2020 (2) TMI 814 - HC - Service Tax

Maintainability of appeal - appropriate forum - Section 35L(1)(b) of the Central Excise Act 1944 - principles of natural justice - time limitation - HELD THAT - There are no proper reasons have been given in support of its finding. It has also not taken into account the certificate dated 4th December 2018 of the Metro Railway certifying the nature of service rendered by the appellant. Time Limitation - HELD THAT - The question of limitation is a mixed question of law and fact. The appellant has pleaded that the respondents had knowledge of the transactions relying on their earlier show cause notice dated 17th September 2004 on the self-same issue relied upon in the subject show cause notice dated 27th March 2007. Thus everything was to their knowledge. There was no suppression of any fact. That question and any other factual issue with regard to the suppression of facts ought to have been gone into in detail by the learned tribunal. When the impugned order of the tribunal is challenged on the above ground that it was passed in breach of the principles of natural justice and in ignorance of the law of limitation then it cannot be said that the appeal has a relation to classification of goods its valuation or the rate of duty. It is neither directly nor indirectly related to these questions - Since mixed questions of facts and law are involved it would be proper to remand the entire matter to the tribunal for re-consideration and re-determination. Appeal allowed by way of remand.

Summary

Issues:
1. Maintainability of the appeal under Section 35G of the Central Excise Act, 1944.
2. Classification dispute regarding the type of service rendered.
3. Breach of principles of natural justice in the impugned order.
4. Invocation of longer period of limitation for fixing service tax liability.
5. Jurisdiction of the Court to hear the appeal based on the grounds raised.

Issue 1: Maintainability of the appeal under Section 35G:
The appeal was admitted under Section 35G of the Central Excise Act, 1944, while keeping the point of maintainability open as raised by the revenue. The primary contention was whether the appeal lay before the Supreme Court under Section 35L(1)(b) of the Act. The substantial questions of law admitted for consideration were whether the dispute was a classification dispute and if the impugned tribunal order was perverse in not properly adjudicating the dispute.

Issue 2: Classification dispute regarding the type of service rendered:
The appellant argued that they provided watch and ward service, not subject to service tax, while the revenue contended it was a security service. The appellant relied on a certificate from Metro Railway certifying the nature of services rendered. The respondent opposed the appeal, stating it involved adjudication on tax rate and classification, beyond the Court's jurisdiction.

Issue 3: Breach of principles of natural justice in the impugned order:
The appellant raised grounds of breach of natural justice and error in considering the limitation period. The tribunal's order lacked proper reasoning and did not consider the certificate from Metro Railway certifying the service nature. The question of limitation was not adequately addressed, as the appellant argued the revenue was aware of all facts, negating any suppression.

Issue 4: Invocation of longer period of limitation for fixing service tax liability:
The appellant contended that the demand was time-barred as the revenue was aware of the transactions, and no suppression occurred. The tribunal failed to consider this aspect adequately, leading to the erroneous invocation of the longer period of limitation.

Issue 5: Jurisdiction of the Court to hear the appeal based on the grounds raised:
The appellant limited the appeal to breach of natural justice and error in considering the limitation period, not delving into tax rate or classification issues. The Court found the appeal unrelated to classification of goods or rate of duty, setting aside the tribunal's order and remanding the matter for re-consideration within six months.

In conclusion, the High Court of Calcutta allowed the appeal based on the grounds of breach of natural justice and limitation period error, directing the tribunal to re-hear the matter and pass a reasoned order within six months. The judgment highlighted the importance of procedural fairness and proper consideration of limitation issues in administrative law matters.