2013 (4) TMI 202 - HC - Service Tax

Pendency of the appeal and the application for interim stay on account of non re-constitution of the Bench - appeal preferred by the petitioner is pending consideration before the CESTAT which has jurisdiction over 3 states ie., Karnataka, Andhra Pradesh, Kerala - Held that - This petition is allowed in part. A direction is issued to the respondent not to recover the arrears of service tax pursuant to the demand notice, Annex.E and await orders of CESTAT over the application filed along with the appeal by the petitioner for interim stay of the demand impugned therein. A direction is issued to the 1st respondent - Union of India by way of a writ of mandamus to constitute and establish as many number of Benches of CESTAT for the 3 southern states of Karnataka, Andhra Pradesh and Kerala forthwith and file a report with the Registrar General of the High Court by way of compliance, on or before 3/6/2013, failing which the matter would be takes seriously.

Summary

Issues:
- Non-constitution of CESTAT Bench causing delay in appeal consideration
- Demand notice issued by respondent without considering appeal and stay application
- Insufficient number of CESTAT Benches in southern states
- Relief sought for writ of mandamus to direct Union of India to establish more Benches

Issue 1: Non-constitution of CESTAT Bench causing delay in appeal consideration
The judgment addresses the delay in the appeal process due to the non-reconstitution of the CESTAT Bench. The petitioner's appeal is pending consideration before CESTAT, which has jurisdiction over three states. The court notes that the respondent-Revenue should have refrained from issuing any demand notice until the interlocutory application for stay of the amount due is considered by CESTAT. It is emphasized that the petitioner cannot be held responsible for the non-constitution of the Bench, leading to interference in the demand notice issued by the respondent.

Issue 2: Demand notice issued by respondent without considering appeal and stay application
The judgment highlights the failure of the Union of India to appoint a judicial member to CESTAT, emphasizing that this delay is not due to any lapse on the petitioner's part. The court directs the respondent not to recover the arrears of service tax pursuant to the demand notice and to await the orders of CESTAT over the application filed for interim stay. The court intervenes in the demand notice issued by the respondent, recognizing the petitioner's lack of responsibility for the delay in appeal consideration.

Issue 3: Insufficient number of CESTAT Benches in southern states
The judgment discusses the disparity in the number of CESTAT Benches between northern and southern states, specifically Karnataka, Andhra Pradesh, and Kerala. It is noted that while there are numerous Benches up north, there is only one Bench for the southern states, leading to a backlog of matters pending consideration. The court calls upon the Union Government to establish additional Benches of CESTAT for the southern states to ensure the speedy disposal of appeals. Although the petition did not seek relief through a writ of mandamus for this purpose, the court deems it appropriate to issue necessary directions to address this issue.

Issue 4: Relief sought for writ of mandamus to direct Union of India to establish more Benches
The judgment allows the petition in part and issues a direction to the Union of India not to recover the arrears of service tax and to await CESTAT's orders on the stay application. Additionally, a writ of mandamus is issued to the Union of India to establish multiple Benches of CESTAT for the southern states of Karnataka, Andhra Pradesh, and Kerala promptly. The Union is required to file a compliance report with the High Court's Registrar General by a specified date, failing which the matter will be taken seriously. The judgment emphasizes the importance of establishing additional Benches to expedite the disposal of appeals in the southern states.