2023 (1) TMI 940 - HC - Service Tax

Rejection of Application for condoning the delay in filing an appeal - sale of space or time for advertisement - HELD THAT - The Petitioner stated that discussions deliberation were made in the Cabinet on the representations of the Railways for exemption from service tax liability and as result of the same, an amendment has been introduced in the Act of 1994 by incorporating section 99 in the Finance Bill-2013. This information was circulated to all the Zonal General Managers of the Indian Railway by the Ministry of Railway through Railway Board by Circular dated 5 March 2013. The Petitioner has stated that thereafter, the Respondents also did not pursue the demand raised by them under the show cause notice presuming that exemption is granted to the Railways for the period in question. When the Petitioner received the demand, the Petitioner informed to the Assistant Commissioner about the amendment and requested to waive the demand with retrospective effect as there was no dues in view of the amendment. The Petitioner has thus stated that the delay is not deliberate but in view of the fact that since the Railways bona fide believed that the liability of service tax for the period from 2006 to 2009 which is the subject matter of demand stood wiped off. Further, either allowing the application for condonation of delay or rejecting the same were not the only options available with the Tribunal. Equities could have been balanced by imposing suitable conditions, which option has not been considered by the Tribunal at all - the equities in the case can be balanced by granting application for condonation of delay, subject to the Petitioner depositing 25% of the principal amount. Petition allowed.

Summary

Issues:
Challenge to order of Customs, Excise and Service Tax Appellate Tribunal rejecting condonation of appeal filing delay by Union of India, Divisional Railway Manager, Central Railway.

Analysis:
The Petitioner, Union of India, Divisional Railway Manager, Central Railway, filed a petition challenging the order of the Customs, Excise and Service Tax Appellate Tribunal rejecting the condonation of delay in filing an appeal. The Additional Commissioner had imposed service tax liability on the Petitioner along with interest and penalties under the Finance Act, 1994, for providing space for advertisement at railway stations. The Commissioner held this activity as a taxable service. The Petitioner's appeal was dismissed by the Commissioner (Appeals), leading to an appeal in the Appellate Tribunal.

The Tribunal rejected the application for condonation of delay citing the Supreme Court's decision in Collector, Land Acquisition Anantnag v. MST. Katiji, stating that the case did not warrant condonation. The Petitioner then approached the High Court challenging this decision. The High Court noted the Petitioner's reasons for delay, including discussions in the Cabinet for exemption from service tax liability and subsequent amendments. The Court found the Petitioner's explanation reasonable and criticized the Tribunal for not discussing the facts of the case or considering alternative options like imposing conditions.

The High Court balanced the equities by allowing the application for condonation of delay, subject to the Petitioner depositing 25% of the principal amount. The Court directed the Petitioner to deposit the amount in the Tribunal within six weeks. Consequently, the writ petition was allowed, and the matter was disposed of accordingly.