CA Bimal Jain

We are sharing with you an important judgement of the Hon’ble High Court of Madras in the case of the Narasimha Mills Pvt. Ltd. Vs. the Commissioner of Central Excise (Appeals) and the Assistant Commissioner of Central Excise [2015-TIOL-1504-HC-MAD-ST] on following issue:

Issue:

Whether an appeal under Section 85 of the Finance Act, 1994 (“the Finance Act”) would lie as against the Rejection Order of declaration passed by the Designated Authority under the Voluntary Compliance Encouragement Scheme, 2013 (“VCES” or “the Scheme”)?

Facts & Background:

In the instant case, the VCES declaration made by the Narasimha Mills Pvt. Ltd. (“the Petitioner”) was rejected by the Designated Authority under Section 106(2) of the Finance Act, 2013 holding that since the Petitioner had been issued with Show Cause Notice for the period involved in the VCES declaration, the Petitioner is not entitled to avail the benefit of the Scheme.

On appeal being preferred to the Ld. Commissioner (Appeals), the same was returned stating that the Scheme does not have a statutory provision for filing appeal against the Rejection Order under Section 106(2) of the Finance Act, 2013 passed by the Designated Authority and that the appeal preferred by the Petitioner under Section 85 of the Finance Act would not lie since the said provision provides appeal only against the Orders passed by the Adjudicating Authority and in the present case, the Designated Authority who passed Rejection Order, cannot be construed as an Adjudicating Authority.

Being aggrieved, the Petitioner filed a Writ Petition before the Hon’ble High Court of Madras.

Held:

The Hon’ble High Court of Madras, relying upon the decision of the Hon’ble Punjab and Haryana High Court in the case of Barnala Builders & Property Consultant Vs. the Deputy Commissioner of Central Excise & Service Tax, Dera Bhassi and others [2013-TIOL-1016-HC-P&H-ST] held the following:

  • Section 85(1) of the Finance Act denotes that any person aggrieved by any decision or Order passed by an Adjudicating Authority subordinate to the Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals);
  • In terms of Section 65B(55) of the Finance Act, the following definition of ‘Adjudicating Authority’ available under Section 2(a) of the Central Excise Act, 1944 would equally apply to the Finance Act:

“Adjudicating authority” means any authority competent to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963, Collector of Central Excise (Appeals) or Appellate Tribunal.”

  • The Designated Authority has given a categorical finding on going through the facts and circumstances of the case by applying his mind, thus his decision would fall within the meaning of ‘Adjudication’ and thereby, the Designated Authority acted as an Adjudicating Authority;
  • VCES was introduced by the Central Government, in exercise of the powers conferred by Sub-Sections (1) and (2) of Section 114 of the Finance Act, 2013 and hence, it is not a self-contained code, but is to be construed as a part and parcel of Chapter V of the Finance Act;
  • When VCES itself is construed as part and parcel of the Finance Act, all other provisions of the Finance Act except to the extent specifically excluded would automatically apply to proceedings under the Scheme and consequently, the Rejection Orderpassed by the Designated Authority is appealable under Section 85 of the Finance Act.

Accordingly, the Hon’ble High Court directed the Ld. Commissioner (Appeals) to take up the appeal filed by the Petitioner for disposing the same in accordance with law, after affording an opportunity to the Petitioner.

We take this opportunity to convey our!!! Heartfelt Wishes on the Occasion of Chartered Accountants Day (1St July) – Wishing all the Members a Wonderful year ahead with Prosperity & Success in Professional Life and Happiness in Personal Life – Let’s pledge to keep the Profession on Top with Harmony, Integrity and Honesty..Wish You a Very Happy CA Day!!!

Link to Download Judgment from Official Website of the High Court

http://judis.nic.in/judis_chennai/Judge_Result_Disp.asp?MyChk=227304

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Email: bimaljain@hotmail.com)

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