TaxTMI 
TaxTMI 
2014 (9) TMI 646
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....ation avers that the applicant's appeal No. ST/136/2007 is pending adjudication before this Tribunal and presents issues which are substantially similar to issues referred for consideration of a Larger Bench (5 Members) by the order of this Tribunal dated 09.09.2013 (in ST/58658/2013 an appeal preferred by the appellant M/s Larsen & Toubro Limited) and seeks leave to appear as an intervener and argue the relevant positions of law before the Larger Bench. In view of the averments in this application, it is ordered and M/s Sepco Electric Power Corporation (appellant in ST/136/2007) is at liberty to intervene and make submissions before the Larger Bench. 4. Miscellaneous Application No. 51246 of 2014 is filed by Mr. Anil Kumar Jain, Commissioner, Service Tax, New Delhi, respondent in ST/58658/2013, an appeal filed by the assessee/ appellant M/s Larsen & Toubro Limited (L&T), wherein orders dated 09.09.2013 and 05.05.2014 were passed proposing reference of certain issues for consideration of a Larger Bench and reframing the issues for consideration by the Larger Bench, respectively. L&T preferred ST/58658/2013 against the adjudication order dated 01.04.2013 passed by the CST, New Delh....
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....f the Delhi High Court in G.D. Builders vs. Union of India - 2013 (32) STR 673 (Del.) had decided the issue regarding vivisection of composite contracts and in line with the Larger Bench decision in BSBK Pvt. Limited; nevertheless, the Division bench 'headed by the President' failed to make out of any case for disagreement with the operative ratio of the decision in BSBK Pvt. Limited. It is also pleaded that the 09.09.2013 order fails to adequately explain the grounds for reconsideration of the decision in BSBK Pvt. Limited and (the order) has 'arbitrarily' referred the matter to a 5 Member Bench, 'to unsettle the law settled by the BSBK Pvt. Limited'. The application concludes by asserting that the 09.09.2013 order is per aquarium (sic. per incurium) the guidelines laid-down by the Larger Bench of the Tribunal in Vandana Global Limited vs. CCE - 2009 (238) ELT 420 (Tri. LB) on constitution of Larger Benches in CESTAT (as set out in para 37 of the Vandana Global decision). According to CST, New Delhi the order dated 09.09.2013 suffers from 'judicial inadequacy'. In the circumstances, review of the order dated 09.09.2013 is sought. ST/Misc./53823/2014 CST, New Delhi (Shri Anil Kum....
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....; a) that the misc. order dated 09.09.2013 had decided the appeal itself and directed Registry to place the papers in the appeal before the President, CESTAT for an appropriate decision in the light of observations in the order; b) that the misc. order dated 09.09.2013 failed to frame the issues for consideration by the larger Bench; c) the order failed to record reasons for disagreeing with the decision of the Larger Bench in BSBK Pvt. Limited; and d) by this order a Division Bench had referred issues to a larger Bench of five members. 8. Before proceeding to consider and record our analyses with regard to and conclusions on misc. application Nos. 51246 and 53283/2014, we consider it appropriate to reiterate the contents of the orders dated 09.09.2013 and 05.05.2013, in extenso: Misc. Order dated 09.09.2013: This application seeks listing of the appeal for consideration before a Larger Bench, of the five Hon'ble Members. The substantive issue is whether works contract service is chargeable to service tax, prior to 1.6.2007.....
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....ervices provided under a composite contract involving both incorporation of goods into the enterprise as well as the service component of labour and allied services, was not taxable as commercial or construction service. Initially, by the order reported in 2007 (5) STR 124 (Tri.-Del.) a Division Bench negated the assessee's contention and allowed the appeal by Revenue, reversed the order of the Appellate Commissioner and confirmed the order by the adjudicating authority. Aggrieved thereby one of the interveners in the appeal before this Tribunal, M/s Larsen & Toubro (which is also the appellant herein) filed a writ petition before the Delhi High Court. The High Court by its order, reported in 2010 (20) STR 163 (Del.) rejected the writ petition on the ground that independent determination of the scope of the relevant provisions of the 46th Constitution Amendment is inappropriate in a proceedings under Article 226, at the instance of the writ petitioner who had an intervener in the appeal decided by the Tribunal. Against the decision of the Division Bench of this Tribunal [reported in 2007 (5) STR 124 (Tri.-Del.)], the assessee preferred an appeal to the Supreme Court, inter alia com....
