2007 (7) TMI 584 - HC - Service Tax

Whether statutory powers of Commissioner to file appeal against an order in appeal before the Appellate Tribunal under section 86(2A) of the Finance Act 1994 can be denied for the reason that Commissioner had once accepted the order in appeal? Whether acceptance of order-in-appeal by the Commissioner becomes final and binding on the department and whether the Commissioner can re-examine the order and file appeal under section 86(2A) of the Finance Act 1994 before the CESTAT? Held that - Here in this case it has been found that the Commissioner has accepted the order of Commissioner of Appeals on June 10 2005. Thereupon the matter has not been precipitated further. That shows a quietus has been given to the issue by accepting the order of the Commissioner of Central Excise (Appeals). Thereupon as found from the reasons stated by the appellant herein in their application for condoning the delay the matter has been once again reconsidered as per the letter of the Chief Commissioner dated April 17 2006 on the sole ground that the connected issue is pending before the Supreme Court and in the High Court of Bombay. The time-limit fixed for filing an appeal is in order to give a finality to the proceedings. If an appeal has not been filed within the time-limit stipulated in the appeal provision a legal right accrues to the other side on the ground that because of non-filing of the appeal the order passed in favour of other side would have been accepted by the department and reached its finality. Such accrued legal right cannot be simply brushed aside by filing an application after one year to condone the delay on the ground that similar issue is stated to be pending before the Supreme Court. It is also well-settled and established legal principle of law that in fiscal statute every assessment year or every clearance is a unit by itself and a separate cause of action. For each cause of action the parties can seek remedy notwithstanding the decisions rendered on an identical set of facts in the earlier years. Hence we are of the view that an ultimate decision rendered by the CESTAT cannot be complained of by the appellant though certain argument has been made about the observation contained in the body of the order as unwarranted. We hereby make it clear that the observation made in the body of the order of the CESTAT need not be taken as a finding rendered on the basis of an adjudicated order. Appeal dismissed.

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Finality and binding nature of the Commissioner's acceptance of the order.
3. Authority of the Commissioner to re-examine and file an appeal after initial acceptance.
4. Tribunal's decision to reject the appeal without considering its merits.

Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The department filed an application to condone a 315-day delay in appealing against the Order-in-Appeal dated March 28, 2005. The appeal was filed on May 29, 2006, after the Commissioner of Service Tax, Chennai, received directions from the Chief Commissioner on April 18, 2006, to file an appeal. The department argued that the delay was due to the Commissioner being unaware of similar issues pending before the Supreme Court and the High Court of Bombay until April 18, 2006. However, the Tribunal found that the delay was unjustified as the Commissioner had already accepted the order on June 10, 2005.

2. Finality and Binding Nature of the Commissioner's Acceptance:
The Tribunal emphasized that once the Commissioner accepted the Appellate Commissioner's order on June 10, 2005, this acceptance became final and binding on the department. The Finance Act, 1994, did not provide for a review of an already accepted order. The Tribunal noted, "Once the order of the Appellate Commissioner is accepted by the Commissioner concerned in accordance with provisions of review under section 86 of the Finance Act, 1994, it is an acceptance forever until that decision is disturbed by a competent court of law in a proceeding initiated by the department."

3. Authority of the Commissioner to Re-examine and File an Appeal:
The Tribunal found that the decision taken on May 19, 2006, to file an appeal was essentially a review of the review already completed on June 10, 2005, which was not permissible under the Finance Act, 1994. The Tribunal stated, "The Finance Act, 1994 did not provide for this kind of review." The Tribunal concluded that the Chief Commissioner's letter received on April 18, 2006, advising to keep the issue open by filing appeals did not revive any cause of action since the order had already been accepted and had become final.

4. Tribunal's Decision to Reject the Appeal Without Considering Its Merits:
The Tribunal dismissed the appeal for want of cause of action rather than on the ground of limitation. The Tribunal reasoned that there was no issue pending when the Chief Commissioner's letter was received, as the impugned order had already been accepted. The Tribunal stated, "Hence, for the present appeal, there is no cause of action." The Tribunal also referenced a similar case, CCE, Madurai v. Ramalinga Mills Ltd., where an appeal was dismissed as time-barred due to lack of explanation for the delay.

High Court Judgment:
The High Court was asked to consider three substantial questions of law regarding the Commissioner's statutory powers to file an appeal, the finality of the Commissioner's acceptance of the order, and the Tribunal's rejection of the department's appeal without considering its merits.

The High Court upheld the Tribunal's decision, emphasizing that the acceptance of the order by the Commissioner on June 10, 2005, gave finality to the proceedings. The High Court noted, "Such accrued legal right cannot be simply brushed aside by filing an application after one year to condone the delay on the ground that similar issue is stated to be pending before the Supreme Court."

The High Court also clarified that the observations made by the Tribunal in the body of its order should not be taken as findings rendered on the basis of an adjudicated order.

Conclusion:
The appeal was dismissed, and the High Court confirmed that the Commissioner's acceptance of the order on June 10, 2005, was final and binding. The Tribunal's decision to reject the appeal for want of cause of action was upheld, and the application for condonation of delay was dismissed.

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