2019 (10) TMI 50 - HC - Service Tax

Maintainability of petition - alternative remedy of filing appeal - freight charges - taxability - HELD THAT - The two orders passed by the revenue are on the face of it contrary to one another. The order dated 28 February 2019 passed by the Commissioner of Central Tax GST, Thane holds that service tax on freight is a taxable service. On the above finding he confirms the recovery of an amount of ₹ 2.36 crores as Service Tax. On the other hand the Commissioner of GST, Mumbai (East) in his order dated 18 March 2019 holds that the freight charges are an exempted service. Thus as a result holds that the Petitioners are not entitled to Cenvat Credits of ₹ 11.37 crores and confirmed the demand on that basis. The revenue can obviously be right only on one of two counts and not on both counts i.e. either the impugned order dated 28 February 2019 is correct or the impugned order dated 18 March 2019 is correct. In fact passing such contrary orders, only seems to suggest that the entire adjudication proceedings are a mere farce. The attitude of the Revenue even at the level of the Commissioner is that the demand has to be confirmed and the relief if any, the party has to obtain from Appellate Authorities. This attitude brings to a naught to claim of the State that it is business friendly. There is no question of the Petitioner being driven to the filing of an appeal to the Appellate Authorities under the Act in respect of both the impugned orders - petition disposed off.

Summary

Issues: Contradictory orders passed by different Commissioners on the taxability of freight charges and entitlement to Cenvat Credits.

Analysis:
1. Contradictory Orders: The petitioner challenged two Orders-in-Original dated 18 March 2019 and 28 February 2019 passed by different Commissioners under the Finance Act, 1994. The order dated 28 February 2019 held that freight charges were taxable, resulting in a demand of ?2.36 crores with penalties. Conversely, the order dated 18 March 2019 by another Commissioner held the freight charges as exempt, denying Cenvat Credits of ?11.37 crores. The High Court noted the contradictory nature of these orders, emphasizing that only one stand by the Revenue could be sustainable under the law.

2. Judicial Intervention: The High Court expressed concerns over the conflicting positions taken by the Revenue in the two orders. It highlighted that if the freight charges were exempt as per one order, the demand for Service Tax in the other order could not be upheld, and vice versa. The Court observed that the Revenue must take a consistent and legally tenable position, rather than confirming notices with dramatically opposing views, which could undermine the adjudication process.

3. Revenue's Stand: During the proceedings, the Revenue stated that it stood by both impugned orders, suggesting the petitioner pursue an appeal under the Finance Act, 1994. However, the Court reiterated that the Revenue could not be correct on both counts and must choose a coherent stance. The Court emphasized that the Revenue's approach of confirming demands and directing parties to seek relief from Appellate Authorities undermined the fairness and efficiency of the adjudication process.

4. Judicial Decision: In light of the contradictory orders and the Revenue's stance, the High Court set aside both orders dated 18 March 2019 and 28 February 2019 passed by the respective Commissioners. The Court directed the Registry to inform the Central Board of Indirect Tax and Customs (CBIC) about the decision and emphasized the importance of avoiding conflicting adjudications by appointing a common adjudicator for similar cases. The petition was disposed of accordingly, providing clarity and resolution to the conflicting tax assessments.