2018 (4) TMI 116 - HC - Service Tax

Appointment of adjudicating authorities - case of petitioner is that the order dated 16.09.2015 appointing respondent No.4 as an adjudicating authority is bad, as by notification dated 19.04.2007, only Commissioners of Central Excise were given the powers of Central Excise Officers. As a result order dated 08.12.2016 is without jurisdiction, having been passed by the Deputy Commissioner. Held that - Clause 11.2 (ii) of the Master Circular (CBEC Circular dated 29.09.2016) does not mean that show cause notices issued to different noticees on the same issue shall be adjudicated by one authority. It would relate only to cases where on a similar issue different show cause notices have been issued to the same noticee - Clause 11.5 clarifies the position. If different show cause notices have been issued on the same issue to the same noticee answerable to different adjudicating authorities, then all the show cause notices would be decided by the adjudicating authority in a case involving the highest amount of duty. From a reading of the clauses 11.2 and 11.5 of the Master Circular, the position emerges that only if similar show cause notices are issued to the same noticee by different adjudicating authorities, all such notices would be adjudicated by one adjudicating authority, i.e. the officer competent to decide the case involving the highest amount of duty. The challenge to the order dated 16.09.2015 also fails. Petition dismissed.

Summary

Issues:
1. Jurisdiction of adjudicating authorities appointed to decide show cause notices regarding service tax liability.
2. Validity of orders dated 16.09.2015 and 08.12.2016 in light of relevant notifications and circulars.

Issue 1: Jurisdiction of Adjudicating Authorities:

The petitioners, cable operators providing services in Amritsar, challenged the appointment of adjudicating authorities to decide show cause notices related to service tax liability. The respondents alleged that the petitioners had not registered with the Service Tax department and had not paid the required service tax. The petitioners contended that the order appointing the adjudicating authorities was flawed as it was passed by a Deputy Commissioner, not a Commissioner of Central Excise as required by a 2007 notification. However, the Court held that the 2005 and 2007 notifications served different purposes, with the former appointing various officers as Central Excise Officers with monetary limits for adjudication, while the latter appointed Commissioners of Central Excise for nationwide jurisdiction in cases assigned by the Board. The Court rejected the argument that the Deputy Commissioner lacked jurisdiction based on the 2007 notification, affirming the validity of the appointment.

Issue 2: Validity of Orders in Light of Circulars:

The petitioners also challenged the orders based on a Master Circular, specifically clauses 11.2 and 11.5. They argued that all show cause notices on a common issue should be adjudicated by a single authority competent to decide the case with the highest duty amount. The Court clarified that the Master Circular's clauses applied to situations where similar notices were issued to the same entity, not to different entities facing similar issues. Upholding the circular's intent to prevent harassment by consolidating notices for the same entity, the Court emphasized that requiring all similar notices nationwide to be handled by one authority would be impractical and hinder the adjudication process. The Court dismissed the challenge to the orders, emphasizing that the circular's provisions did not support the petitioners' interpretation and upheld the validity of the appointment of multiple adjudicating authorities.

In conclusion, the High Court dismissed the writ petition challenging the jurisdiction of the appointed adjudicating authorities and the validity of the orders dated 16.09.2015 and 08.12.2016. While the Court did not delve into the merits of the case, it allowed the petitioners to pursue a statutory appeal against the impugned order dated 08.12.2016.