2023 (10) TMI 530 - HC - Service Tax

Validity of adjudication order - recovery of service tax alongwith penalty - quantum of penalty - HELD THAT - Though the adjudication order was passed in the year 2017, till date the respondent/department has not been able to effect any recovery from the appellants and the orders of adjudication have remained only on paper. Thus, balancing the interest of both parties, more particularly bearing in mind the interest of revenue, we find the case on hand to be a peculiar case, where certain directions can be issued so that the part of the amount payable by the appellants can be recovered by the department. Simultaneously, the appellants can also be granted an opportunity to question the correctness of the order of adjudication as well as also make their submissions as to whether the penalty enhanced by the Commissioner was warranted. The appeal stands disposed of by directing the appellants to pay 50% of the Service Tax, which was determined and demanded in the order of adjudication dated 21st June, 2017. Such payment shall be effected by the appellants within six weeks from the date of receipt of server copy of this order.

Summary

Issues involved: Challenge to order of adjudication, non-preference of appeal before Commissioner of Central Excise, Kolkata, penalty imposition, recovery of money, return of seized documents, satisfaction of reasons for not preferring appeal.

Challenge to order of adjudication: The appellants challenged the order of adjudication confirming service tax demand and imposing penalty. The appellants did not prefer an appeal before the Commissioner of Central Excise, Kolkata, leading to the department appealing for enhanced penalty.

Non-preference of appeal before Commissioner of Central Excise: The appellants did not avail the option to file an appeal before the Commissioner of Central Excise, Kolkata, despite having an effective alternate remedy, while the department pursued an appeal resulting in enhanced penalty.

Penalty imposition: The penalty imposed on the appellants was enhanced to Rs. 38,93,956/- by an order dated 2nd November, 2018, due to the appellants' non-appearance at the personal hearing and subsequent rejection of adjournment requests.

Recovery of money: Despite the adjudication and penalty orders, the respondent/department failed to recover any money from the appellants, with both orders remaining as paper orders till date.

Return of seized documents: The appellants contended that several documents were seized, and they requested the department to return the documents to effectively contest the proceedings, along with citing other reasons in the writ petition.

Satisfaction of reasons for not preferring appeal: The reasons provided by the appellants for not preferring an appeal or challenging the adjudication order were deemed unsatisfactory by the court, emphasizing the interest of revenue and the need for recovery.

Judgment: The court directed the appellants to pay 50% of the service tax demanded within six weeks, allowing them to file an appeal before the Commissioner of Central Excise (Appeals), Kolkata, within thirty days of payment to contest the adjudication order and penalty imposition.

Appellate authority considerations: The Commissioner of Central Excise (Appeals), Kolkata, was instructed to permit the appellants to raise grounds regarding penalty levy and quantum, given the previous ex parte decision due to rejection of adjournment.

Legal issues and precedent: All legal issues were left open for raising before the appellate authority, with the court clarifying that the order was specific to the case's circumstances and should not be treated as a precedent.

Costs and certified copy: No costs were awarded, and the parties were to receive an urgent certified copy of the order upon compliance with legal formalities.