevant date which is the date of final order of CESTAT i.e. 13.08.2014. The refund claim of 29.07.2015 is well within the period of one year limitation.

(iv) For want of any liability under GTA, as alleged, the appellant is entitled to the refund. However, the admissibility of the refund claim was directed to be verified by the original adjudicating authority, andafter verification of challans to ascertain as to whether any stay has been obtained by the department against the final order dated 28.07.2016.

5.8 These observations are sufficient for us to hold that the scope of remand was a simple factual verification but the original adjudicating authority in sheer violation of judicial discipline has re-adjudicated the issue about impugned activity to fall or not under the scope of GTA Services. As already observed above, the same was not the point raised even in the impugned show cause notice. The orders under challenge in both these appeals are not only an outcome of judicial indiscipline but are also held to be beyond the scope of show cause notice. Commissioner (Appeals) vide the impugned order has tried to distinguish as far as the principles of res judicata shall or shall not apply to the given facts.

5.9 It is observed that there is a fundamental material change whenOrder-in-Original subsequent to final order of this Tribunal has been passed that Apex Court has decided the issue holding that the activity is covered under GTA. To our opinion, these findings are not sustainable as the classification was not the subject matter of the impugned show cause notice. As far as the present appellant is concerned, for the period in question and amount is question, the final order of CESTAT which has attained finality has to be followed and the adjudication was limited to the verification as directed in the order of remand dated 22.11.2016. Adjudicating authorities below are therefore held to have travel beyond the scope of show cause notice after committing judicial indiscipline.

6. In the light of above discussion, we hold that the entitlement of appellant for the impugned refund, the issue of time bar and the issue of unjust enrichment have already stands decided in favor of the appellant including the issue of classification of the impugned activity of transportation (at least for this particular case). We hold that the refund claim has wrongly been rejected. Singh Transporters (supra) is held to hav wrongly been applied retrospectively.

7. We also observe that subsequent to Order-in-Appeal dated 22.11.2016 directing remand, there has been two set of adjudications based on ground of jurisdiction. This issue has also been dealt in Order-in-Appeal dated 22.11.2016 in following words:

“It is completely immaterial as to whether or not demand or dispute was specifically raised by Jabalpur commissionerate or erstwhile Bhopal Commissionerate under whose jurisdiction SECL, Johilla falls. Once the dispute is raised by Central Excise department under the CBEC, and the appellant has contested the matter before the authority (Raipur Commissionerate) which raised the dispute, the payment of tax till the time appeal was pending before the CESTAT would be deemed to be “Under Protest” and once, the decision has been rendered by the CESTAT in their favour, the appellant is legally eligible to claim refund under clause (ec) of the Explanation to the said Section 11B of the Central Excise Act, 1944.”

8. We now take note of miscellaneous application as has been filed in Appeal No. 52987 of 2018 as was filed on 27.02.2024 (received by email). The arguments in both the impugned appeals got concluded on 04.01.2024 and the matter got reserved for orders. The impugned application is therefore received after the matter was reserved for orders. Perusal reveals that the application as moved by the department request for change in the cause title of the Appeal No. 52987 of 2018. It relies upon the Notification No. 13/2017 dated 09.06.2017. The cause of action for the impuned application, therefore, does not require giving notice of hearing to both the parties. We accordingly peruse the notification and the request in the application. We observe that the name and jurisdiction of the respondent has been changed as appearing at Sr. No. 48 of the Table-II of the said notification. The Name of C.C.E., Bhopal has been changed to Commissioner of C.G.ST. and C.E., Napier Town, Jabalpur. It is observed that in Appeal No. 52987, respondent is C.C.E. and S.T., Raipur. To our understanding, the notification is not applicable as far as changing the name of respondent in this appeal is concerned. We hereby dismiss the application.

9. In the light of entire above discussion, we hold that Commissioner (Appeals) have traversed while passing the impugned orders in both these appeals. The order are contrary to the findings of this Tribunal amounting to an act of Judicial indiscipline. Accordingly, the impugned order stands set aside.

Appeals stands allowed. The copy of this order be sent to the Board to appraise the conduct of the adjudicating authority noticed. Board is at liberty to take appropriate action against the concerned officer as is deemed fit.

[Order pronounced in the open court on 03.05.2024]