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....d 1.4.2013. The adjudication order confirmed the specified quantum of service tax, interest and penalty. Inter alia a turnkey works contract between the appellant herein and M/s DMRC was classified as constituting construction service/Commercial or Industrial Construction service, in respect of services under such contract provided prior to 1.6.2007. This adjudication order did not refer either to the decisions in Jyoti Ltd.; Indian Oil Tanking Ltd. or BSBK but independently came to the same conclusion as in BSBK Pvt. Ltd. 8. In the facts and circumstances therefore there is a conflict between three decisions rendered by benches comprising of three Members each in the Jyoti Ltd., Indian Oil Tanking Ltd. and BSBK Pvt. Ltd. Jyoti Ltd., and Indian Oil Tanking Ltd. larger benches have taken the view that a composite contract involving transfer of property in goods and services is not assessable to tax prior to 1.6.2007 under pre-existing taxable services such as commercial or industrial construction service or consulting engineering service etc. The decision in BSBK Pvt. Ltd. also a three Members bench propounded a contrary view, that the service elements of a composite works contract....
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....nch comprising three members, is no longer res-integra. 12. In Puri (P.C.), Vs. Commissioner of Income Tax - (1985) 151 ITR 0584, the Delhi High Court clarified the position as to the nature and effect of a judgment pronounced on a reference pursuant to a conflict. We re-produce the relevant observations :- Before I proceed to deal with the two questions referred to us. I will deal with another question which was raised before me. It was suggested by counsel for the assessees, that there being a conflict of decisions in this court on the matter of interest, these references ought to have been placed before a Full Bench and not before a third judge. In my opinion, there is no merit in this contention. Section 259 says : Case before High Court to be heard by not less than two judges :- (1) When any case has been referred to the High Court under Section 256, it shall be heard by a Bench of not less than two judges of the High Court, and shall be decided in accordance with the opinion of such judges or of the majority, if....
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....above observations of the High court could neither be construed as the ratio or even obiter but must be confined to the factual matrix in which the observations are recorded. This contention does not commend acceptance. It requires to be noticed that the issue before the Delhi High Court arose out of a conflict of opinion emanating from a Division Bench decision in a reference made to the High Court under Section 256(1) of the Income Tax Act 1961. The statutory provisions in issue i.e. Section 25 of the 1961 Act enjoin that a case before the High Court ought to be heard by not less than two judges and that any case referred under Section 256 shall be heard by a Bench by not less than two judges of the High Court, and shall be decided in accordance with the opinion of such judges or the majority if any of such judges. Sub-Section 2 further provides that where there is no such majority, the judges shall state the point of law upon which they differ, and the case shall then be heard upon that point only by one or more of the other judges of the High Court, and such point shall be decided according to the opinion of the majority of the judges who have heard the case including those who....
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....n precedents having equal efficacy, it is the duty of this Tribunal to resolve such conflict in the interests of doctrinal stability. If the larger bench of five members takes a view the third Member to whom the existing conflict of opinion arising out of a Division Bench decision is referred, would be bound to take the view in conformity with the decision of such larger bench. No issue of chilling of judicial discretion arises. 17. In the result, the Registry is directed to place the papers in ST/58658/2013 before the Hon'ble President for an appropriate decision in the light of the observations in this order. Misc. Order dated 05.05.2014 In the order dated 09.09.2013, in Service Tax Miscellaneous Application Nos. 60108 and 59936 of 2013 (in ST Appeal No. 58658/2013), the Tribunal noticed a conflict between Larger Bench (three Members) decisions in Jyoti Ltd., vs. CCE - 2007 -TIOL-2337-CESTAT-AHM, CCE vs. Indian Oil Tanking Ltd., -2010-TIOL-1015-CESTAT-MUM and CCE vs. BSBK Ltd., - 2010-TIOL-646-CESTAT-DEL-LB. This order referred for consideration of a Larger Bench of five Members, the following issues (reframed): (a) Whether a composite contract/ transaction, involving incorpo....
