FEE IS REQUIRED TO BE PAID FOR FILING AN APPEAL UNDER SERVICE TAX PROVISIONS

[Mr. M. GOVINDARAJAN]

       Section 86 of the Finance Act, 1994 ('Act' for short) provides for appeals to Customs, Excise and Service Tax Appellate Tribunal (CESTAT) against the order passed by the Commissioner (Appeals).  Sec. 86(1) refers to appeal to be filed by the assessee against an order passed by a Commissioner of Central Excise under Sec.73 or Sec. 83A or Sec.84 or an order passed by Commissioner of Central Excise (Appeals) under Sec. 85.   Sec. 86(2), 86(2A) and 86(3) deal with the appeals by the Department.   Sec. 86(4) deals with the cross objections by the Department and the assessee, as the case may be, on receipt of notice of any appeal against part of the order of Commissioner of Central Excise, Commissioner (Appeals) adverse to them.  Sec. 86(6) provides the manner of thing the appeal including payment of fee by the appellant.

       Sec. 86(6) provides that an appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, irrespective of the date of demand of service tax and interest of levy of penalty in relation to which the appeal is made, be accompanied by a fee of-

·  Where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is five lakh rupees or less, one thousand rupees;

·  Where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is more than five lakh rupees but not exceeding fifty lakh rupees, five thousand rupees;

·  Where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is more than fifty lakhs rupees, ten thousand rupees;

·  No fee shall be payable in the case of appeal filed by the Department under Sec. 86(2) or Sec. 86(2A);

·  No fee shall be payable in the case a memorandum of cross objections is filed;

·  Every application made before the Appellate tribunal in an appeal for grant of stay or for rectification of mistake or for any other purpose or for restoration of an appeal or an application. No such fee shall be payable in the case of an application filed by the Commissioner of Central Excise or Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be under this section.

       Sec. 86(6), as it is originally stood, stipulated payment of fee of two hundred rupees on appeal or memorandum of cross objections.  Sec. 86(6) was amended by Finance Act, 2004 and a new sub section providing graded fee structure depending on the amounts of service tax, interest demanded and penalty in place of a fixed fee of two hundred rupees as provided earlier, was substituted.  The new provision was to take effect from the date notified by the Central Government in the Official gazette by Notification No. 31/2004-ST  dated 25.10.2004.   The Central Government notified 01.11.2004 as the date of commencement of the amended provision.

       In the case 'E-Biz.Com Pvt. Ltd., V. Commissioner of Central Excise, Noida'- 2008 -TMI - 31591 - CESTAT NEW DELHI  the tribunal discussed the question whether fee is required to be paid when an appeal is filed against a decision of Central Excise Authority in which there is no demand of tax, interest and penalty.  The facts of the case run as follows:

       The appellant is engaged in the business of developing and selling various on line/off line educational software packages through associates engaged for that purpose.  The associates get commission on the volume of sale generated by them as per defined business modules.  The appellant has been availing credit of service tax paid on input services like telephones, broad band services, courier, speed post services etc.,    These associates were informed by the Central Excise Department that they were liable to pay service tax on the commission received by them under the category of 'Business Auxiliary Service'.   The associates, thereafter, raised invoices on the appellant for service tax paid by them to the Department.   On 21.5.2007 the appellant addressed a letter to Deputy Commissioner (Service Tax), Noida seeking guidelines/clarification on the issue relating to CENVAT credit on Business Auxiliary Services.  Similar letter was also addressed to Assistant Commissioner of Central Excise and Service Tax, Noida on 4.6.2007 and Joint Commissioner (Preventive), Central Excise and Service Tax, Noida some in August 2007.  The Asst. Commissioner, in respect of the said letters, on 28.12.2007 sent a letter by way of clarification on the point of availment of CENVAT credit in respect of service tax paid/being paid by their associates giving reference to different provisions of CENVAT Credit Rules.   No demand was raised nor was any adjudication made on any dispute.   The letter ended with the words, "This is for information please".

       On appeal, the Commissioner (Appeals) observed that the letter in question had simply clarified the position that the availment

 of CENVAT credit is restricted with certain exclusion clause in Rule 9(b) of CENVAT Credit Rules, 2004 and in that case they are not entitled for CENVAT credit.  The letter was merely clarificatory and it was not understandable as to how the appellant had concluded that they have been denied the credit which was otherwise admissible to them.   Making these observations, the Commissioner (Appeals) dismissed the appeal.

       The appellant preferred the appeal without paying the fee.  The appellant was directed to remove the defect within ten days from receipt of the notice.  Instead of seeking decision on the objection, the appellant filed a writ petition in the Delhi High Court.   The writ petition came up for hearing and the appellant sought permission to withdraw the same with liberty to file application before the tribunal to consider its request for non payment of fee.   The writ petition was dismissed as withdrawn with the said liberty.  The High Court observed that if such an application is made, the tribunal shall hear the petitioner and pass appropriate order in accordance with the law.  The appellant thereafter filed a miscellaneous application seeking an order that no fee is payable in terms of Sec. 86 of the Finance Act, 1994 as the appeal does not involve any demand of service tax, interest or penalty by any Central Excise Officer.        

       The tribunal observed that the appeal itself is not maintainable and invited the appellant to address on the point of maintainability, for, if the appeal itself is not maintainable, the issue as to whether the appellant is required to pay any fee may not arise decision.  The tribunal observed that it is well settled that the courts including tribunals performing quasi judicial functions are not supposed to decide academic issues unless decision on the issue is necessary for deciding the appeal etc.,

The appellant contended that in terms of Sec. 86(6) the appellant is required to pay fee only when there is demand of service tax, interest and penalty - the amount thereof determines the amount of fee.   When there is no such demand by way of service tax, interest or penalty no fee would be payable.  The appellant relied on the following cases:

·  Zinc Ltd. V. Commissioner of Central Excise (Appeals), Vishakapatnam - 2008 -TMI - 31790 - CESTAT (Bangalore);

·  Taksal Pharma Pvt. Ltd., V. CC (Airport) Mumbai, 2008 -TMI - 2586 - CESTAT, MUMBAI

       The tribunal observed that it would appear on a glance of Sec. 86 the appellant is required to pay fee between one thousand rupees and ten thousand rupees depending on the amount of service tax and interest demanded and penalty levied by any Central Excise Officer.   A new sub section (6A) was also inserted by the amendment No.2 of 2004 requiring payment of a fee of five hundred rupees on miscellaneous applications for stay or rectification of mistake application or for any other purpose as well as for restoration of appeal or an application.   It is evident from the provisions of Sec. 86(6) as they originally stood and stand now that if an assessee desires to prefer appeal in the Appellate Tribunal, he is required to pay the requisite fee.   They do not envisage exemption except in case of appeals by the department or cross objects by either the assessee or the department.

       The submission of the appellant is wholly misconceived and self defeating.   The tribunal held that even if the appeal were maintainable, the appellant is required to pay the minimum fee prescribed by the statute, that is, one thousand rupees.  The tribunal further analyzed the case laws relied on by the appellant.  In both the cases the appellant had already paid fee - in the first case, one thousand rupees  in each of the six appeals and in the second case, rupees five thousand.   The dispute arose on insistence of the Registry asking the appellant to pay further fee.   In the facts of the case, it was found that the fee already paid was sufficient.   These decisions cannot be cited in support of the proposition that no fee is payable.  The tribunal negatively decided in this case.