2019 (3) TMI 422 - HC - Service Tax

Principles of natural justice - ex-parte order - Works contract - levy of service tax - It is the case of the petitioner that the works contract services done by the petitioner for BHEL for the period from 2006-2007 to 26.07.2009 is exempted - Held that - The Finance Act, 1994, enjoins upon the Tribunal to pass order in the appeal confirming, modifying or annulling the decision or order appealed against or may remand the matter. It does not give any power to the Tribunal to dismiss the appeal for default or for want of prosecution in case, the appellant is not present when the appeal is taken up for hearing. The Hon'ble Supreme Court in various cases while considering Section 35-C (1) of the Central Excise and Salt Act, 1944, which deals with the orders of the appellate Tribunal r/w. Rule 20 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, has held that the Central Excise Act, 1944, does not give power to the Tribunal to dismiss the appeal for default or for want of prosecution, in case, the appellant is not present when the appeal is taken up for hearing. The first respondent Tribunal could not have dismissed the appeal filed by the petitioner for want of prosecution and it ought to have decided the appeal on merits even if the appellant or its Counsel was not present when the appeal was taken up for hearing. Further, non-compliance of the conditional order by the petitioner for the grant of stay will also not empower the first respondent Appellate Tribunal to dismiss the main appeal for non-prosecution. The matter is remanded back to the first respondent for fresh consideration - petition allowed by way of remand.

Summary

Issues:
Challenge to order imposing service tax on works contract services, dismissal of appeal by Appellate Tribunal for non-appearance, interpretation of relevant legal provisions.

Analysis:
1. The petitioner, a works contractor, challenged a service tax order from 2006-2010. The second respondent levied service tax despite an exemption for a specific period. The petitioner appealed the order, but the Commissioner of Appeals and the first respondent Appellate Tribunal upheld it.

2. The first respondent passed an ex-parte order dismissing the appeal due to non-appearance by the petitioner. The Tribunal cited non-compliance with a stay order as the reason for dismissal. The petitioner challenged this order through a writ petition.

3. The Court examined Section 86(7) of the Finance Act, 1994, which directs the Tribunal to follow the same procedure as the Central Excise and Salt Act, 1944. Section 35-C(1) of the latter Act outlines the Tribunal's powers to pass orders after hearing parties.

4. Rule 20 of the Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982, allows the Tribunal to dismiss appeals for default if the appellant doesn't appear. However, the Act does not provide for dismissal due to non-appearance.

5. Referring to previous Supreme Court judgments, the Court emphasized that the Tribunal must decide appeals on merits, not dismiss them for non-appearance. The Court held that the Tribunal erred in dismissing the appeal for non-prosecution and ordered a fresh consideration on merits within three months.

6. The Court quashed the original order and remanded the matter to the Tribunal for proper consideration. The judgment emphasized the necessity of deciding appeals on their merits and not dismissing them for procedural reasons. The writ petition was disposed of without costs.

This detailed analysis highlights the legal intricacies involved in the judgment, focusing on the challenge to the service tax order, the dismissal of the appeal, and the interpretation of relevant legal provisions governing appellate procedures.