TaxTMI 
TaxTMI 
2025 (11) TMI 433
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....ion 65 of the said Act (2) I confirm the Service Tax amounting to Rs 31,37,505/- (Rupees thirty one lac thirty seven thousand five hundred and five only) liable to be recovered from the party under the provisions of section 73 of Chapter V of the said Act read with the provisions of Section 68 ibid; (3) I order recovery of interest from them at the appropriate rates and as applicable in force under section 75 of the said Act, is payable on the amount of the confirmed demand of Service Tax and the Education Cess, supra, from the date on which the said Service Tax and the Education Cess became due and until the same is paid by them. (4) I order the recovery of interest amounting to Rs 7000/- on account of delayed payment of Service Tax from the party under Section 75 of the Finance Act, 1994. (5) I impose on the party penalty of Rs 200 (Rupees two hundred only) per day for the period during which the failure to pay the due amount of Service Tax continues under Section 76 of the said Act, subject to limit specified in the said section. (6) I impose on the party penalty of Rs 31,37,505/- (Rupees thirty one lac thirty seven thousand five hund....
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....er the order in original referred in para 1, above. 2.8 Aggrieved appellant filed before the Commissioner (Appeal) which has been dismissed as per the impugned order. 2.9 Aggrieved appellant has filed this appeal before CESTAT. 2.10 Revenue had also filed appeal which was number 98 of 2009. 2.11 The appeal was dismissed as per final order No ST/256/09 dated 21.08.2009 for want of clearance from Committee on Disputes (COD) but was subsequently restored vide Misc Order No ST/29/11 dated 22.02.2011. 2.12 This appeal was dismissed under Rule 20 of CESTAT Procedure rules, 1982, for non prosecution by Final Order No 57355/2013 dated 23.08.2013 and restored back vide Misc order No.53200-53201/2014 dated 16.09.2014. 2.13 This appeal was again dismissed under Rule 20 of CESTAT Procedure Rules, 1982, for non prosecution by Final Order No 71733/2018 dated 02.08.2018 and restored back vide Misc order No 70344/2018 dated 06.12.2018. While restoring the appeal bench had observed "The same is fixed for final disposal on 29.01.2019, a date suggested by learned Advocate. It is made clear that no appearance on the said date would lead to disposal of the appeal on the basis of recor....
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....enue. 3.3 When the matter was earlier argued on 06.10.2023 counsel then appearing for the appellant (Shri Ravindra Narayan Singh, Shri Ashok Kumar Lal & Shri Kundan Rai, Advocate) submitted that- ⮚ The issue on merits need to be determined on the basis Section 65 (105zd), 65 (60), 65 (104), 65 (111), 65 (29), 65 (28) and 65 (39a) of the Chapter V of the Finance Act, 1994 as were relevant at the appropriate time. ⮚ In terms of the definitions contained in the section 65 (105zd) the services provided by them can be classified, under the category of leased circuit only if it can be shown that the services recipient was exclusively using the said services. In the present case the services provided by them to MTNL were not used exclusively by MTNL but were used to further provide the services to its consumers. Hence the services cannot fall within the category of leased circuits. ⮚ The installation of gadgets and modems are not within the meaning of the words "commissioning and installation" as defined by Section 65 (28) hence the tax liability determined by the authorities below, cannot be upheld. ⮚ The demand is barred....
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....persons/subscribers of other telecom authorities but that of MTNL only. Also, the appellants have claimed that MTNL cannot be termed as a subscriber in terms of definition of leased circuit supra. I find that as per clause (104) of section 65, the subscriber is defined as a person to whom any service of leased circuit has been provided by a telegraph authority". Though the term person has not been defined in the context of service tax but the term "person" has been defined in clause (42) of Section 3 of General Clauses Act, 1897 as "person includes any company or association or body of individual, whether incorporated or not". Therefore a subscriber may be artificial or juristic person or may be a natural person, when service is provided to any person; it will fall under the service tax net. Therefore, MTNL, in this case is covered under the term " subscriber". Further, I find that Rule 2(d) of the Service Tax Rules, 1994 has defined the person liable for payment of service tax and in relation to leased circuit services, it also covers any other person who has been granted a license by the Central Government under the first proviso to sub-section (1) of Section 4 of the In....
