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TMI Blog2014 (9) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... sues to be considered the larger bench of five Members. The core issue to be considered for resolution by the five Members Larger Bench was already identified and specified in Misc. order dated 09.09.2013. The order dated 05.05.2014 merely annotated integers of the issue referred for resolution by the Larger Bench while indicating the probable date for consideration of the Larger Bench i.e. around 09.06.2014; and directed that notices be put up on notice boards of advocates associations at all Regional Benches, so as to afford opportunity to other Members of the Bar, to assist the Larger Bench in answering the identified conflict. The basis for the present applications (seeking review of the misc. applications dated 09.09.2013 and 05.05.2014) is ex-facie misconceived and proceeds on a basic incomprehension of these orders. The CST, New Delhi erroneously assumes that the order dated 09.09.2013 disagreed with the ratio of the Larger Bench in BSBK Pvt. Limited. Clearly, that is not the position. The issues referred to the larger Bench (of five members) essentially involve critical analyses of several precedents, deep principles of constitutional law, elucidation of allocation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain issues for consideration of a Larger Bench and reframing the issues for consideration by the Larger Bench, respectively. L T preferred ST/58658/2013 against the adjudication order dated 01.04.2013 passed by the CST, New Delhi. This order assessed and levied Service Tax of ₹ 114,04,88,887/- on the ground that assessee provided (during March 2005 to March, 2009) the taxable Commercial or Industrial Construction services under a composite works contract, to M/s Delhi Metro Rail Corporation (DMRC) in respect of construction of a commercial complex known as Information and Technology Park at Shastri Park, Delhi. 5. Miscellaneous Application No. 53283 of 2014 is also by the CST, New Delhi seeking rectification of mistake of the miscellaneous order dated 05.05.2014, passed in the L T appeal. 6. L T has filed miscellaneous application No. 53938/2014, to bring on record its response to miscellaneous application Nos. 51246 and 53283 (filed by the CST, New Delhi). This application is ordered. Miscellaneous application No. 51246/2014 CST, Delhi filed this application on 19.02.2014 seeking rectification of mistake in the misc. order dated 09.09.2013. Para 2 of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Vandana Global decision). According to CST, New Delhi the order dated 09.09.2013 suffers from judicial inadequacy . In the circumstances, review of the order dated 09.09.2013 is sought. ST/Misc./53823/2014 CST, New Delhi (Shri Anil Kumar Jain) filed this application seeking rectification (review) of the Misc. order dated 05.05.2014 passed in Service Tax Appeal No. 58658/2013 (preferred by M/s Larsen Toubro Limited). In the grounds set out to support this application, it is asserted that the following errors needs to be rectified: a) The Misc. order dated 05.05.2014 was passed on a memo filed by the appellant (L T) in the Court on 05.05.2014 and during mention the date of constitution of hearing by the Larger Bench by five Members was fixed but no issue was reframed; b) The order dated 05.05.2014 refers to an earlier order dated 09.09.2013 which is under challenge through another RoM application (ST/Misc/51246/2014), which enumerates the issues for consideration by the Larger Bench of five Members. The order dated 05.05.2014 proceeds to reframe the issues for consideration by the Larger Bench while no issues/ grounds were set out in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007, Section 65(105)(zzzza) was introduced authorising levy of service tax on services provided in relation to execution of a works contract, excluding works contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. The services provided by the petitioner/appellant pursuant to agreements on turnkey basis were brought to tax under other specified taxable services that were operative prior to 1.6.2007 i.e. under Section 65 (105) (25b), as commercial or industrial construction service. 2. In this application, it is pointed out that two Larger Benches, in Jyoti Ltd. Vs. CCE - 2008 (9) STR 373 (Tri.-Ahmd.) and CCE Vs. Indian Oil Tanking Ltd. - 2010 (18) STR 57 (Tri.-Mum.) have held that in the absence of works contract service having been enumerated as an independent taxable service prior to 1.6.2007, a service provided which is essentially in the nature of a works contract cannot be brought to tax under other, existing taxable services. It requires to be noticed that the decisions in Jyoti Ltd. and Indian Oil Tanking Ltd. were the culmination of decisions of a third ld. Member resolving a conflict that arose in Division Bench judgments which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court by the decision, reported in 2008 (9) STR J29 (SC) allowed the assessees appeal; set aside judgment of the ld. Division Bench on the ground that it was passed ex. parte and remitted the matter to this Tribunal for a fresh decision. Thereafter this Tribunal by the order reported in 2009 (13) STR 26 (Tri.