2011 (1) TMI 747 - AT - Service Tax

Power of remand - Revenue pleaded that during the period of dispute, the Commissioner (Appeals) had no power of remand, that the provisions of Section 85 of the Finance Act, 1994 are in pari materia with the provisions of Section 35 A of the Central Excise Act, 1944 and that with regard to Section 35 A of the Central Excise Act, 1944, Hon'ble Supreme Court in the case of MIL India Ltd. 2007 -TMI - 1196 - SUPREME COURT OF INDIA , held that the Commissioner (Appeals) has no power of remand, that the order of the Hon'ble Supreme Court in the case of MIL India Ltd. (supra) is applicable to the service tax appeals also and in view of this, Commissioner (Appeals)'s orders remanding the matter to the original adjudicating authority are not correct - The impugned orders are, therefore, set aside and the matters are remanded to the Commissioner (Appeals).

Summary

Issues:
- Appeal against the order of the Commissioner (Appeals) remanding the matter to the original adjudicating authority.
- Power of remand of the Commissioner (Appeals) under Section 85 of the Finance Act, 1994.
- Imposition of penalty under Section 76 of the Finance Act for delay in payment of service tax.
- Applicability of Section 80 of the Finance Act, 1994 in waiving penalty.
- Consideration of genuine reasons for delay in payment of service tax by the original adjudicating authority.

Issue 1: Appeal against the order of the Commissioner (Appeals) remanding the matter to the original adjudicating authority.

The Revenue appealed against the order of the Commissioner (Appeals) on the basis that the Commissioner (Appeals) had remanded the matter to the original adjudicating authority. The Revenue argued that the Commissioner (Appeals) lacked the power of remand, citing the case of MIL India Ltd. where the Supreme Court held that the Commissioner (Appeals) has no power of remand. The Revenue contended that the Commissioner (Appeals) should have decided the matter after hearing the appellants on merits rather than remanding it.

Issue 2: Power of remand of the Commissioner (Appeals) under Section 85 of the Finance Act, 1994.

The Revenue emphasized that during the period of dispute, the Commissioner (Appeals) had no power of remand, drawing a parallel with Section 35 A of the Central Excise Act, 1944. Referring to the case of MIL India Ltd., the Revenue argued that the Commissioner (Appeals) does not possess the authority to remand matters. The representatives of the appellants pleaded that their cases were decided by the original adjudicating authority without considering their reasons for delay in payment and without addressing their plea for waiving the penalty under Section 80 of the Finance Act, 1994.

Issue 3: Imposition of penalty under Section 76 of the Finance Act for delay in payment of service tax.

The appellants contended that they were charged interest and penalty for delay in payment of service tax, highlighting genuine reasons for the delay during certain months. They argued that the penalty imposed was disproportionate to the interest demanded and that, in accordance with Section 80 of the Finance Act, 1994, there was no justification for imposing such penalties. The appellants asserted that the original adjudicating authority failed to consider their reasons for delay and the applicability of Section 80 in waiving the penalty.

Issue 4: Applicability of Section 80 of the Finance Act, 1994 in waiving penalty.

The appellants relied on Section 80 of the Finance Act, 1994, to argue against the imposition of penalties for delayed payment of service tax. They maintained that the penalties under Section 76 should have been waived due to genuine reasons for the delay, which were not adequately considered by the original adjudicating authority. The appellants justified their plea for penalty waiver based on the provisions of Section 80 and emphasized that the penalties imposed were unjustified given the circumstances of the delay.

In the judgment delivered by Hon'ble Shri Rakesh Kumar, Member (Technical), it was concluded that the Commissioner (Appeals) lacked the authority to remand matters to the original adjudicating authority, as established by the precedent set in the case of MIL India Ltd. The judgment set aside the impugned orders and remanded the matters back to the Commissioner (Appeals) for a reevaluation. The Commissioner (Appeals) was directed to hear the respondents, consider their pleas regarding penalty, including the application of Section 80, and assess the genuine reasons presented for the delay in discharging monthly service tax liabilities.