2013 (9) TMI 860 - AT - Service Tax

Input services - provisions of rule 9(1)(b) read with Explanation under CCR - Held that - admittedly covered by the decision of the Tribunal in the case of JSW Steel Ltd. v. CCE 2008 (9) TMI 74 - CESTAT, CHENNAI - Commissioner has acted contrary to well settled law, which provides that till and until the order passed by the higher authority is set aside, the same is always binding upon the lower authorities. Mere filing of appeal against the order of the Tribunal does not result in stay of the order passed by the Tribunal. It does not empower the Commissioner to ignore the order of the Tribunal unless the order of the Tribunal is set aside by the High Court or Supreme Court or the Commissioner is able to lawfully distinguish such order of the Tribunal; the Commissioner has no option than to follow such order of the Tribunal - Decided in favour of assessee. Notice issued to Commissioner requiring him to explain as to why the necessary action to initiate contempt proceedings should not be taken by the Tribunal in this matter.

Summary

Issues:
Violation of binding authority by the Commissioner.

Analysis:
The judgment pertains to a case where the Commissioner, in an impugned order, disregarded a decision of the Tribunal despite the decision being binding until set aside by a higher authority. The Tribunal noted that the mere filing of an appeal against the Tribunal's order does not automatically stay the order's effect. The Commissioner was found to have acted improperly by ignoring the binding precedent set by the Tribunal in the case of JSW Steel Ltd. The Tribunal emphasized that unless the Tribunal's order is lawfully distinguished or set aside by a higher court, lower authorities must adhere to it. Consequently, the Tribunal found grounds to stay the impugned order and waive the demand until the appeal's disposal.

Moreover, due to the Commissioner's disregard for the binding authority, the Tribunal decided to issue a notice to the Commissioner, requiring an explanation for the actions taken. The Tribunal deemed the Commissioner's actions as potentially warranting contempt proceedings. The Commissioner was given 15 days to provide an explanation, with a deadline set for April 20, 2011. The matter was scheduled for further consideration upon receipt of the Commissioner's reply on April 25, 2011.