-Del.) referred the appeal for consideration by a Larger Bench, on the issue whether service by way of advice, consultancy or technical assistance within the conspectus of a turnkey contract, would attract service tax and the essential issue as to whether a turnkey contract could be vivisected. 4. By the decision reported in 2010 (253) ELT 522 (Tri.-LB), the Larger Bench held that the turnkey contracts could be vivisected and the discernible service elements therefore could be segregated and classified for levy of service tax under the provisions of the Act, provided such services are taxable services, defined under the Act. It requires to be noticed that the ld. Larger Bench in BSBK Pvt. Ltd. was sensitised about contrary view of the Larger Bench in Jyoti Ltd. (para 3.2). However, BSBK Pvt. Ltd. neither analysed the ratio in Jyoti Ltd. nor disagreed with the operativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , on vivisection of the composite contract and brought to tax under pre-existing taxable services. There is thus an extant conflict between three Larger Bench decisions of this Tribunal, is the contention urged on behalf of the petitioner/appellant, for seeking resolution of this conflict by a larger bench of five hon ble members. 9. Per contra, it is urged on behalf of the Revenue by the ld. Departmental Representatives Shri S.K. Sinha supported by Shri A. Jain and Shri Govind Dixit that there no conflict between three Larger Benches. The contention on behalf of Revenue is predicated on the following premises : (a) Where a conflict ensues from an order of a Division Bench and such conflict is resolved by the decision of a third member, the resultant judgment would nevertheless be the judgment of a Division Bench only, since the three members cannot be considered to constitute the Larger Bench; and (b) a Larger Bench consisting of three Members constituted to deliberate on an issue would be a Larger Bench in effect and reality since there would be simultaneously application of mind (by the three members) on arguments addressed before such Larger Bench. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and such point shall be decided according to the opinion of the majority of the judges who have heard the case including those who first heard it. In accordance with this section, the references under s. 256 were heard by a Bench of two judges of the court. On the first question, they found that there was a conflict of decisions which required to be resolved. On the second point, there was a sharp difference of opinion. So it became necessary to refer to a third judge. This is perfectly in according with s. 259. There is no difference, really speaking, between a Full Bench of three judges sitting together and this method of referring to the third judge in the case of a difference of opinion between the two judges. Whether the first method is adopted or the second, opinion of the majority will be decisive. In this case, there is a formal reference to a third judge to ascertain his opinion. His is the deciding voice. He turns the scales. The third judge is the Full Bench. Not alone. But along with the two others who first heard the case. Whether the three judges sit at the same time or at different times-two at one time, and the third hearing the matter later on a difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made in view of the issue as to whether a conflict in decisions of Division Benches could be resolved by referring the conflict for resolution by a third Judge and upon the opinion of the third ld. Judge, the opinion of the majority could be construed to be a decision by a full Bench. 14. On principle and in the light of the observations of the Delhi High court in Puri (P.C.), we are of the considered view that wherever pursuant to a conflict opinion in a decision by a Division Bench, the conflict is referred to a third member of this Tribunal for resolution, the resultant judgement must be considered a the judgement of a full Bench, as if it were a judgement of a Larger Bench (three ld. Member) sitting en banc. 15. Pursuant to the aforesaid analysis, since there is a conflict of opinion between Larger Bench decisions of this Tribunal Jyoti Ltd; Indian Oil Tanking Ltd. and BSBK Pvt. Ltd., we consider it appropriate that in the interests precedential coherence, the issue whether a composite contract, involving transfer of property in goods and services which is taxable only from 1.6.2007, onwards and not earlier thereto, in view of the provisions of Section 65(105)(zzzza) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite contract be assessed for levy of service tax (for providing a taxable service); under provisions of the Finance Act, 1994, prior to 01.06.2007, the date of introduction of Works Contract as a taxable service under Section 65 (105) (zzzza), whereafter Works Contract became a taxable service; i.e. whether enumerated taxable services provided under such composite contracts, are excluded from the purview of the provisions of the Act for levy of service tax and only contracts exclusively involving rendition of services (and not involving deemed transfer of goods) were taxable; i.e. what is the scope of taxable services such as Commercial or industrial Construction , Erection commissioning or installation or turnkey contracts, prior to 01.06.2007; and (b) Whether legislated authorisation for vivisection of such composite contracts provided under Sales tax/ VAT laws enacted by States, legitimises vivisection by federal executive and quasi-judicial authorities, administering provisions of the Finance Act, 1994; in respect of Works Contract service, prior to 01.06.2007. 