2014 (11) TMI 463 - AT - Service Tax

Tribunal upholds Revenue's appeal under Finance Act despite procedural defects

Commissioner, LTU, Chennai Versus M/s. Cognizant Technology Solutions India Pvt. Ltd.

Commissioner, LTU, Chennai Versus M/s. Cognizant Technology Solutions India Pvt. Ltd. - TMI Issues Involved:1. Maintainability of the appeal filed by the Revenue under Section 86 of the Finance Act, 1994.2. Requirements and procedural compliance for the Committee of Commissioners under Section 86(2A) of the Finance Act, 1994.Detailed Analysis:1. Maintainability of the Appeal:The learned Senior Advocate for the respondent raised a preliminary objection regarding the maintainability of the appeal filed by the Revenue under Section 86 of the Finance Act, 1994. The contention was based on the premise that the Committee of Commissioners did not meet to review the order passed by the Commissioner (Appeals), which is a substantial requirement under Section 86(2A).The learned Commissioner (AR) countered that there is no provision in Section 86 mandating a meeting of the Committee for reviewing orders. He argued that procedural defects, such as the absence of a date on the review order, are curable and were addressed by the Department. The Commissioner (AR) also emphasized that the review function is administrative, not quasi-judicial, and thus does not require a mandatory meeting.2. Procedural Compliance for the Committee of Commissioners:The learned Senior Advocate argued that Section 86(2A) necessitates meaningful consideration and application of mind by the Committee of Commissioners, proper review cum authorization, appropriate signatures with dates, and a meeting of the Commissioners. He cited various case laws to support his contention that the absence of these requirements leads to denial of natural justice.The Tribunal noted that Section 86 provides a statutory right to both the Assessee and the Revenue to appeal to the Appellate Tribunal. The Tribunal observed that the power of filing an appeal, initially vested with the Commissioner of Central Excise, was transferred to the Committee of Commissioners by the Finance Act, 2007. The Tribunal emphasized that the executive must comply with the Act, rules, and guidelines in exercising its powers to appeal.The Tribunal reviewed the Board's guidelines issued on 23.11.2012, which outlined the procedural requirements for the Committee of Commissioners, including meaningful consideration and application of mind, review cum authorization orders, and avoidance of procedural infirmities.Judgment:The Tribunal found that the Committee of Commissioners had applied their mind and framed an opinion to appeal against the impugned order. The Tribunal ruled that the absence of a meeting of the Committee of Commissioners does not render the appeal non-maintainable, provided the decision satisfies the test of reasonableness and fairness. The Tribunal referred to various case laws, including decisions by the Hon'ble Allahabad High Court and the Hon'ble Gujarat High Court, supporting the view that procedural defects are curable and should not invalidate the appeal.The Tribunal concluded that the right of appeal is a substantive right created under the statute and cannot be defeated by procedural lapses, especially when no specific guidelines or instructions were issued by the Board regarding the functioning of the Committee of Commissioners until 23.11.2012. The preliminary objection raised by the learned Senior Advocate was overruled, and the miscellaneous applications filed by both the Revenue and the Assessee were disposed of. The Tribunal scheduled the hearing for the stay application on 26.11.2014.Conclusion:The Tribunal held that the appeal filed by the Revenue is maintainable despite the absence of a meeting of the Committee of Commissioners, as long as the decision to appeal was based on reasonableness and fairness. The Tribunal emphasized the substantive right of appeal and the curability of procedural defects, aligning with judicial precedents and the Board's guidelines.