Petitioner's Appeal Dismissed in Service Tax Case

The writ petition challenging Ext.P6 order confirming service tax and penalty was dismissed. The petitioner, engaged in manufacturing and trading, mistakenly availed ineligible credit. The court held that the petitioner, whose legal proceedings began before the 2014 amendment to the Finance Act, is not required to deposit 7.5% of the confirmed tax amount to appeal before the Tribunal. The petitioner is directed to pursue the alternate remedy of filing an appeal before the Tribunal under the pre-2014 provisions of the Finance Act, with an application for waiver of pre-deposit and stay of recovery of the amounts confirmed in Ext.P6 order.

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Issues:
Challenge against Ext.P6 order-in-original confirming service tax and penalty.

Analysis:
The writ petition challenges Ext.P6 order passed by the 2nd respondent confirming a demand of service tax and penalty on the petitioner. The petitioner, engaged in manufacturing and trading of electronic goods under a BIFR sanctioned scheme, mistakenly availed ineligible credit on input services totaling &8377; 2.8 lakhs. Upon realizing the error, the petitioner promptly reversed the credit. However, the 2nd respondent demanded &8377; 14 crores along with a penalty, citing the petitioner's failure to maintain separate books of accounts for the credit availed. The impugned Ext.P6 order is the subject of challenge in the writ petition.

The learned Standing counsel for the respondents highlighted that the petitioner has an alternative remedy against the Ext.P6 order by appealing before the Customs, Excise and Service Tax Appellate Tribunal. Following an amendment to the Finance Act, 1994, effective from 16.08.2014, the petitioner is required to deposit only 7.5% of the confirmed tax amount to appeal before the Tribunal. The primary issue for consideration is whether the petitioner must deposit this amount as a condition for pursuing the appellate remedy.

Considering the submissions, it was noted that the petitioner's right of appeal under the erstwhile provisions of law may not be affected by the 2014 amendment to the Finance Act, especially if the legal proceedings commenced before the introduction of the amendment. Citing legal precedents, it was established that the right of appeal vested at the time of institution of legal proceedings is governed by the law prevailing then, not at the date of the decision or appeal filing. Consequently, the petitioner, whose legal proceedings began in 2013, is not obligated to deposit the 7.5% amount as per the 2014 amendment. The petitioner is directed to pursue the alternate remedy of filing an appeal before the Tribunal, with an application for waiver of pre-deposit and stay of recovery of the amounts confirmed in Ext.P6 order.

The judgment dismisses the writ petition challenging Ext.P6 order without delving into the case's merits. It clarifies that if the petitioner files a valid appeal under the pre-2014 provisions of the Finance Act, the Appellate Tribunal must number the appeal, consider the waiver application, and proceed with the appeal hearing accordingly. The petitioner is advised to approach the Tribunal for further proceedings in compliance with the statutory provisions predating the 2014 amendment.

In conclusion, the writ petition is disposed of as outlined, emphasizing the petitioner's recourse to the alternate remedy provided under the Finance Act, 1994, before the Appellate Tribunal.

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