2. We notice from the order dated 21.03.2014 that the learned Division Bench of the Bombay High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el.); and of the Madras High Court in AGS Entertainment Pvt. Limited vs. Union of India (2014) 46.GST-73/46.Taxmann.com.92 (Mad) have concluded the issue in conformity with the Larger Bench decision in BSBK Pvt. Limited. The written submissions state further that BSBK Pvt. Limited was followed by Division Benches of this Tribunal in CCE, Indore vs. Gopal Enterprises and in M/s MIL Industries Limited vs. CST, Chennai. Therefore, the misc. orders dated 09.09.2013 and 05.05.2014 require recall and the reference dissolved, is the plea. 10. We have extracted the misc. orders dated 09.09.2013 and 05.05.2014, earlier. 11. The order dated 09.09.2013 does not record a disagreement with the decision of the Larger Bench in BSBK Pvt. Limited. It merely notices a clear conflict between decisions of Larger Benches in Jyoti Limited and in Indian Oil Tanking Limited on the one hand and BSBK on the other. Para 15 of the Misc. order dated 09.09.2013 clearly records that in the interests of precedential coherence, the issue [whether a composite contract, involving transfer of property in goods and services which is taxable only from 01.06.2007 and not earlier thereto, in view of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 disagreed with the ratio of the Larger Bench in BSBK Pvt. Limited. Clearly, that is not the position. The 09.09.2013 order expressly noticed the conflict between three member Bench decisions of this Tribunal (in Jyoti Limited and Indian Oil Tanking Limited on the one hand and BSBK Pvt. Limited on the other) and therefore referred for resolution (by a Larger Bench of five Members) such conflict for resolution. The second misconception of the CST, New Delhi is that the order dated 09.09.2013 failed to indicate the issue for resolution. This is an equally erroneous assumption. Para 15 of the order dated 09.09.2013 clearly indicated the conflict that requires to be resolved by a five Member Bench. The third misconception of is that a two Member Bench having disagreed with the Larger Bench decision in BSBK Pvt. Limited had referred the matter directly to a Larger Bench of five Members, contrary to the procedural discipline spelt out by the constitution Bench in Pradip Chandra Parija and Others (supra). This assumption is as demonstrably erroneous as the earlier two assumptions. The Division Bench which passed the misc. order dated 09.09.2013 merely noticed the conflict among coordinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) A Bench of lesser quorum cannot disagree or dissent from the view of the law taken by a Bench of larger quorum. In case of doubt all that the Bench of lesser quorum can do is to invite the attention of the Chief Justice and request for the matter being placed for hearing before a Bench of larger quorum than the Bench whose decision has come up for consideration. It will be open only for a Bench of coequal strength to express an opinion doubting the correctness of the view taken by the earlier Bench of coequal strength, whereupon the matter may be placed for hearing before a Bench consisting of a quorum larger than the one which pronounced the decision laying down the law the correctness of which is doubted. (3) The above rules are subject to two exceptions: (i) the abovesaid rules do not bind the discretion of the Chief Justice in whom vests the power of framing the roster and who can direct any particular matter to be placed for hearing before any particular Bench of any strength; and (ii) in spite of the rules laid down hereinabove, if the matter has already come up for hearing before a Bench of larger quorum and that Bench itself feels that the view of the law taken by a Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he need for continuity, certainty and predictability in the administration of justice. Persons affected by decisions of Tribunals or Courts have a right to expect that those exercising judicial functions will follow the reason or ground of the judicial decision in the earlier cases on identical matters. Classification of particular goods adopted in earlier decisions must not be lightly disregarded in subsequent decisions, lest such judicial inconsistency should shake public confidence in the administration of justice. It is, however, equally true that it is vital to the administration of justice that those exercising judicial power must have the necessary freedom to doubt the correctness of an earlier decision if and when subsequent proceedings bring to light what is perceived by them as an erroneous decision in the earlier case. In such circumstances, it is but natural and reasonable and indeed efficacious that the case is referred to a larger Bench. This is what was done by the Bench of two members who in their reasoned order pointed out what they perceived to be an error of law in the earlier decision and stated the points for the President to make a reference to a larger Bench. