2016 (1) TMI 258 - AT - Service Tax

Levy of penalty - appellant sought to get clarification about the order of tribunal 2014 (3) TMI 1008 - CESTAT MUMBAI regarding penalty - it was submitted that, the contention of adjudicating authority on demand of service tax was upheld by the Tribunal, therefore they did not want to repeat arguments on merits before the Tribunal in later cases and only advanced their arguments on the issue of penalty - Franchisee Services - Held that - Para 4 of Tribunal order dt. 26.3.2014 only seeks to convey that as the case had been decided on merits by the Tribunal in its first order dt. 29.11.2006, the appellant did not want to repeat the arguments on merits. The fact that they did contest on merits is evident from the appeal filed by them which gives detailed grounds for contesting the appeal on merits. Para 4 of the order is intended to state that, during the hearing their contention on merits were not sought to be repeated.

Summary

Issues:
Clarification sought by the appellant under Rule 41 of the CESTAT (Procedure) Rules regarding Tribunal Order, nature of services provided by the appellant being Franchisee Services, confirmation of service tax demand, imposition of penalty under Section 78, limited arguments on penalty issue, application for appropriate clarification, contention on merits, rectification of mistake application, denial of natural right to appeal, Rule 41 empowering Tribunal to secure justice.

Analysis:
The appellant filed a Miscellaneous Application seeking clarification in a Tribunal Order regarding the nature of services provided by them being considered as Franchisee Services under Section 65(105) (zze) of the Finance Act 1994. The department had confirmed a service tax demand and imposed a penalty under Section 78. The Tribunal upheld the demand but set aside the penalty. The High Court directed the appellant to apply for clarification as they had only opposed the appeal on penalty grounds. The appellant argued that they did not want to repeat arguments on merits as they had already contested the issue in previous cases. The Tribunal noted that the appellant consistently argued on merits in all adjudication orders and clarified that the appellant did not concede the issue on merits. The Tribunal clarified that the appellant's contention on merits was not repeated during the hearing, and Rule 41 empowers them to pass orders to secure justice.

The Tribunal found it improbable that the appellant would contest the same issue on merits only in the first adjudication order but not in subsequent periods. The Tribunal confirmed the levy of service tax based on findings from earlier orders and did not record that the appellant conceded the issue on merits. The Tribunal clarified that the application was not for rectification of mistake but seeking justice under Rule 41. The Tribunal made a clarification in the order to convey that the appellant did not repeat arguments on merits during the hearing, as their detailed grounds for contesting the appeal on merits were already provided in the appeal filed by them. The clarification was made based on the sequence of events and records to secure the ends of justice, considering that the Members who passed the original order had retired.