REVISIONARY POWER OF COMMISSIONER UNDER SERVICE TAX PROVISIONS

[Mr. M. GOVINDARAJAN]

     Sec. 84 of the Finance Act, 1994 provides for the revisionary powers of Commissioner.  This section provides that the Commissioner of Central Excise may call for the record of a proceeding under service tax provisions in which the adjudicating authority subordinate to him has passed any decision or order and may make such inquiry or cause such inquiry to be made and, subject to the provisions pass such order thereon as he thinks fit.

     This section further provides that no order which is prejudiced to the assessee shall be passed under this section unless the assessee has been given an opportunity of being heard.

     The Commissioner of Central Excise shall communicate the order passed by him to the assessee, such adjudicating authority and the Board.

     No order shall be passed by the Commissioner of Central Excise in respect of any issue if an appeal against such issue is pending before the Commissioner of Central Excise (Appeals).

     No order shall be passed after the expiry of two years from the date of which the order sought to be revised has been passed.

     The Bangalore tribunal in the case 'TNT India Private Limited V. Commissioner of Service Tax, Bangalore' - 2007 -TMI - 1018 - CESTAT, BANGALORE held that as per Sec. 84 of the Finance Act, 1994, the Commissioner may call for record of a proceeding which has been taken by sub ordinate officer and pass suitable order.   Likewise the tribunal Delhi in 'Bhilai Engineering Company Limited V. Commissioner of Central Excise, Raipur' - 2008 -TMI - 30862 - CESTAT, NEW DELHI held that since no appeal was pending against the imposition or non imposition of penalty under Sec. 76 of the Finance Act, 1994 prima facie the Commissioner could have exercise revisional power under Sec. 84 of the Finance Act, 1994.  In 'Composition Investments (P) Ltd., V. Commissioner of Central Excise' 2005 -TMI - 123 - CESTAT, BANGALORE the Bangalore tribunal observed that as per the records the Commissioner proceeded to revise the order when the matter was pending by way of appeal before the Commissioner (Appeals). Since the Commissioner was not empowered to revise the order when the matter was pending before the Commissioner (Appeals) the revised order was not sustainable in the eye of law and therefore, the appeal was allowed with consequential relief, if any.

     The Commissioner under Sec. 84 has no power to review an original order.  In 'Navin Chemical Enterprises V. Commissioner of Central Excise' - 2005 -TMI - 73 - CEGAT, NEW DELHI the tribunal held that the Commissioner was not empowered to review the order and thereafter direct the Deputy Commissioner of Central Excise to file an appeal.  In view of this, the appeal filed by Deputy Commissioner and the order passed by the Commissioner (Appeals) on that appeal was a nullity and hence the stay petition and appeal were allowed.  In another case the tribunal held that the directions of the Commissioner to file appeal were without jurisdiction and illegal. (S.V. Electricals Limited V. Commissioner of Central Excise' - 2005 -TMI - 77 - CEGAT, NEW DELHI.

CASE LAWS:

1. Majestic Mobikes Pvt. Ltd., V. Commissioner of Service Tax, Bangalore - 2008 -TMI - 30790 - CESTAT BANGLORE

     The very action of the appellant has shown that he is ready to comply with the law. Under such circumstances the original authority is of the view that waiver of penalty under Sec. 76 and Sec. 77 can be given in terms of Sec. 80 and also imposition of a nominal penalty under Sec. 78 which is well reasoned and not at all arbitrary.   The tax paid is to the tune of Rs.6,68,945/- whereas the penalty imposed by the Revisionary authority is Rs.10 lakhs.  It is very clear that imposition of such a huge penalty on an assessee who voluntarily complied is uncalled for and very much goes against the various provisions of the Finance Act, 1994 relating to service tax.   In our view, the Revisionary Authority has exercised his power for the reason that legally, he has the powers. Such powers have been exercised ignoring the various provisions already existing in the Finance Act. A sadistic streak can be discerned in such exercise of power.

2. Jayant Vasudeva Deshmukh v. Commissioner of Central Excise & Customs, Nasik - 2007 (6) STR 257 (Tri. Mumbai)

     The assessee had made the payment before issuing the show cause notice and after confirming the penalty amount. The Commissioner (Revisional) had exercised his jurisdiction in issuing the show cause notice and adjudicating thereupon. On adjudication of the said notice the penalty was worked out to the tune of Rs.49,533/- @ Rs.100 per day.   Considering the facts of the case the tribunal considered the imposition of enhancing penalty is not warranted. The order is set aside.

4. Jindal Steel & Power Limited V. Commissioner of Central Excise, Raipur - 2008 -TMI - 30901 - CESTAT, NEW DELHI

Commissioner (Appeals) while deciding the appeal filed by the applicant had not enhanced the penalty. Therefore subsequent revision by Commissioner is not sustainable.

5. JBC Impex V. Commissioner of Service Tax, Bangalore - 2008 (9) STR 222 (Tri. Bangalore)

     The appellants discharged the service as well as interest before the issue of show cause notice. The Assistant Commissioner has noted that there is no suppression of facts and the appellants have strong case for not levying the penalty.   However the order was reversed. The Commissioner has not considered the rulings on this point in revision but has enhanced the penalty. Waiver of pre deposit of penalty is allowed.

6. Media Advertising & Marketing V. Commissioner of Central Excise, Nasik - 2008 -TMI - 2779 - CESTAT, MUMBAI

     The Commissioner in revisionary proceedings enhanced the penalty. The revision for such enhancement of penalty is not given in revision order. The tribunal set aside the enhancement of penalty.

7. ETA Engineering Limited V. Commissioner of Central Excise - 2006 (3) STR 429 (Tri. Del)

     Appellant contended that the service tax had been paid voluntarily without any confirmation of demand. The original authority ought to have confirmed demands. Imposition of penalty in revision order when demand is not confirmed, prima facie, is not justified.

8. StudioPhotoPlaza V. Commissioner of Central Excise & Service Tax, Patna - 2008 (9) STR 172 (Tri. Kolkatta)

     The Commissioner who exercised power under Sec. 84 is to state the reason why he proposed to exercise the power under Sec. 84. It is the elementary principles of jurisprudence.Without stating the reason why such a power is exercisable, a notice issued shall not get sanction of law.  

9. Ajmer Automobiles (P) Ltd., V. Commissioner of Central Excise, Jaipur - 2008 -TMI - 4404 - CESTAT, NEW DELHI

The impugned order was passed by the Commissioner in exercise of suo motu or revisional power under Sec.84 of the Finance Act, 1994 pursuant to show cause notice issued in terms of a provision which was non existent at the relevant time.  The tribunal set aside the order.

10. Markfed Oil & Allied Industries V. Commissioner of Central Excise - 2005 -TMI - 85 - CEGAT, NEW DELHI

The tribunal in this case held that as the notice to the appellants was issued only under Sec. 77 of the Finance Act, 1994 for imposing penalty on account of failure to file returns, the Commissioner exercising revisionary powers could not pass an order for making payment of service tax with interest.

APPEAL AGAINST REVISIONARY ORDER:

     Any assessee or the Board aggrieved by an order passed by a Commissioner of Central Excise under Se. 84 (revisionary power) may file appeal to the Appellate tribunal against such order within three months of the date on which the order sought to be appealed against is received by the assessee, the Board or by the Commissioner of Central Excise, as the case may be. The Appellate Tribunal may admit an appeal after the expiry of the relevant period if it is satisfied that there was sufficient cause for not presenting it within that period.