2016 (11) TMI 707 - HC - Service Tax

Levy of tax - Erection, Installation and Commissioning of Telecommunication Towers - Held that - the activity of supply of materials, services of civil and electrical and commissioning and installation are part and parcel of and incidental to the turnkey project of design, supply, erection, commissioning and installation of telecommunication tower project undertaken by them and consequently the value of materials which were consumed/used for providing the service is includible in the taxable value of service. Delay in filing petition - Held that - The respondent is bound by the Circular issued by CBEC. In the impugned order, there is no finding recorded by the respondent as to why the Circular was not adhered to and why the order was not passed within atleast one month after the conclusion of the personal hearing. It may be true that the delay by itself cannot be a ground to set aside the order, but if the assessee is put to prejudice on account of the delay, then it is a good ground to interfere with the order passed by the lower authority. However, in this case, this Court is not inclined to test the correctness of the order on the ground of delay, since this Court is satisfied that the impugned order is not sustainable, for the other reason, namely by relying upon an order of the Tribunal, which has been set aside, it is sufficient to hold that the impugned order is unsustainable and the matter requires fresh consideration. Appeal allowed - matter remanded.

Summary

Issues: Challenge to order passed under Finance Act, 1994 for service tax demand based on reliance on overruled tribunal decision and delay in passing final order.

Analysis:
1. The petitioner challenged an order by the respondent related to service tax demand for services provided from April 2009 to September 2011 under the Finance Act, 1994. The respondent issued show cause notices and conducted a personal hearing before confirming the demand. The delay in passing the final order, after over a year from the hearing, was a key contention in this challenge.

2. The petitioner primarily contested the order on two grounds. Firstly, the reliance on a Tribunal decision in a case that had been overruled by the High Court of Bombay was highlighted. The petitioner argued that this reliance was erroneous and rendered the impugned order unsustainable. Secondly, the delay in passing the order was emphasized, citing a Circular by CBEC which directs timely communication of decisions post personal hearings. The petitioner argued that this delay prejudiced their position and warranted setting aside the order.

3. The respondent defended the order by stating that the Tribunal decision, though overruled, was remanded for fresh consideration. Regarding the delay, the respondent referred to a previous court decision emphasizing that delay alone might not be sufficient to set aside an order. The respondent argued against the petitioner's contentions on these grounds.

4. Upon hearing both parties, the Court noted that the impugned order relied on a Tribunal decision that had been set aside by the Bombay High Court. This fact alone rendered the order unsustainable as the basis for the decision was no longer valid. The Court found that this error was significant enough to set aside the order and require fresh consideration by the respondent.

5. The Court also addressed the issue of delay, noting the Circular by CBEC and the lack of explanation in the impugned order for the delay in decision-making. While delay alone might not invalidate an order, the Court found that in this case, the reliance on an overruled decision was sufficient to set aside the order without delving into the delay aspect. The Court allowed the writ petition, set aside the order, and remanded the matter for fresh consideration by the respondent.