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....e vendors have done the work on behalf of the appellants and bills for the aforesaid services to the respective clients have been raised by the appellants and the appellants being the service provider are liable to pay the tax. Also, the appellant's plea that while confirming demand for service tax on installation services, the adjudicating authority has confirmed it under the amended entry under "Erection, commissioning and installation services " under Section 65(39A) and not under section 65(28) under category of "commissioning and installation services" as demanded under Show cause notice, I find that the entry Section 65(28) was substituted by entry 65(39A) w.e.f 10/09/2004 thereby extending the scope of services and renaming it as "Erection Commissioning and Installation services". The issue being materially the same, and there being no major change in substance, I find that this conclusion arrived at by the adjudicating authority does not vitiate the order which is otherwise proper and correct. However, regarding imposition of penalty by the adjudication authority, I find the matter involves the interpretation of law as demand is related to the initial period wh....
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....ommissioner (Appeal). Revenue also filed appeal against the impugned order challenging the reduction of penalties imposed under Section 76 & 78 by the Commissioner (Appeal). 4.4 Both these appeals were dismissed by the CESTAT on 23.08.2013 by way of two separate orders as detailed below: A. Appeal filed by the appellant was dismissed vide Final Order No 57355/2013 dated 23.08.2013, noting as follows: "The appeal by the assessee is preferred against the appellate order of the Commissioner (Appeals), Custom & Central Excise, Noida -II dated 23.10.2008. The appellant had preferred an appeal against the adjudication order dated 31.12.2017 passed by the Additional Commissioner, Central Excise, Noida confirming service tax demand of Rs 31,37,505/-; ordering recovery of interest as specified and imposing penalties under Section 76 & 77 of the Act. On appeal the appellate authority upheld the adjudication order in all respects except for reduction of penalties imposed, to the extent indicated in the order. 2. The notice of hearing of this appeal of the year 2008 and the connected appeal S T 98 of 2009 preferred by the Revenue, was forwarded to the appellant an....
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....issue is whether the Commissioner (Appeal) was right in reducing the penalty under Section 76 and 78 of the Finance Act. We find the Commissioner (Appeal) has held that the issue involved in the appeal is respect of interpretation in law in the initial period of levy of service tax under the internet service and he further held that the Respondent, being an autonomous society under the Department of Information Technology under Ministry of Communication & Information Technology, cannot be viewed as having any malafide intention to evade the service tax. We find that the Commissioner (Appeal) has examined the law, facts mentioned in the original order and held that there is reason to reduce the penalty under 76 and 78. We do not find any infirmity in the finding of Commissioner (Appeal) and we uphold the same with regard to reduction in penalty and reject the appeal filed by revenue. 5. Revenue's Appeal is rejected." 4.5 Revenue challenged the order of tribunal before Hon'ble Allahabad High Court. While upholding the Order of Tribunal dismissing the appeal filed by the revenue Hon'ble Allahabad High Court vide its order in Central Excise Appeal No. 63 of 2014, decide....
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....isions of section 68 or the rules made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of section 75, a penalty which shall not be less than one hundred rupees for every day during which such failure continues one hundred rupees but which may extend to two hundred rupees for every day during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of service tax that he failed to pay. SECTION 78. Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, as determined under sub-section (2) of section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall....
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.... 11. In a case of non-payment, short-payment or erroneous refund of duty normally three issues are likely to arise relating to (i) recovery, (ii) interest and (iii) penalty. The three issues are dealt with under Section 11A (Recovery of duties), Section 11AA (Interest for the period from three months after the determination of duty payable till the date of payment of duty), section 11AB (Interest for the period from the first day of the month succeeding the month in which duty was payable till the payment of duty) and Section 11AC (Penalty for short levy or non levy of duty). Section 11A reads as follows : "11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. - (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or [erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder], a Central Excise Officer may, within [o....
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...., be deemed to be conclusive as to the matters stated therein : Provided further that, if such person has paid duty in part, interest and penalty under sub-section (1A), the Central Excise Officers, shall determine the amount of duty or interest not being in excess of the amount partly due from such person.] [(2A) Where any notice has been served on a person under sub-section (1), the Central Excise Officer, - (a) in case any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by reason of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, where it is possible to do so, shall determine the amount of such duty, within a period of one year; and (b) in any other case, where it is possible to do so, shall determine the amount of duty of excise which has not been levied or paid or has been short-levied or short-paid or erroneously refunded, within a period of six months, from the date of service of the notice on the person under sub-section (1) (2B) Wh....
