2018 (8) TMI 169 - HC - Central Excise

Maintainability of appeal - Challenge to Rectification Order - Held that - So far as the appeals where the impugned order and the rectification order is challenged, we made it clear that appeals will be heard only for the original order and for rectification order, the appellant may move a writ petition within a period of two weeks. In this appeal order passed in rectification application is under challenge - it is held that against such order, writ petition is to be preferred by the appellant. Appeal not maintainable and is dismissed.

Issues Involved:
1. Maintainability of appeal against an order of rectification.
2. Availability of investment allowance for mining activities.
3. Procedure for imposing penalty under section 221 of the Income Tax Act.
4. Applicability of section 254(2) for rectification of Tribunal orders.
5. Appropriate forum for challenging rectification orders.

Detailed Analysis:

1. Maintainability of Appeal Against an Order of Rectification:
The judgment emphasizes that appeals against orders of rectification under Order 47 Rule 7 are not maintainable. The appropriate remedy is to file an appeal before the appropriate forum. This principle was reiterated in the case of Shri Shrivatas Rathi Versus Commissioner of Central Excise and Service Tax, Jaipur-I, where it was held that appeals against rectification orders are not maintainable, and the appellant must seek remedy before the appropriate forum.

2. Availability of Investment Allowance for Mining Activities:
The judgment discusses whether investment allowance is available for activities such as mining, raising, loading, and transporting of gypsum. The Tribunal's order denying the investment allowance was challenged, and the substantial question of law framed was whether the Tribunal erred in holding that no manufacture or production of any article or things takes place in such activities. The court referred to the Supreme Court's judgment in CIT Vs. Sesa Goa Ltd., which could constitute an error apparent on the face of the record, necessitating rectification by the Tribunal.

3. Procedure for Imposing Penalty Under Section 221 of the Income Tax Act:
The judgment elaborates on the procedure for imposing penalties under section 221 of the Act. It references the Safari Mercantile Pvt. Ltd. vs. ITAT case, where the Tribunal's order was set aside for failing to consider the necessity of serving a demand notice before imposing a penalty. The court directed the Tribunal to recall its order and rehear the appeal, emphasizing that the right to statutory appeal must not be bypassed.

4. Applicability of Section 254(2) for Rectification of Tribunal Orders:
Several cases were cited to illustrate the scope and limitations of section 254(2) for rectifying Tribunal orders. For instance, in Commissioner of Income Tax Vs. Saroop Tanneries Ltd., the Tribunal corrected a mistake by recognizing the Supreme Court's judgment, but the rectification order itself was not appealable. Similarly, in CIT vs. Sahara India Ltd., it was held that orders passed in rectification applications do not fall within the meaning of orders passed by the Appellate Tribunal in appeal and thus are not appealable under section 260A.

5. Appropriate Forum for Challenging Rectification Orders:
The judgment clarifies that rectification orders under section 254(2) are not appealable and should be challenged via writ petitions. This principle was supported by various cases, including Lachman Dass Bhatia vs. ACIT, where it was held that an order rejecting a rectification application is not appealable but can be challenged under Articles 226 and 227 of the Constitution of India. The court emphasized that if an appeal is not maintainable, the appropriate remedy is to file a writ petition.

Conclusion:
The appeal was disposed of with the direction that the appellant may move a writ petition within two weeks to challenge the rectification order. The judgment underscores the importance of adhering to procedural requirements and the appropriate forums for challenging rectification orders, ensuring that statutory rights to appeal are preserved.

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