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Boveri Limited - 2000 (120) ELT 228 (Tri. LB), following the decision in Paras Laminates (supra) entertained a reference arising out of an order passed by single Member Bench recommending to the President, CESTAT for constitution of a Larger Bench for resolution of an extent conflict and the order of the President, CESTAT referring the issue for consideration by a Larger Bench (of five Members). Para 6 and 7 of this judgment explain the relevant position: 6.?On a consideration of submissions made by both the sides and the case law relied on by the Departmental representative, we note that the Apex Court judgment in Paras Laminates case has examined both the aspects, viz., (a) the competence of one Bench of the Tribunal to differ from the view taken by another Bench of the Tribunal and (b) the power of the Hon'ble President to constitute and refer a case to a Larger Bench a matter where Members of the Bench differ in opinion on any point and to refer such a case to one or more Members of the Tribunal. It has been observed in Paragraph 11 of the said judgment that Section 129C confers the power of reference upon the Hon'ble President and the power should be construed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal may be exercised and discharged by Benches constituted by the President of the Appellate Tribunal from among the members thereof. (2) Subject to the provisions contained in sub-section (3), a Bench shall consist of one judicial member and one accountant member. (3) The President or any other member of the Appellate Tribunal authorised in this behalf by the Central Government may, sitting singly, dispose of any case which has been allotted to the Bench of which he is a member and which pertains to an assessee whose total income as computed by the Assessing Officer in the case does not exceed one lakh rupees and the President may, for the disposal of any particular case, constitute a Special Bench consisting of three or more members, one of whom shall necessarily be a judicial member and one an accountant member. (4) If the members of a Bench differ in opinion on any point, the point shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ, and the case shall be referred by the President of the Appellate Tribunal for he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ....... which were posted for hearing before us on ..............is/are fit and proper appeal(s) which should be heard by a Special Bench consisting of three/or ............. members of the Tribunal. We accordingly forward the records of the appeal(s) mentioned above to the President of the Tribunal and request him to constitute a Special Bench for the reasons given below : Reasons in brief : Singature : 1. 2. Note : 1.?This form should be sent to the President of the Tribunal in duplicate alongwith the observations of the Vice President of the concerned Zone. Note : 2.?Document/materials in support of the reasons for constitution of a Special Bench should be enclosed. The aforesaid regulation shows that the concerned Bench which is seized of the matter may in exercise of its judicial function in appropriate case make a reference to the President to constitute a Special Bench. The exercise of that function by the Bench of the Tribunal hearing the matter is of course a judicial function but so far as the President s power under sub-section (1) read with sub-section (3) of Section 255 to constitute Benches or for that matter Special Benches is concerned the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnable reason or justification. 24. At the hearing today we are informed by ld. AR. Shri Amresh Jain that there is no extent procedure of vetting or approval of misc. applications filed by Revenue officers/ Commissioners, in pending matters. While substantive appeals by Revenue are vetted by a Committee of Commissioners or Chief Commissioners, as the case may be, misc. applications including for review of orders could be filed by a party Commissioner, without verification or vetting either by a superior administrative authority or even by ARs who are authorized to appear in the Tribunal and presumed to have knowledge of the appropriate legal principles procedural principles prescriptions. Consequently applications as the present ones come to be filed on the basis of unfounded fears and on misconceived notions of law and facts. 25. As a result of this regressive practice, the CST, New Delhi Shri Anil Kumar Jain has filed the two misc. applications seeking review of the misc. orders dated 09.09.2013 and 05.05.2014, without a basic understanding of the nature, scope and content of these orders nor a modicum of comprehension of the relevant and settled principles in the area. The ..... 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