2024 (8) TMI 719 - HC - Service Tax

Pre-deposit for maintaining appeal - recovery of service tax with interest and penalty - HELD THAT - The Hon ble Supreme Court in the case of RAJ KUMAR SHIVHARE VERSUS ASSTT. DIRECTOR, DIRECTORATE OF ENFORCEMENT 2010 (4) TMI 432 - SUPREME COURT while considering the scope of the provisions of Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 and Foreign Exchange Management Act, 1999 (FEMA ), in relation to an order passed in connection with an application for dispensation of pre-deposit of penalty and the right to prefer an appeal to the High Court in terms of Section 35 thereof, in paragraph 24 of such judgment was, inter alia, pleased to observe by taking note of the language used in Section 35 of FEMA that the word any in this context would mean all - the Hon ble Supreme Court had opined that the said Section confers right of appeal to any person aggrieved and such a right to appeal is a right which has been conferred by the statute. Any decision passed, would be appealable under Section 35 of the FEMA and that the legislature has conferred such right to a person aggrieved from any order or decision of the Appellate Tribunal, though with certain limitations. Taking note of Section 35G of the said Act, it would appear that an appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal, though the maintainability thereof would be dependent on certain statutory limitations. Thus, it cannot be said that the order passed by the Tribunal on 5th January, 2024 does not qualify as an order for preferring an appeal before the High Court, simply because the same does not seek to adjudicate the rights of the parties. It is a different question whether the High Court would admit the same having regard to the substantial questions of law involved. There are limitations imposed by the statute which are required to be followed. Such statutory limitations, do not make an appealable order, non appealable, especially when there is no limitation on the nature of order or the decision to be appealed against, as in this case. The present writ petition ought not to be entertained on the ground of alternative remedy as also on the ground of lack of territorial jurisdiction - Allowing a petition of this nature would permit bypassing of statutory provision which is not ordinarily permissible. Petition dismissed.

Summary

Issues:
Challenge to order of Customs, Excise and Service Tax Appellate Tribunal regarding pre-deposit for maintaining appeal.

Analysis:
The petitioners challenged the order of the Tribunal dated 5th January, 2024, which directed the petitioner to make a pre-deposit for maintaining the appeal. The petitioners, engaged in providing work contract services, claimed that the construction of bailey bridges, awarded to them by the State Government, was not liable to service tax as the bridges were intended for general public use. A demand-cum-show cause notice was issued for service tax, interest, and penalties for the financial year 2015-16. The respondent confirmed the demand, leading to the petitioners filing a writ petition in the High Court at Guwahati, which was dismissed with liberty to file a statutory appeal before the Tribunal.

The Tribunal, by an order dated 5th January, 2024, directed the petitioners to make a pre-deposit to maintain the appeal. The petitioners argued that the High Court had the jurisdiction to grant exemption and cited relevant judgments to support their contention. On the other hand, the respondent argued that post-amendment of Section 35F of the Act, the Tribunal could not entertain an appeal without the mandatory pre-deposit. The respondent relied on case law to support this argument.

The High Court noted that the order of the Tribunal directing the pre-deposit was appealable before the High Court as per Section 35G of the Act. The Court observed that while the appeal was maintainable, it was subject to statutory limitations and the requirement of substantial questions of law. The Court found that the petitioners did not challenge the jurisdiction of the Tribunal or allege a violation of natural justice. Therefore, the Court held that the writ petition should not be entertained due to the availability of alternative remedies and lack of territorial jurisdiction.

In conclusion, the High Court dismissed the writ petition, emphasizing that allowing such petitions would bypass statutory provisions. The Court also noted that the judgment cited by the petitioners did not assist their case. No costs were awarded, and parties were directed to comply with formalities for obtaining a copy of the order.