2022 (4) TMI 1207 - AT - Service Tax

Maintainability of appeal - monetary limit for filing appeal - applicability of section 35F(1) of Central Excise Act, 1944 read with instructions No. 390/MISC/116/ 2017-JC dated 22.8.2019 - competence of Commissioner (Appeals) to demand service tax - HELD THAT - The present appeal has been filed pursuant to the Review Order No. 117/2020-21 dated 03.03.2021. The Reviewing Authority has held that Commissioner (Appeals) has travelled beyond the scope of mandate of Statute confirming demand of service tax of Rs,20,830/- as he has no power under Section 125(4) of Finance Act, 1944 to pass order where no appeal has been filed by the assessee to challenge amount of demand of ₹ 20,830/- as appeal before Commissioner (Appeals) was also filed by the department. There is no denial of the fact that vide the departmental instructions issued by CBEC under Customs Act dated 22.8.19, the monetary limit for filing the appeal by the Department before CESTAT has been fixed at ₹ 50 lakh and above clarifying that in any case having monetary limit i.e. less than ₹ 50 lakh shall not be filed before the CESTAT. The submission of learned Departmental Representative for being covered under the exemption clause are held not sustainable. Thus, none of the provisions the constitutional validity thereof was challenged. Nor the Original Authority had held any Notification/ instruction/order or Circular to be illegal or ultravires. Hence the exemption from applicability of monetary limit is not available with the Department. It is held that being aggrieved against the order the department is in appeal wherein the amount involved is much less than the monetary limit for maintainability of any appeal before this Tribunal in terms of section 35F(1) of Central Excise Act, 1944 read with instructions No. 390/MISC/116/ 2017-JC dated 22.8.2019. The appeal is accordingly, dismissed as being not maintainable.

Summary

Issues:
- Challenge to dropping of service tax demand
- Monetary limit for maintainability of appeal before Tribunal
- Scope of exemption clause in departmental instructions

Analysis:

Issue 1: Challenge to Dropping of Service Tax Demand
The appellant, engaged in providing transport services, faced a demand of ?4,53,279 for unpaid Service Tax. The Original Adjudicating Authority dropped a significant portion of the demand, holding it as liability under reverse charge mechanism for certain recipients not covered under the relevant category. Only a demand of ?20,830 was confirmed on the freight amount received during a specific financial year. The Appellate authority further dropped this demand, emphasizing that the appellant provided services to entities liable to pay service tax under reverse charge mechanism. The appellant argued no TDS was deducted as per Income Tax provisions, and the Commissioner (Appeals) subsequently dropped the demand of ?20,830.

Issue 2: Monetary Limit for Maintainability of Appeal
The Department challenged the dropping of the demand, arguing that despite the amount being only ?20,830, the appeal was maintainable before the Tribunal based on the monetary limit set by the Central Board of Excise and Customs. The Department cited statutory powers under the Central Excise Act and instructions fixing the limit at ?50 lakh and above for filing appeals. However, the Department failed to qualify for an exemption from the monetary limit as none of the constitutional validity of provisions or legality of notifications/instructions/orders was challenged in the case.

Issue 3: Scope of Exemption Clause in Departmental Instructions
The Review Order highlighted that the Commissioner (Appeals) exceeded the statutory mandate by confirming the demand of ?20,830, as no appeal challenging this amount was filed by the assessee. The Department argued for exemption from the monetary limit based on departmental instructions. However, it was concluded that the exemption clause did not apply in this case as no challenge to constitutional validity or legality of notifications/instructions/orders was raised, rendering the appeal not maintainable due to the amount falling below the prescribed limit.

In conclusion, the Tribunal dismissed the appeal as not maintainable due to the amount involved being below the monetary limit set for appeals before the Tribunal, despite the Department's arguments regarding statutory powers and exemption clauses.