2017 (1) TMI 659 - HC - Service Tax

Valuation - inclusion of reimbursement of expenses - Jurisdiction of high court to entertain writ petition - Delay in filing appeal - time limitation - Held that - if this Court finds that the authority has passed the order without jurisdiction or has exercised the power in excess of the jurisdiction or by over-stepping or crossing the limit of jurisdiction or that there is failure of justice, or it has resulted in gross injustice, it would be a case falling under the exceptional category for exercising the power under Article 226 of the Constitution and to interfere with the order of the original authority or the appellate authority, as the case may be. Unfortunately the decision of the Delhi High Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India 2012 (12) TMI 150 - DELHI HIGH COURT though was specifically brought to the notice of the original authority in the reply to the show cause notice, in the impugned order of the original authority, there is no reference whatsoever. Under these circumstances, we find that the case may fall in the exceptional category for exercise of the power under Article 226 of the Constitution. The impugned order of the first appellate authority as well as the order of the Tribunal are set aside, on condition that the petitioner deposits the amount of 7.5% of the duty demanded and further pays cost of ₹ 25,000/- to the respondent, within a period of one month from the date of receipt of certified copy of the order. After the aforesaid condition is complied with, the matter shall stand restored on the file of the Commissioner (Appeals) with a further direction that he shall consider the appeal on merits in the light of the observations made by this Court in the above judgment and after giving opportunity of hearing to all concerned.

Issues Involved:
1. Limitation Period for Filing an Appeal
2. Application of Delhi High Court Decision on Service Tax
3. Exercise of Power under Article 226 of the Constitution
4. Communication of the Adjudication Order

Detailed Analysis:

1. Limitation Period for Filing an Appeal:
The petitioner challenged the order dated 31-12-2012 passed by the Commissioner of Service Tax and subsequent orders by the CESTAT and the first appellate authority, which dismissed the appeal as time-barred. The petitioner argued that they did not receive the order within the stipulated time and only became aware of it on 12-09-2013. The appeal was filed on 9-10-2013, but the Commissioner (Appeals) rejected it on 20-2-2014 as it was beyond the statutory period of 90 days (60 days plus 30 days condonable delay). The court referred to the Full Bench decision of the Gujarat High Court in Panoli Intermediate (India) (P) Ltd. v. Union of India, which held that the delay beyond the period of 90 days cannot be condoned under Section 35 of the Central Excise Act, 1944.

2. Application of Delhi High Court Decision on Service Tax:
The petitioner contended that their case was covered by the Delhi High Court's decision in Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India, which held that expenses incurred by the service provider for the service of the consumer cannot be included for service tax computation. The petitioner argued that the tax on the amount charged for services provided had already been paid, and the additional tax assessed on reimbursed expenses was invalid. The court noted that this decision was not considered by the original authority, despite being brought to its notice in the petitioner's reply to the show cause notice.

3. Exercise of Power under Article 226 of the Constitution:
The court examined whether it could exercise its power under Article 226 of the Constitution to condone the delay in filing the appeal. It referred to the Full Bench decision of the Gujarat High Court, which stated that a writ petition under Article 226 would not lie for condoning the delay but could challenge the order of the original adjudicating authority on merits if it was passed without jurisdiction, in excess of jurisdiction, or in violation of principles of natural justice. The court found that the absence of consideration of the Delhi High Court's decision by the original authority resulted in a failure of justice, making it an exceptional case for exercising power under Article 226.

4. Communication of the Adjudication Order:
The petitioner claimed that they did not receive the adjudication order dated 31-12-2012, which was allegedly delivered to a non-responsible person (watchman). The court noted that the Department's communication on 12-9-2013 informed the petitioner about the order, and a certified copy was provided on 1-10-2013. The court found that the delay in communication and the subsequent appeal process justified the exercise of its writ jurisdiction.

Conclusion:
The court set aside the orders of the first appellate authority and the Tribunal, directing the petitioner to deposit 7.5% of the duty demanded and pay ?25,000 as costs to the respondent within one month. Upon compliance, the matter would be restored to the Commissioner (Appeals) for a fresh decision on merits, considering the observations made by the court. The appeal was to be decided within three months from the date of compliance, with all contentions remaining open for consideration by the appellate authority. The petition was allowed, and the rule was made absolute.

← Previous Next →