2025 (2) TMI 897 - AT - Service Tax

Tribunal Overturns Service Tax Order; Special Economic Zones Act 2005 Overrules Conflicting Notifications in Rent-a-Cab Case.

ORIX Auto Infrastructure Services Ltd Versus Commissioner of Service Tax – V

The Tribunal set aside the order of the Commissioner of Service Tax - V, Mumbai, which directed the recovery of 87,43,593 under the Finance Act, 1994, for ... Recovery of service tax with interest and penalty - rent-a-cab service - period April 2006 to March 2009 - HELD THAT:- It is found that the stand of the adjudicating authority that the decision of the Tribunal on non taxability in identical circumstances was not valid precedent from non-acceptance of the decision on merit is erroneous. That the reviewing authorities did not consider the said decision as fit to contest in appeal either owing to the threshold prescribed by the Central Government under the Litigation Policy or for any other reason and does not detract from the applicability of such an order. The Hon'ble Supreme Court, in re Kamalakshi Finance Corporation Ltd [1991 (9) TMI 72 - SUPREME COURT] has eloquently determined the mandate of judicial discipline and extraction of a contends of a circular of Central Board of Excise & Customs (CBEC) does not condone the demonstrated lack of judicial discipline. Nor can such circular purport to guide adjudication in a particular direction. It is also seen that the rejection was based upon a N/N. 4/2004 dated 31st March 2004 which preceded the Special Economic Zones Act, 2005. Section 51 of Special Economic Zones Act, 2005 renders the provisions of that law to prevail over any other statute in the event of conflict. Conclusion - As the adjudicating authority has relied upon an outdated notification the final outcome not tenable warranting a fresh appreciation of proposals in the show cause notice in the context of settled law as well as exemption afforded by Special Economic Zones Act, 2005. The matter remanded back to the original authority for a fresh adjudication within the framework of law - appeal allowed by way of remand. The appeal in the case of M/s ORIX Auto Infrastructure Services Ltd challenges the order of the Commissioner of Service Tax - V, Mumbai, directing recovery of 87,43,593 under section 73 of the Finance Act, 1994 for the rendering of 'rent-a-cab' service between April 2006 to March 2009. The appellant contended that the exemption under section 26 of the Special Economic Zone Act, 2005 excluded them from any liability under the Finance Act, 1994. However, the adjudicating authority did not accept this contention and confirmed the recovery. The appellant argued that the Central Board of Excise and Customs (CBEC) should not decide on precedents in adjudication or appeals. They also referred to previous tribunal decisions supporting their position based on the pre-eminence of the Special Economic Zone Act, 2005.The appellant further relied on the decision of the Hon'ble Supreme Court in Union of India v. Kamalakshi Finance Corporation Ltd, emphasizing the importance of judicial discipline and the binding nature of higher appellate authorities' orders on subordinate authorities. The Tribunal found the adjudicating authority's rejection of the previous tribunal decision as a valid precedent to be erroneous. The Tribunal emphasized that the Special Economic Zones Act, 2005 prevails over any conflicting notification and that the outdated notification relied upon by the adjudicating authority was not tenable. Therefore, the impugned order was set aside, and the matter was remanded back to the original authority for a fresh adjudication within the framework of the law.In conclusion, the appeal was allowed by way of remand, emphasizing the importance of adhering to judicial discipline and considering the provisions of the Special Economic Zones Act, 2005 in determining liability under the Finance Act, 1994.