2019 (9) TMI 838 - HC - Service Tax

Taxability - freight charged by the Petitioner s to its customers - CENVAT Credit u/r 6(3)(i) of the Cenvat Credit Rules, 2004, read with Section 73 (1) of the Finance Act, 1994 - HELD THAT - On the face of it the two impugned orders in respect of similar period has taken a contrary stand. If the freight charges are exempt as held in the impugned order dated 18 March 2019, then the demand of Service Tax as made in the impugned order dated 28 February 2019 cannot stand and vice versa. Revenue can be correct or rather on facts can only take one of the two stands and not confirm the notices taking a dramatically opposite views. At the request of Mr.Jetly the Petition is adjourned to 27 September 2019.

Summary

Issues:
Contradictory orders passed by two different Commissioners regarding the taxability of freight charges and Cenvat Credit for the same period.

Analysis:
The judgment by the Bombay High Court deals with a petition challenging two Orders-in-Original passed by two different Commissioners under the Finance Act, 1994. The first issue highlighted is the contradictory nature of the orders dated 18 March 2019 and 28 February 2019. The order by the Commissioner of GST Thane held that freight charges are taxable, resulting in a confirmed payment and penalty, while the order by the Commissioner of GST Mumbai-East stated that the freight charges are exempt from tax. This contradiction raises a significant legal issue as only one of the two stands taken by the Revenue can be sustainable under the law.

The Court emphasized that if the freight charges are indeed exempt as per one order, then the demand for Service Tax made in the other order cannot stand, and vice versa. The judgment points out that the Revenue can only take one consistent stand based on facts and cannot confirm notices based on dramatically opposite views. This inconsistency in the orders highlights a lack of clarity and consistency in the application of tax laws by the Revenue authorities.

During the proceedings, the Court requested the Respondent's counsel to seek instructions from the Revenue department regarding which of the two orders the department stands by. The Respondent's counsel agreed to consult with the officers to clarify the basis for the contradictory stand taken in the orders. As a result, the Court adjourned the petition to a later date to allow for further clarification from the Revenue department. This decision reflects the Court's commitment to ensuring a fair and consistent application of tax laws and resolving the issue of contradictory orders in a systematic manner.