Case Law Details
The impugned communications dated 22 January 2014 and 23 January 2014 issued by Respondent no.3 Assistant Commissioner of Service Tax insisting that the Petitioner should pay the amounts adjudicated upon by order dated 27 December 2013 is contrary to the provisions of the Finance Act which provides for a period of three months to file an appeal to the Tribunal. In this case, the impugned communications are issued without waiting for the statutory period of three months provided to enable the filing of an appeal and stay application to the Tribunal is over. This is contrary to the CBEC circular dated 1 January 2013 issued by CBEC. The impugned communications, to say the least, is high handed. The statute has advisedly provided a period of three months to an assessee to file an appeal before the appellate authority and also obtain a stay. This is with a view to enable the assessee to seek proper advice and considered opinion on the adjudication order before taking a decision and then challenging the adjudication order in appeal proceedings.
In case, the Revenue is allowed to adopt coercive measures and/or if the assessee is required to pay tax determined immediately, it would lead to injustice to an assessee, as his opportunity to obtain a stay from the appellate authority would stand foreclosed. Moreover, the inherent right of an appellate authority to stay the order being appealed against would be rendered futile. In fact, this Court in Mahindra & Mahindra Limited Vs. Union of India and others (1959-ELT-505) had directed the Revenue to return the amounts recovered by encashing the bank guarantee of the assess as it was done before the expiry of three months to file an appeal.
The officers of Respondent Revenue would do well to realize that their job is much more than merely collecting the tax. They are officers of the State, administering the Finance Act, 1994 and fairness in approach to the tax payers and acting in accordance with the Rule of Law is a sine-qua-non in discharge of all its functions. In the circumstances, we hold that the impugned communications dated 22 January 2014 and 23 January 2014 are not only in defiance of the CBEC circular dated 1 January 2013 but also in breach of the statutory provisions which gives a period of three months to enable the aggrieved party to file an appeal before the appellate authority.
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WRIT PETITION NO.1014 OF 2014
Tata Teleservices (Maharashtra Limited Petitioner
versus
The Ministry of Finance, Department of Revenue and others Respondents
CORAM : MOHIT S. SHAH, C.J. AND
M.S.SANKLECHA, J.
DATE : 29 January 2014
PC :
1. By this petition under Article 226 of the Constitution of India, the Petitioner assails the communications dated 22 January 2014 and 23 January 2014 issued by Respondent no.3 Assistant Commissioner of Service Tax. By the impugned communications dated 22 January 2014 and 23 January 2014, the Assistant Commissioner of Service Tax has called upon the Petitioner to reverse CENVAT credit of Rs. 22.28 crores and also pay the applicable interest and penalty, as confirmed by the order dated 27 December 2013 of the Commissioner of Service Tax. The order dated 27 December 2013 was served upon the Petitioner on 2 January 2014.
2. At the request of the counsel for the parties, this petition is taken up for final disposal at the time of admission.
3. Under the Finance Act, 1994 read with Central Excise Act, 1944, the Petitioner has a statutory period of three months available to file an appeal along with stay application before Customs, Excise and Service Tax (Appellate) Tribunal (`Tribunal’) from the date of communication of the order passed by the Commissioner of Service Tax. Notwithstanding the above position, on 22 January 2014, the Assistant Commissioner of Service Tax called upon the Petitioner to comply with the order dated 27 December 2013 within two days, failing which he threatened to take coercive action to recover the dues.
4. In response, the Petitioner, by letter dated 24 January 2014, informed the Assistant Commissioner of Service Tax that they are in receipt of the order in original dated 27 December 2013 and they are in process of preferring an appeal and a stay application to the Tribunal. The Petitioner also brought to the notice of the Assistant Commissioner a circular dated 1 January 2013 issued by the Central Board of Excise and Customs, Ministry of Finance (Department of Revenue), Government of India (`CBEC’). Attention of the Assistant Commissioner was specifically invited to Entry no.4 of paragraph 2, which stipulates that in a situation where no appeal is filed against an order-in-original issued by the Commissioner, the recovery shall be initiated only after expiry of statutory period of 90 days. This is so far the reason that the period of three months is provided for filing an appeal to the Tribunal, from the date of communication of order passed by Commissioner of Service Tax.
