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TMI Blog2010 (4) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... was found by the Department that the said communication was contrary to the Board's Circular F. No. 341/43/96-TRU dated 31-10-1996 and therefore, a letter C. No. IV/16/38/2005 ST. Tech dated 9-1-2006 was issued informing that the clarification issued in letter dated 23-12-2004 was contrary to the legal provision and therefore, void ab initio. Aggrieved by the letter dated 9-1-2006, the respondent-assessee filed an appeal before the CESTAT which by its Final Order No. 1947/06 dated 28-11-2006 held that the letter dated 9-1-2006 is an order and therefore, appellable and held that since the rights of the assessee were altered without following the due process of law, the same was bad in law and accordingly, allowed the appeal by setting aside the order dated 9-1-2006. The same is questioned in this appeal by raising the following substantial questions of law : 4.1 Whether the CESTAT is legally right in coming to the conclusion that the letter C. No. IV/16/38/05-S.T. Tech dated 9-1-2006 written by the Commissioner of service tax is an "order" and therefore appealable under section 86 even when the said letter/order is not passed under sections 73, 83A, 84 or 85 of Finance Act, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 84, the order has been passed and therefore, the tribunal was justified in setting aside the said order in an appeal filed under Section 86 of the said Act. He has also stated that the Commissioner had to give an opportunity to the respondent before revising his opinion and holding that the service rendered by the respondent was a taxable service. Be that as it may, without issuing a show-cause notice, making a demand for the recovery of the service tax, the order dated 9-1-2006 simply stated that the tax liability had to be paid immediately thereby by passing the entire gamut of procedure envisaged under the said Act. Therefore, the CESTAT was justified in setting aside the order dated 9-1-2006 which does not call for any interference in this appeal. During the course of arguments he has also submitted that the relevant records which led to the change in the opinion of the department regarding the taxability of the service of the respondent, which documents have been obtained by the respondent under the Right to Information Act. He has also brought to our notice that the order annexed by the department in the memorandum of appeal at Annexure-A has a footnote which is an inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject service during the period immediately. Yours faithfully, Sd/- (S.S. LENKA) COMMISSIONER Copy to the Assistant Commissioner of Service Tax, Dn. II. for information and necessary action. He is directed to issue SCN immediately (party should be asked to show cause to the Commissioner because the tax involvement is more than Rs. 20 lakhs) for recovery of Service Tax interest from the above mentioned service provider. Action taken in this regard shall be reported to this office within 7 days from the receipt of this letter. Sd/- (S.S. LENKA) COMMISSIONER." It is also necessary to extract the very same order dated 9-1-2006 which was actually communicated to the respondent : "OFFICE OF THE COMMISSIONER OF SERVICE TAX : 16/1 S.P. COMPLEX, LALBAGH ROAD : BANGALORE-560027. C. NO. IV/16/38/05 S.T. Tech. dated : 9-1-2006 To M/s. TNT India Pvt. Ltd., 82/1, Richmond Road, Bangalore-560025 Sirs, Sub : Levy of Service Tax on Door-to- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten by the respondent-assessee. The Commissioner of Service Tax and the Commissioner of Central Excise respectively. The letter dated 8-10-2004 reads as follows : "TNT India Private Limited October 8, 2004 Registered Office 82/1, Richmond Road Shri Subhash Chander Bangalore-560 025 Commissioner of Service Tax Tel: +91 80 51248341 Service Tax Commissionerate Fax: +9180 22292227 No. 16, S.P. Complex, V Floor E-mail : [email protected] Lalbagh Road www.tnt.com Bangalore-560 027 Dear Sir, Subject : Clarification on applicability of Service Tax in respect of Door to Door International Freight Ref. 1. Our letter dated 20-3-2002 to the Department. 2. Our discussions with you on 4th October, 2004 Further to our discussions on 4th October, 2004 during the Advisory Committee Meeting, we are enclosing herewith copy of our letter dated 20-3-2002 addressed to the Commissioner of Central Excise, Bangalore requesting for clarification on applicability of service tax in respect of door to door international freight. As informed to you in person we have till date not received any response to the letter or any clarification from the department. We request you to gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 86 of the Act, 1994, refers to any order passed by the Commissioner under Section 73 or Section 83A or Section 84 of the Act. The present case does not fall within the purview of Section 74 / Section 86 of the Act. Accordingly, the question of rectification of mistake or review of commissioner's Order does not arise. Since it is not an order, the same could be withdrawn in as much as it is in conflict with the Circular issued by the Board. Under the provisions of law (Section 37B of the Act) the Circular/Instructions issued by the board is binding on all departmental authorities and this has been held so by a no. of decisions of Hon'ble Apex Court. While the decision taken by the earlier Commissioner could be rescinded/letter withdrawn, the short levy cause (an amount of Rs. 71 lakhs from Dec.'04 to Sep.'05) could be recovered by issue of demand notice under Section 73 of the Act. Since the decision was given in the month of December, 2004, the ST. 3 returns pertaining to that period would have been filed by 25th April, 2005 and accordingly the date of expiry for issuance of SCN under Section 73 of the Act falls on 24-4-2006. It is viewed that the mistake com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter. The said aspect was not made known to the assessee. 