2022 (8) TMI 1564 - HC - Central Excise

Agency commission service tax liability case overturned due to Tribunal relying on non-final order

Prin. Commissioner, CGST And Central Excise Lko. Versus M/s Anand Motors Agencies Ltd. Lko. U.P.

The Allahabad HC allowed the appeal, setting aside the Tribunal's order dated 04.02.2022 regarding service tax liability on agency commission from Maruti ... Service tax liability of the respondent on Agency Commission from Maruti Udyog Ltd., DGS&D - non-registration of the respondent's unit No. 1 i.e. 21 Vidhan Sabha Marg, Lucknow - HELD THAT:- The Tribunal has set aside the demand holding that the adjudicating authorities have absolutely ignored the principles of judicial discipline by not following the binding order passed by the Tribunal, whereas the Tribunal is also required to follow the judicial discipline while deciding the issue involved in appeal, which was pending consideration before the Tribunal in another appeal after remand by this court. Once the same issue involved in the appeal is pending consideration before the Tribunal after remand by this court it is incumbent upon the Tribunal to decide the issue afresh in accordance with law and unless the Tribunal decides the issue it cannot be said that the said order dated 17.12.2015 has attained finality and adjudicating authority should follow the judgment and order passed by the Tribunal, which is still pending for fresh consideration. Therefore the Tribunal ought to have decided both the appeals, involving several common issues, together. Thus the substantial question of law involved in this appeal is answered accordingly. Conclusion - Tribunal orders must attain finality before being relied upon in subsequent decisions. The impugned judgment and order dated 04.02.2022 is not sustainable and the appeal is liable to be allowed. ISSUES PRESENTED and CONSIDEREDThe primary issue considered was whether the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) erred in relying on its Final Order No. 70112/2015, which had not attained finality and was still pending before the Tribunal after being remanded by the High Court. The question was whether the Tribunal's decision to set aside the demand based on this order was justified.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe appeal was filed under Section 35G of the Central Excise Act, 1944. The legal question revolved around the application of judicial discipline and the finality of Tribunal orders in the context of service tax demands.Court's Interpretation and ReasoningThe Court noted that the Tribunal had set aside the service tax demand based on its previous order dated 17.12.2015. However, this order was challenged and remanded by the High Court for reconsideration, indicating that it had not attained finality. The Court emphasized the importance of judicial discipline, stating that the Tribunal should have awaited the outcome of the remanded proceedings before relying on the previous order.Key Evidence and FindingsThe evidence presented included the show cause notice issued for the period 2012-13 to 2016-17, which raised similar demands to those made in the earlier period of 2002-03 to 2006-07. The Tribunal's reliance on its order from 17.12.2015, which was still under reconsideration, was a critical point of contention.Application of Law to FactsThe Court applied the principles of judicial discipline, noting that the Tribunal should not have relied on an order that was not final. The Tribunal was expected to consider the remanded issues afresh and not assume finality of the previous order.Treatment of Competing ArgumentsThe appellant argued that the Tribunal erred in setting aside the demand based on an order that was not final. The respondent did not dispute the non-finality of the order but argued against the appellant's position. The Court sided with the appellant, emphasizing the need for the Tribunal to reconsider the issues in light of the remand.ConclusionsThe Court concluded that the Tribunal's decision was not sustainable as it relied on an order that had not attained finality. The Tribunal was directed to reconsider the appeal along with the remanded issues.SIGNIFICANT HOLDINGSThe Court held that the Tribunal erred in setting aside the demand based on an order that was still under reconsideration. It emphasized the need for adherence to judicial discipline and the requirement for the Tribunal to decide the issues afresh.Core Principles EstablishedThe judgment reinforced the principle that Tribunal orders must attain finality before being relied upon in subsequent decisions. It highlighted the importance of judicial discipline in ensuring that pending issues are resolved before making determinations based on previous orders.Final Determinations on Each IssueThe Court set aside the Tribunal's order dated 04.02.2022, directing the Tribunal to reconsider the appeal along with the remanded issues within a specified timeframe. The appeal was allowed, and the Tribunal was instructed to hear both parties and decide in accordance with the law.