2009 (12) TMI 378 - AT - Service Tax

Dispute involving PSU- Appeal involving state Public Sector Undertaking. Tribunal in KARNATAKA LAND ARMY CORPN. LTD. Versus COMMR. OF S.T., BANGALORE 2009 -TMI - 34827 - CESTAT, BANGALORE, relying on High Court ruling, held that clearance from committee on disputes not required in respect of PSU. Mere rejection of SLP by Supreme Court against said High Court ruling not amounts to confirmation of views of High Court. Supreme court in several cases noted requirement of committee to sort dispute with PSUs. Held that- Tribunal decision and High Court ruling not in consonance with law laid down by Supreme Court. Clearance from COD required in present case.

Summary

Issues:
1. Whether COD clearance is required for a dispute between State owned PSU and the Central Government.
2. Applicability of previous judgments by different courts on the requirement of COD clearance.

Analysis:
1. The judgment addresses the issue of whether COD clearance is necessary for a dispute involving a State-owned PSU and the Central Government. The Tribunal refers to a letter from the Joint Commissioner (Review) and STO (Review) stating that the matter pertains to such a dispute and COD clearance is not required. The Tribunal cites the decision in Karnataka Land Army Corporation Ltd. v. Commissioner of Service Tax, Bangalore and U.P. State Cement Corporation Ltd. v. Union of India to support this stance. However, the Tribunal notes that the Supreme Court's decision in ONGC Ltd. v. City & Indus. Dev. Corpon. Maharashtra emphasizes the need for COD clearance in such cases. The Tribunal concludes that clearance is necessary even for disputes between the Central Government and State entities.

2. The judgment delves into the applicability of previous judgments by different courts regarding the requirement of COD clearance. It highlights the decision of the Hon'ble Allahabad High Court in U.P. State Cement Corporation Ltd.'s case, which emphasized the need for in-house settlement before resorting to legal action. The High Court's decision was based on references to previous judgments, including the Apex Court's ruling in ONGC v. Collector of Central Excise. The Tribunal contrasts this with the Supreme Court's stance in ONGC Ltd. v. City & Indus. Dev. Corpn. Maharashtra, where a committee was recommended to resolve disputes between Central and State entities. The Tribunal concludes that the previous decisions by the High Court and Tribunal are not aligned with the Supreme Court's directives, emphasizing the necessity of COD clearance in such disputes.

In conclusion, the judgment clarifies that COD clearance is required for disputes involving State-owned PSUs and the Central Government, contrary to previous decisions by lower courts. The Tribunal emphasizes the importance of following the Supreme Court's directives in resolving such disputes and directs the concerned party to obtain the necessary COD clearance.