14. On a comparison of the letter dated 9-1-2006 produced by the revenue as Annexure-A to the memorandum of appeal with the communication of the letter sent to the respondent -assessee both extracted supra, would make apparent that the footnote found in the letter at Annexure-A is absent in the letter sent to the respondent-assessee. In fact in the letter sent to the respondent-assessee, a direction is issued to pay the service tax liability for the period immediately and the procedure for making a demand by way of a show cause notice as envisaged under the Act which is stated in the letter produced by the revenue at Annexure-A is totally absent. Since the respondent found that its position with regard to the liability to pay service tax which was initially held to be absent was reversed in the communication dated 9-1-2006 and further the said reversal was without hearing the respondent-assessee and thirdly, a demand was made for payment of the service tax immediately without complying with the procedure envisaged under the Act by issuing a show-cause notice in the first instance, the respondent-assessee challenged the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of service tax not levied or paid or short levied or short paid or erroneously refunded while Section 83(a) deals with the power of adjudication and Section 84 deals with revision of orders by the Commissioner of Central Excise. Section 85 deals with appeals to the Commissioner of Central Excise. 15. Therefore, if in the exercise of power under Section 73 or 83(a) or 84 by the Commissioner of Central Excise or under Section 85 by the Commissioner of Central Excise (Appeals) an order is passed, an appeal would lie to the appellate tribunal if the assessee is aggrieved by such an order. In the instant case, it is necessary to decide as to whether any of the above provisions apply having regard to the facts of the case. The relevant portion of Section 73(a)' of the Finance Act, 1994 reads as follows : "73. Value of taxable services escaping assessment - If (a) the Central Excise Officer has reason to believe that by reason of omission or failure on the part of the assessee to make a return under Section 70 for any quarter or to disclose wholly and truly all material facts necessary for his assessment for any quarter, the value of taxable service for that quarter has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is to be construed as one under Section 84 of the Act, then in such a case, the procedure envisaged under Section 84(2) had to be complied with. In either event, the aggrieved assessee has a right to challenge such an order before the CESTAT under Section 86 of the Act. Section 73 refers to "Central Excise Officer" while Section 84 uses the word "adjudicating authority". Both the phrases are not defined under Section 65 of the Finance Act, 1994. However, under Section 65(125) it is stated that words and expressions used, but not defined in Chapter V and defined in the Central Excise Act, 1944 or the Rules made thereunder shall apply insofar as may be in relation to service tax as they apply in payment of duty of excise. Therefore, we have to refer to the Central Excise Act, 1944 in order to understand the scope of the said expressions in the aforesaid two sections. Under Section 2(b) the Central Excise Act, Central Excise Officer is defined as follows : "2. Definitions - In this Act, unless there is anything repugnant in the subject or context - (b) "Central Excise Officer" means the Chief Commissioner of Central Excise, Commissioner of Central Excise, Commissioner of Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the order dated 23-1-2004 was reversed and further the order dated 23-12-2004 was held to be void ab initio and nullified and hence, the exercise of power, if under Section 84 by the Commissioner of Central Excise in the instant case was vitiated by not complying with the mandatory requirements stated therein. 19. Further under Section 73 of the Act, recovery cannot directed without issuing a show-cause notice under the said section. Therefore if the communication dated 9-1-2006 is construed as one under Section 73 of the Act, as a direction to pay tax immediately was issued, then also, it would be an order within the meaning of Section 86 and an appeal would lie to CESTAT. 20. Under the circumstances, the respondent-assessee rightly invoked the appellate remedy by filing an appeal under Section 86(1) of the Finance Act. The Tribunal was therefore, justified in holding that the Communication dated 9-1-2006 was an order which was appealable before the CESTAT and that the said order was passed without complying with the principles of natural justice and thereby setting aside the same by allowing the appeal. Consequently, any show-cause notice that has been issued, by virtue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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