5. In spite of the above, on 27 January 2014, the Petitioner was served with communication dated 23 July 2014 of the Assistant Commissioner of Service Tax calling upon the Petitioner to reverse the excess CENVAT credit along with applicable interest and penalty within two days, failing which coercive proceedings for recovery was threatened.
6. This petition challenges the two communications dated 22 January 2014 and 23 January 2014 issued by the Assistant Commissioner of Service Tax.
7. Mr.Prasad Paranjape, the learned counsel for the Petitioner states that the action of the Respondent Revenue in seeking to recover the service tax as confirmed by order dated 27 December 2013 even where the statutory period of three months to file an appeal against the order of Commissioner of Service Tax has not yet expired, is bad in law and without jurisdiction. It is submitted that the action of the Assistant Commissioner of Service Tax in issuing notice is not only contrary to the statute but also in breach of circular dated 1 January 2013 issued by CBEC, which prohibits any coercive action till the period of filing the appeal has expired. It is submitted that the demand made on the Petitioners by the Revenue authorities is premature inasmuch as the Petitioner has a right to file an appeal within a period of three months. It is also submitted that the Petitioner is in the process of filing an appeal with the appellate authority against the order of the adjudicating authority.
8. As against the above, Mr.Jetly, learned counsel for Revenue submits that the Petitioner has not yet filed any appeal against the order dated 27 December 2013 of the Commissioner of Service Tax. It is submitted that in stead of filing an appeal to the Tribunal, the Petitioner has moved this petition seeking to stop the Revenue from collecting its legitimate dues. Therefore, it is submitted that no interference with the demand made by letters dated 22 January 2014 and 23 January 2014 order dated 27 December 2013 is called for.
9. We have considered the rival submissions. The impugned communications dated 22 January 2014 and 23 January 2014 issued by Respondent no.3 Assistant Commissioner of Service Tax insisting that the Petitioner should pay the amounts adjudicated upon by order dated 27 December 2013 is contrary to the provisions of the Finance Act which provides for a period of three months to file an appeal to the Tribunal. In this case, the impugned communications are issued without waiting for the statutory period of three months provided to enable the filing of an appeal and stay application to the Tribunal is over. This is contrary to the circular dated 1 January 2013 issued by CBEC. The impugned communications, to say the least, is high handed. The statute has advisedly provided a period of three months to an assessee to file an appeal before the appellate authority and also obtain a stay. This is with a view to enable the assessee to seek proper advice and considered opinion on the adjudication order before taking a decision and then challenging the adjudication order in appeal proceedings.
10. In case, the Revenue is allowed to adopt coercive measures and/or if the assessee is required to pay tax determined immediately, it would lead to injustice to an assessee, as his opportunity to obtain a stay from the appellate authority would stand foreclosed. Moreover, the inherent right of an appellate authority to stay the order being appealed against would be rendered futile. In fact, this Court in Mahindra & Mahindra Limited Vs. Union of India and others (1959-ELT-505) had directed the Revenue to return the amounts recovered by encashing the bank guarantee of the assess as it was done before the expiry of three months to file an appeal.
11. The officers of Respondent Revenue would do well to realize that their job is much more than merely collecting the tax. They are officers of the State, administering the Finance Act, 1994 and fairness in approach to the tax payers and acting in accordance with the Rule of Law is a sine-qua-non in discharge of all its functions. In the circumstances, we hold that the impugned communications dated 22 January 2014 and 23 January 2014 are not only in defiance of the CBEC circular dated 1 January 2013 but also in breach of the statutory provisions which gives a period of three months to enable the aggrieved party to file an appeal before the appellate authority.
12. We accordingly pass following order :
(i) The impugned communications dated 22 January 2014 and 23 January 2014 issued by the Assistant Commissioner of Service Tax are quashed and set aside;
(ii) The Revenue authorities are restrained from adopting any coercive proceedings to implement the order-in-original dated 27 December 2013 of the Commissioner of Service Tax till the statutory period of three months from the date of communication of the adjudication order expires;
(iii) In the event the Petitioner files an appeal and a stay application within the statutory period before the Tribunal, then the Revenue authorities shall not adopt any coercive procedure for recovery of tax dues in terms of the adjudication order dated 27 December 2013, till the disposal of stay application by the Tribunal;
13. The petition is disposed of in above terms. There shall be no order as to costs.
