2014 (9) TMI 415 - HC - Service Tax

Rectification of order passed by Tribunal - power of the CESTAT to rectify its order - Held that - Section 35C of the Central Excise Act, 1944, relates to the orders of the Appellate Tribunal, in that, sub-section (1) contemplates that the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against. Such power includes the power to remit the matter back to the authority for fresh adjudication. Sub-section (2) of Section 35C contemplates a power on the Appellate Tribunal to rectify any mistake apparent from the record within a period of six months from the date of the order. The above provision is made applicable by virtue of the provisions of Section 83 of the Finance Act, 1994, relating to service tax. The finding of the CESTAT holding that there is no statutory provision for filing application for rectification in case of service tax appeals is unsustainable and is liable to be set aside. - matter remitted back to tribunal - Decided in favor of assessee.

Summary

Issues:
1. Interpretation of statutory provisions for rectification in service tax appeals.
2. Applicability of service tax for a specific period under Export of Services Rules, 2005.

Issue 1: Interpretation of statutory provisions for rectification in service tax appeals:
The appellant, a registered service tax assessee, received a show cause notice for service tax payment related to courier services between 15-3-2005 and 15-6-2005. The appellant argued that Rule 3(21) of the Export of Services Rules, 2005, provided full exemption from service tax as the addressees were outside India. The Original Authority rejected this explanation, leading to a penalty under Section 76 of the Finance Act, 1994. The Commissioner of Central Excise (Appeals) overturned the Original Authority's decision, but the Department appealed to the CESTAT, which ruled in their favor. The appellant filed a petition for rectification under Section 35C(2) of the Central Excise Act, 1944, citing an apparent error due to the amendment Act's timing. The CESTAT dismissed the petition, stating no provision allowed rectification in service tax appeals. The High Court held that Section 35C(2) empowered the Appellate Tribunal to rectify mistakes and remitted the matter back to the CESTAT for consideration, ruling in favor of the appellant.

Issue 2: Applicability of service tax for a specific period under Export of Services Rules, 2005:
The dispute arose from the application of Rule 3(2) of the Export of Services Rules, 2005, regarding service tax for the period from 15-3-2005 to 15-6-2005. The appellant argued that the amended provision of Rule 3(2) was not applicable to their case as it came into effect only from 16-6-2005. The CESTAT's order was challenged through a petition citing this discrepancy. The High Court found merit in the appellant's argument, emphasizing the need to consider the timing of the amendment Act. The Court set aside the CESTAT's order and directed a reevaluation on merits in line with Section 35C(2) of the Central Excise Act, 1944. The judgment favored the appellant, closing the connected Miscellaneous Petition without costs.