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....o observe the guidelines laid-down by the Supreme Court in several decisions regarding referral of matters to a Larger Bench. The decision of the Constitution Bench in Pradip Chandra Parija and Others vs. Pramod Chandra Patnaik and Others - 2002 (144) ELT 7 (SC) is referred to. Provisions of Section 129C(5) of the Customs Act, 1962 are also adverted to. Shri Jain contends that as per this provision, the decision of the three Member Larger Bench in BSBK Pvt. Limited must be construed as a decision by five Members, by adding numbers of the two minority members who recorded the minority opinion in the earlier Larger Bench decisions in Jyoti Limited vs. CCE, Vadodara - 2008 (9) STR 373 (Tri. Ahmd.) and in CCE, Raigad vs. Indian Oil Tanking Ltd. -2010 (18) STR 577 (Tri. Mum.). These minority opinions were in conformity with the BSBK Pvt. Limited en banc conclusion. On this premise (according to written submissions), the law on the issue referred to the five Members Larger Bench stands concluded by the judgment of the Larger Bench in BSBK Pvt. Limited. It is further asserted that subsequent judgments of the Supreme Court in Raheja Developers -2013-TIOL-46-SC-CT (LB) and in Kone Elevator ....
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....ch. This order directed that the papers be placed before the President, CESTAT, for appropriate orders; after clearly recording the issue on which conflict of opinion existed. It is clear that the 09.09.2013 order expressly and clearly identified the specific issue presenting the conflict and had referred the matter to the President, CESTAT, after recommending that an appropriate case is made out for reference to a Larger Bench. 13. Misc. order dated 05.05.2014 reframed the issues to be considered the larger bench of five Members. The core issue to be considered for resolution by the five Members Larger Bench was already identified and specified in Misc. order dated 09.09.2013. The order dated 05.05.2014 merely annotated integers of the issue referred for resolution by the Larger Bench while indicating the probable date for consideration of the Larger Bench i.e. around 09.06.2014; and directed that notices be put up on notice boards of advocates associations at all Regional Benches, so as to afford opportunity to other Members of the Bar, to assist the Larger Bench in answering the identified conflict. 14. The basis for the present applications (seeking review of the misc. applic....
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....d whenever a conflict in opinion on any point, among Members of a Bench arises; provides the process to be followed for resolution of such conflict; and spells out how the operative outcome should be ascertained after the conflict in opinion is referred for resolution to the referral Member/ Members and the reference is answered. In our considered view further elaboration on this aspect is not warranted. It would be an idle parade of settled and established law and practice, which has however eluded the applicant, the CST, New Delhi, either by default or design. 16. Lahoti, C.J. writing the opinion for the constitution Bench in Central Board of Dawoodi Bohra Community and Another vs. State of Maharashtra and Another - (2005) s SCC 673, after an elaborate analyses of several Indian and foreign precedents, including the earlier constitution Bench decision in Pradip Chandra Parija (supra) summarized the relevant principles as follows: 12. Having carefully considered the submissions made by the learned Senior Counsel for the parties and having examined the law laid down by the Constitution Benches in the abovesa....
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....n. It has all the powers conferred expressly by the statute. Furthermore, being a judicial body, it has all those incidental and ancillary powers which are necessary to make fully effective the express grant of statutory powers. Certain powers are recognized as incidental and ancillary, not because they are inherent in the Tribunal, nor because its jurisdiction is plenary, but because it is the legislative intent that the power which is expressly granted in the assigned field of jurisdiction is efficaciously and meaningfully exercised. The powers of the Tribunal are no doubt limited. Its area of jurisdiction is clearly defined, but within the bounds of its jurisdiction, it has all the powers expressly and impliedly granted. The implied grant is, of course, limited by the express grant and, therefore, it can only be such powers as are truly incidental and ancillary for doing all such acts or employing all such means as are reasonably necessary to make the grant effective. As stated in Maxwell on Interpretation of Statutes, (eleventh edition) 'where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially ne....
