2014 (12) TMI 866 - HC - Service Tax

Parallel assessment proceedings for the same transactions, same period and in respect of the same amount by different Jurisdictional authority i.e. Delhi - Assessee was registered at Allahabad - Rent-a-cab-operator service - Penalty u/s 76 & 77 - Held that - There is no dispute at all that the respondent no. 3 (at Delhi) has initiated parallel assessment proceedings against the petitioner and passed ex-parte order in original dated 22.5.2008 in respect of the same transactions and for the same period for which the petitioner was assessed by the jurisdictional assessing authority i.e. respondent no. 2. The only objection taken by the respondents department is that since the petitioner has failed to challenge within limitation the unauthorized ex-parte order dated 22.5.2008 passed by the respondent no. 3 and appeal against it was also rejected on the ground of delay and as such the demand created under the said orders cannot be withdrawn and is liable to be recovered from the petitioner. Jurisdiction with respect to recipient of services - Held that - Section 66 is charging section which provides for levy of tax on the value of taxable service rendered by a person to another. Section 67 provides for valuation of taxable service. Section 68 provides that every person providing taxable service shall pay service tax at the prescribed rates and in the manner prescribed. Neither the Act nor the rules provides for any double assessment nor it can be permitted in view of the fact that the transaction in question have been assessed by the jurisdictional authority. Article 265 of the Constitution of India provides that no tax shall be levied or collected except by authority of law. Thus the order dated 22.5.2008 passed by the respondent no. 3 was a complete nullity and therefore, the demand created thereunder was not legally recoverable from the petitioner. If an authority or court lacks inherent jurisdiction to pass a decree or order, the decree or order passed by such authority or court would be non est and void ab-initio. The defect of jurisdiction goes to the root of the matter. It strikes at the very authority of the court to pass the order. Competence of a court to try a case goes to the very root of the jurisdiction, and where it is lacking, it is a case of inherent lack of jurisdiction. Such defect has always been treated as basic and fundamental. Since the respondent no. 3 was not the assessing authority of the petitioner and has passed the impugned order dated 22.5.2008 without jurisdiction and without authority of law and also since the petitioner was assessed by the jurisdictional assessing authority in respect of the same transactions and for the same period and as such the impugned order dated 22.5.2008 and all consequential proceedings initiated by respondent no. 3 were nullity. It may be clarified that there is difference between irregular or wrong order and the order passed without jurisdiction. An erroneous and illegal decision is not necessarily void but if an order is passed by an authority without jurisdiction or without authority of law then it is void. Impugned order dated 22.5.2008 was wholly without jurisdiction and same was passed by the respondent no. 3 in respect of the same transactions and for the same periods with respect to which the petitioner was assessed by the jurisdictional assessing authority i.e. respondent no. 2; I hold that the impugned order dated 22.5.2008 is a complete nullity. The order dated 10.10.2013 passed by the respondent no. 3 rejecting the recall application also cannot be sustained - The proper course for the respondent no. 3 was to recall the order dated 22.5.2008 when wholly undisputed facts came to his notice that respondent no. 2 is jurisdictional assessing authority who has assessed and passed assessment order in respect of the same transactions and for the same periods. It was a case of creation of a demand of service tax without jurisdiction. The respondent no. 1 in its order dated 30.1.2014 and respondent no. 5 in the short counter affidavit dated 16/18.7.2014 have accepted these facts. - Decided in favour of assessee.

Issues Involved:
1. Jurisdiction of the assessing authority.
2. Legality of parallel assessment proceedings.
3. Validity of the ex-parte order dated 22.5.2008.
4. Rejection of recall application by respondent no. 3.
5. Dismissal of appeal by respondent no. 1 on the ground of delay.
6. Violation of Article 14 of the Constitution of India.
7. Entitlement to costs for harassment and deprivation of lawful money.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Assessing Authority:
The petitioner, a service provider as Rent-a-cab-operator, was registered under the Finance (No. 2) Act of 1994 with the Deputy Commissioner, Central Excise and Service Tax Division-I, Allahabad (respondent no. 2). It is undisputed that respondent no. 2 is the jurisdictional assessing authority for the petitioner. The petitioner was assessed by respondent no. 2 for the relevant periods, and demands were created accordingly.

2. Legality of Parallel Assessment Proceedings:
A parallel assessment proceeding was initiated by respondent no. 3, Assistant Commissioner, Central Excise and Service Tax Division-II, Allahabad, for the same transactions and periods already assessed by respondent no. 2. This parallel proceeding was without jurisdiction, as admitted by the respondents. The respondent no. 3 lacked the authority to initiate such proceedings, making the order dated 22.5.2008 a nullity.

3. Validity of the Ex-parte Order Dated 22.5.2008:
The ex-parte order dated 22.5.2008 passed by respondent no. 3 was for the same transactions and periods already assessed by respondent no. 2. The petitioner claimed no knowledge of this order until a recovery letter was sent on 11.6.2013. The appellate authority observed the parallel assessment and noted that the order from respondent no. 2 had not attained finality. The order by respondent no. 3 was without jurisdiction and thus void ab initio.

4. Rejection of Recall Application by Respondent No. 3:
The petitioner moved a recall application against the ex-parte order, which was rejected by respondent no. 3 on the grounds that the order had attained finality as it was not challenged in appeal. This rejection was improper as the order was without jurisdiction. The proper course was to recall the order when it was evident that respondent no. 2 was the jurisdictional authority.

5. Dismissal of Appeal by Respondent No. 1 on the Ground of Delay:
The petitioner's appeal against the ex-parte order was dismissed by respondent no. 1 on the ground of delay. Despite acknowledging the parallel assessment, the appellate authority failed to address the jurisdictional issue adequately. The dismissal on the ground of delay was thus not sustainable.

6. Violation of Article 14 of the Constitution of India:
The actions of the Central Excise and Service Tax Authorities were deemed arbitrary, illegal, and violative of Article 14 of the Constitution of India. The petitioner was subjected to unauthorized demands and deprived of lawful money due to the improper actions of respondent no. 3.

7. Entitlement to Costs for Harassment and Deprivation of Lawful Money:
The petitioner sought costs for the harassment and deprivation of lawful money caused by the unauthorized actions of respondent no. 3. The court acknowledged the petitioner's claim and awarded costs of Rs. 25,000/- to be paid by respondent no. 3 within one month.

Conclusion:
The court set aside the impugned orders dated 30.1.2014, 22.5.2008, 11.6.2013, and 10.10.2013, recognizing the lack of jurisdiction and the nullity of the parallel assessment proceedings initiated by respondent no. 3. The writ petition was allowed with costs awarded to the petitioner.

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