2023 (7) TMI 952 - HC - Service Tax

Violation of principles of natural justice - contentions were not dealt properly - Levy of Service Tax - Authorised Service Station Services - Banking and Other Financial Services - penalty under Section 76 of the Finance Act, 1994 - HELD THAT - It is satisfying that certainly in respect of the aspects which are noted by the Tribunal, a remand to the Commissioner was necessary. However, it is found that accompanied with the relook on the factual issues, the issues of law as being canvassed by the Appellant which are on the nature of warranty contract and position of law in that regard as also the issue of jurisdiction were required to be considered by the Tribunal and findings recorded thereon. However, there are no findings recorded on such issues by the Tribunal. The Commissioner in the peculiar facts needs to consider these issues in respect of nature of warranty contract in the light of the decision of the Supreme Court in case of COMMISSIONER, CENTRAL EXCISE CUSTOMS VERSUS M/S LARSEN TOUBRO LTD. AND OTHERS 2015 (8) TMI 749 - SUPREME COURT , as also the issue of jurisdiction be addressed by him in deciding the proceedings on record. The present appeals disposed off by maintaining the order of the Tribunal in remanding the proceedings to the Commissioner.

Summary

Issues involved:
The judgment involves challenges to orders passed by the Customs, Excise & Service Tax Appellate Tribunal in two appeals related to Central Excise Appeal No. 1 of 2021 and Central Excise Appeal No. 4 of 2021. The issues raised include warranty repair services, jurisdiction, interest, and penalty under the Finance Act, 1994.

Warranty Repair Services:
The Appellants challenged the Tribunal's decision to remand the matter to the adjudicating authority instead of deleting the demand of service tax related to Authorised service station services amounting to Rs. 43,91,01,360. The Appellants argued that the warranty contract for repair and maintenance of movable property was not taxable before July 2012, citing legal precedent. They also highlighted that the quantification of demand was not adequately addressed in the impugned order.

Jurisdiction:
The Appellants contended that the Tribunal should have deleted the demand based on the lack of territorial jurisdiction of the adjudicating authority. However, no specific finding was recorded on this issue in the impugned order. The Appellants raised this jurisdictional issue in their reply to the show cause notices, emphasizing the need for a thorough examination by the Commissioner.

Interest:
The question of whether the Tribunal should have deleted or set aside the interest under Section 75 of the Finance Act, 1994 was also raised by the Appellants. The Tribunal's order did not provide a clear resolution on this issue, prompting further consideration by the Commissioner. The Appellants sought a comprehensive review of all relevant documents to support their case.

Penalty:
The Appellants argued that the Tribunal should have deleted or set aside the penalty imposed under Sections 76 and 77 of the Finance Act, 1994. The Tribunal's order did not address this issue satisfactorily, leading to the need for a detailed examination by the Commissioner. The Appellants emphasized the importance of a thorough review of all legal and factual aspects involved in the case.

In the judgment, the High Court of Bombay upheld the Tribunal's decision to remand the proceedings to the Commissioner for further examination. The Court noted that while a remand was necessary for certain factual aspects, the Tribunal failed to address key legal issues raised by the Appellants, such as the nature of the warranty contract and the jurisdictional concerns. The Court directed the Commissioner to consider these issues in light of relevant legal precedents, including a Supreme Court decision. The Appellants were permitted to raise additional issues during the proceedings, and all contentions were kept open for consideration. The Court instructed the Commissioner to expedite the process and provide a decision within six weeks after granting the Appellants an opportunity to be heard. The appeals were disposed of without any costs imposed on either party.