2019 (5) TMI 876 - HC - Service Tax

Rectification of Mistake - mistake apparent from the record or not - It was contended that Rule 2A of the Service Tax (Determination of Value) Rules, 2006, was not even taken note of while arriving at the quantum of tax - HELD THAT - The question as to whether the non-application of the relevant provision of the rules would tantamount to a mistake apparent on the face of the record, is subject to certain parameters. It is not in all cases that the application of a wrong provision or the non-application of a right provision would tantamount to a mistake apparent from the record. May be the petitioner has a good case on merits. But, an order of rejecting of an application for rectification cannot per se be taken to be wrong in the light of the limited scope of Section 74 of the Finance Act. Therefore, the petitioner should only file an appeal against the original order dated 10.01.2019. Time Limitation for filing appeal - Section 85(3A) of the Finance Act - HELD THAT - Under Section 85(3A) of the Finance Act, the petitioner has a remedy of appeal within two (2) months - In this case, the period of two (2) months can be calculated only from the date of receipt of the order of rejection of the rectification of application. The date of order of rejection of the rectification application is 28.02.2019. It was received by the petitioner on 04.03.2019. Therefore, the petitioner has time up to 04.05.2019 for filing an appeal against the order in original dated 10.01.2019. Petition dismissed.

Summary

Issues:
1. Rejection of application for rectification under Section 74 of the Finance Act, 1994.
2. Consideration of the non-application of Rule 2A of the Service Tax (Determination of Value) Rules, 2006.
3. Applicability of the remedy of appeal under Section 85(3A) of the Finance Act.

Analysis:
1. The petitioner challenged the rejection of their application for rectification under Section 74 of the Finance Act, 1994, concerning a demand for service tax. The High Court noted that while the petitioner may have a strong case on merits, the rejection of the rectification application does not necessarily imply an error in the original order. The Court emphasized the limited scope of Section 74 and directed the petitioner to file an appeal against the original order instead of seeking rectification.

2. The Court discussed the significance of Rule 2A of the Service Tax (Determination of Value) Rules, 2006, which the petitioner claimed was not considered when determining the tax amount. The judgment highlighted that the mere non-application of a relevant provision does not always constitute a mistake apparent on the face of the record. The Court advised the petitioner to address this issue in the appeal against the original order.

3. Regarding the remedy of appeal under Section 85(3A) of the Finance Act, the Court clarified that the petitioner had two months from the date of receiving the rejection of the rectification application to file an appeal. As the rejection order was received on 04.03.2019, the petitioner had until 04.05.2019 to appeal against the original order dated 10.01.2019. The Court granted liberty to the petitioner to file a regular appeal within the specified timeframe and directed the appellate authority to consider all objections, including the applicability of Rule 2A.

In conclusion, the High Court dismissed the writ petition, allowing the petitioner to file a regular appeal against the original order within the prescribed period. The judgment emphasized the importance of following the appeal process and addressing all contentions, including the alleged non-application of relevant rules, during the appellate proceedings.