2025 (2) TMI 421 - AT - Service Tax

Adjudicating Authority Exceeded Jurisdiction by Replacing Order; Appeal Dismissed Under Section 74 of Finance Act.

M/s Sreeja Facilities Versus Commissioner of Central Tax Rangareddy - GST

The Court determined that the Adjudicating Authority exceeded its jurisdiction by substituting a new order for the original one, resulting in the ... Jurisdiction of Adjudicating Authority to substitute a new order in place of the original order - rectification of mistake - mistake apparent on the face of record or not - HELD THAT:- Under Section 74 of Finance Act concerned Officer can rectify his order if any mistake apparent from the record. Therefore, Adjudicating Authority only rectifies any mistake which is apparently shows. The Adjudicating Authority cannot do anything which is not permissible in law. Revenue relied on Hon’ble Supreme Court judgment in the case of Deva Metal Powders Pvt Ltd., Vs Commissioner, Trade Tax, UP 2007 (12) TMI 221 - SUPREME COURT] in which Hon’ble Supreme Court held that “a mistake which can be rectified is one which is patent, which is obvious and whose discovery is not dependent on any argument or elaboration, rectification of an order does not mean obliteration of order originally passed and its substitution by a new order. Where an error is far from self-evident, it ceased to be an apparent error.” In this case Adjudicating Authority by Order-in-Original No. 88/2022- 23-Adjn dated 25.05.2022 substituted a new order in place of Order-in- Appeal No. 78/2022-Adjn dated 22.03.2022 which is beyond his jurisdiction. Conclusion - The Adjudicating Authority exceeded its jurisdiction by substituting a new order in place of the original order, leading to the dismissal of the appeal. There are no illegality or irregularity in the Order-in-Original - Appeal dismissed. The issues presented and considered in the legal judgment are as follows:1. Whether the Adjudicating Authority had the jurisdiction to substitute a new order in place of the original order.2. Whether the rectification made by the Adjudicating Authority was within the scope of the law and the provisions of the Finance Act.3. Whether the Commissioner (Appeals) correctly allowed the appeal against the Order-in-Original.Issue-Wise Detailed Analysis:Issue 1: Jurisdiction of the Adjudicating Authority- Relevant legal framework and precedents: Section 74 of the Finance Act allows for rectification of mistakes apparent from the record by the Central Excise Officer who passed the order.- Court's interpretation and reasoning: The Adjudicating Authority substituted a new order in place of the original order, which the Department argued was beyond the Authority's jurisdiction.- Key evidence and findings: The Department relied on the Supreme Court judgment in Deva Metal Powders Pvt Ltd. v. Commissioner, Trade Tax, UP, which emphasized that rectification should only be for patent and obvious errors.- Application of law to facts: The Adjudicating Authority's action of substituting a new order was deemed beyond jurisdiction based on the legal framework and precedents.- Treatment of competing arguments: The Department argued against the Authority's actions, highlighting the limitations on rectification of orders.- Conclusions: The Court found that the Adjudicating Authority exceeded its jurisdiction by substituting a new order, leading to the dismissal of the appeal.Issue 2: Rectification under Section 74 of the Finance Act- Relevant legal framework and precedents: Section 74 allows for rectification of mistakes apparent from the record by the concerned Officer.- Court's interpretation and reasoning: The Adjudicating Authority rectified the original order under Section 74, but the Department contested the scope of rectification.- Key evidence and findings: The Department argued that rectification should only be for apparent mistakes, as per the provisions of the Finance Act.- Application of law to facts: The Court considered the scope of rectification under Section 74 and whether the Adjudicating Authority's actions were in line with the law.- Treatment of competing arguments: The Department emphasized the limitations on rectification, while the appellant sought rectification based on the facts of the case.- Conclusions: The Court assessed the rectification made by the Adjudicating Authority and its compliance with Section 74, ultimately leading to the dismissal of the appeal.Issue 3: Commissioner (Appeals) decision on the appeal- Relevant legal framework and precedents: The Commissioner (Appeals) considered the legality of the Adjudicating Authority's actions in allowing the appeal against the Order-in-Original.- Court's interpretation and reasoning: The Commissioner (Appeals) observed that the Adjudicating Authority cannot change findings or pass a new order with different conclusions.- Key evidence and findings: The Commissioner (Appeals) analyzed the actions of the Adjudicating Authority and the implications of allowing the appeal.- Application of law to facts: The Commissioner (Appeals) applied the relevant legal principles to determine the correctness of the appeal decision.- Treatment of competing arguments: The Department argued against the appeal, highlighting the limitations on changing findings in the original order.- Conclusions: The Commissioner (Appeals) dismissed the appeal, emphasizing that the Adjudicating Authority's actions were beyond jurisdiction, leading to the final determination of the case.Significant Holdings:- The Court held that the Adjudicating Authority exceeded its jurisdiction by substituting a new order in place of the original order, leading to the dismissal of the appeal.- The Court emphasized the limitations on rectification under Section 74 of the Finance Act, requiring rectification only for apparent mistakes.- The Commissioner (Appeals) decision to dismiss the appeal was based on the Adjudicating Authority's actions being beyond jurisdiction and the principles established in the legal framework.Overall, the legal judgment analyzed the jurisdiction of the Adjudicating Authority, the scope of rectification under the Finance Act, and the correctness of the Commissioner (Appeals) decision, leading to the dismissal of the appeal based on the findings and interpretations of the Court.