2002 (8) TMI 1 - AT - Service Tax

Tribunal Limits Commissioner's Revisionary Powers

MARKFED OIL & ALLIED INDUSTRIES Versus COMMISSIONER OF C. EX., CHANDIGARH

The Tribunal allowed the appeal, ruling that the Commissioner exceeded authority by demanding service tax and interest through revisionary powers beyond ... Service Tax – (1) Demand (2) Show cause notice (3) Revision Issues:Appeal against Order dated 14-12-2001 passed by Commissioner of Central Excise; Interpretation of Rule 2(d)(1) xvii of Service Tax Rules, 1994; Validity of show cause notice for penalty under Section 77 of Finance Act, 1994; Power of revision under Section 84 of Finance Act, 1994; Authority to demand payment of service tax and interest.Interpretation of Rule 2(d)(1) xvii of Service Tax Rules, 1994:The appellant argued that as per Rule 2(d)(1) xvii, a person liable to pay freight to goods transport operators was liable to pay service tax from 16-11-97. Referring to a Supreme Court decision, the appellant contended that the goods were ultra vires of the Finance Act, 1994. The Deputy Commissioner had initially dropped proceedings based on this decision. However, the Commissioner revised the order, directing the calculation and payment of service tax at 5% of gross freight weight. The appellant challenged this, stating that revisionary powers cannot be used to demand service tax and interest when not proposed earlier.Validity of Show Cause Notice and Penalty under Section 77:The appellant argued that the show cause notice only mentioned penalty under Section 77 for not filing returns, with no proposal for service tax or interest. The Commissioner's revision order demanded payment of service tax and interest, exceeding the scope of the notice. The appellant relied on legal precedent stating that revisionary authority cannot go beyond the show cause notice. The Tribunal's decision in a similar case supported this argument, emphasizing that revisionary powers are limited by the contents of the notice.Power of Revision under Section 84 of Finance Act, 1994:The Commissioner's power of revision under Section 84 allows for inquiry and orders based on proceedings initiated by subordinate officers. The appellant contended that since no proposal for service tax payment was made by the Deputy Commissioner, the Commissioner could not demand such payment through revisionary powers. Legal principles were cited to support the argument that revisionary authority cannot exceed the scope of the original proceedings initiated by subordinate officers.Authority to Demand Payment of Service Tax and Interest:The appellant challenged the Commissioner's authority to demand payment of service tax and interest through revisionary powers, emphasizing that the show cause notice did not propose such payment. Legal precedents were cited to support the argument that revisionary powers are constrained by the contents of the notice and cannot introduce new liabilities not originally raised. The Tribunal's decision in a similar case was referenced to highlight the limitation on revisionary authority in demanding payments not initially proposed.In conclusion, the Tribunal allowed the appeal to the extent that the Commissioner's order demanding payment of service tax and interest through revisionary powers was deemed beyond the scope of the original show cause notice. The decision emphasized the principle that revisionary authority is confined by the issues raised in the notice and cannot introduce new liabilities not initially proposed.