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....bers of a Bench find themselves unable to decide a case according to what they perceive to be the correct law and fact because of an impediment arising from an earlier decision with which they cannot honestly agree. In such cases, it is necessary for the healthy functioning of the Tribunal that the President should have the requisite authority to refer the case to a larger Bench. That is a power which is implied in the express grant authorizing the President to constitute Benches of the Tribunal for effective and expeditious discharge of its functions. 12. In our view, the Bench of two members acted within their power in stating the points of law which required clarification and the President acted equally within the bounds of his power in constituting a larger Bench to hear and decide those points. 18. A recent decision of the Supreme Court in West U.P. Sugar Mills Assn. and Others vs. State of U.P. - (2012) 2 SCC 773 reiterates the relevant principles in the area. Supreme Court identified a conflict between observations in two Constitution Benches Tika Ramji vs. State of U.P. - AIR 1950 SC 676 and U.P. Cooperative Cane Union Federation vs. West U.P. Sugar Association - (2004) 5....
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.... and emphasise the observation of the Apex Court in Para 9 of the Paras Laminates case stating that a two Member Bench must not lightly disregard the decision of another Bench of the Tribunal on an identical question particularly when the earlier decision is rendered by a Larger Bench in the interest of continuity, certainty and predictability in the administration of justice. For the same reason we find also no infirmity in the order of the Hon'ble President in referring the present issue to this Larger Bench. 20. In Income Tax Appellate Tribunal vs. Dy. C.I.T. (Assts.) III, Hyderabad - 1996 (82) ELT 4 (SC), the Court considered the scope and extent of powers of the President, ITAT under Section 255 of the Income Tax Act, 1961. Paras 12 and 13 of this judgment spell out and explain the relevant principles and the scope of the power of the President, ITAT, under Section 255(3) of the Income Tax Act, 1961: 12. In our view the aforesaid decision of the High Court to the effect that the President of the Income Tax Appellate Tribunal cannot constitute a Special Bench save and except under a judicial order cannot be sust....
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....hows that it is the administrative function of the President to constitute benches from amongst the members of the Tribunal for exercising the powers and functions of the Appellate Tribunal. Similarly sub-section (3) empowers the President for disposal of any particular case to constitute a Special Bench consisting of three or more members one of whom shall necessarily be a judicial member and one an accountant member. The functions entrusted under sub-sections (1) and (3) of Section 255 to the President of the Appellate Tribunal are obviously administrative functions. They have nothing to do with exercise of any judicial power. It is of course true that as per sub-section (5) the Appellate Tribunal can regulate its own procedure and the procedure of benches and for that purpose can frame appropriate regulations. In exercise of that power the Income Tax Appellate Tribunal has framed regulations. The relevant regulation for the present purpose is Regulation 98(A). It reads as under : Regulation 98(A) With a view to bring about uniformity in the procedure for reference of cases to President I.T.A.....
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....esident, CESTAT are in pari materia, under provisions of the Finance Act, 1994 read with the Central Excise Act, 1944. 21. Though the misc. application (ST/Misc/51246/2014) pleads that the order dated 09.09.2013 transgressed the principles referred to in para 37 of the larger Bench judgment in Vandana Global Ltd. (on principles regarding reference to larger Benches), this aspect was not argued. We also find nothing in the Vandana Global decision which explains or lays down principles or procedure in this area. 22. On 24.03.2014 the Bombay High Court in Writ Petition (L) No. 433/2014 (preferred by L&T), while adjourning hearing of the writ petition to 21.04.2014 and after noticing that the matter of reference to Larger Bench was under consideration pursuant to the misc. order dated 09.09.2013 observed that the President, CESTAT may constitute the Larger Bench of the five Member at the earliest. On noticing this observation we passed the misc. order dated 05.05.2014, scheduling hearing of the Larger Bench tentatively on 09.06.2014. On 03.06.2014, learned AR Shri Amresh Jain made an oral mention seeking adjournment of the Larger Bench of five Members (scheduled on 09.06.2014) to a l....