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....l return, showing particulars of the duty paid on the excisable goods removed during the period to which the said return relates, is to be filed by a manufacturer or a producer or a licensee of a warehouse, as the case may be, the date on which such return is so filed; (B) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (C) in any other case, the date on which the duty is to be paid under this Act or the rules made thereunder; (b) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (c) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund.]" From sub-section 1 read with its proviso it is clear that in case the short payment, non-payment, erroneous refund of duty is unintended and not attributable to fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made under it with intent to evade payment of duty then the ....
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....he amount of duty so increased, the interest payable thereon and twenty-five per cent of the consequential increase of penalty have also been paid within thirty days of the communication of the order by which such increase in the duty takes effect - Explanation. - For the removal of doubts, it is hereby declared that - (1) the provisions of this section shall also apply to cases in which the order determining the duty under subsection (2) of section 11A relates to notices issued prior to the date on which the Finance Act, 2000 receives the assent of the President; (1) any amount paid to the credit of the Central Government prior to the date of communication of the order referred to in the first proviso or the fourth proviso shall be adjusted against the total amount due from such person. 17. The main body of Section 11AC lays down the conditions and circumstances that would attract penalty and the various provisos enumerate the conditions, subject to which and the extent to which the penalty may be reduced. 18. One cannot fail to notice that both the proviso to subsection 1 of Section 11A and Section 11AC use the same expressions : "........
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....he appeal. For the reason that the appeal filed by the appellant was dismissed for non-prosecution, tribunal did not interfered with the order of Commissioner (Appeal) on any other account. From the facts as noted above it is quite evident that Hon'ble High Court has upheld the penalties as determined by the Commissioner (Appeal) in the impugned order and upheld by the tribunal vide the above referred order. Thus the impugned order and the order of tribunal dismissing the revenue appeal got merged with the order of Hon'ble High Court. Thus the order of Commissioner (Appeal) to this extent has acquired finality to the extent of the penalties imposed by the impugned order, and Tribunal is functus officio in the matter. CESTAT Bench cannot interfere with the order of Commissioner (Appeal) to the extent which has been upheld by the Hon'ble High Court. We have discussed above that the penalties imposed under Section 76 and 78 are not in vacuum and are linked with the demand of service tax. If in the appeals before us which is now listed before us after being restored third time tribunal concludes that demand was not maintainable, then it will be contrary to the earlier order of tribunal....
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....ot inadvertently placed. It is their contention that non-disclosure of the said fact was not a mistake on the part of the ld. Advocate in as-much as the said order was also received by the Commissioner of Customs as also by the Departmental Representative and by the Registry of the Tribunal. The same was also available on the website of the Hon'ble Supreme Court and was not a secret document and as such it was contended that there was no intention on the part of the ld. Advocate for not bringing the said fact to the notice of the Bench. At this stage, we may take note of the Hon'ble Supreme Court decision in the case of Meghmala & Ors. v. G. Narasimha Reddy & Ors. [(2010) 8 SCC 383] wherein the concept of fraud was considered by the Hon'ble Supreme Court. It was observed that it is settled proposition of law that where the order is obtained by making misrepresentation or playing fraud upon the competent authority, such order cannot be sustained in the eyes of law. "Fraud avoids all judicial acts ecclesiastical or temporal". Dishonesty cannot be permitted to bear the fruit and benefit to the persons who played fraud or made misrepresentation and in such circumstances, the C....
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.... upon the Court and that where the Court is misled by a party or the Court itself commits a mistake which prejudices a party, the Court has the inherent power to recall its order. It was further held by the Hon'ble Supreme Court in the case of Chittaranjan Das v. Durgapore Project Ltd. [99 CWN 897] that suppression of material document would amount to fraud and it is well-known that fraud vitiates all solemn acts. In respect of judgments obtained by suppressing or not disclosing the material developments before the higher forum, the principles of res judicata also does not apply. As such, the technical objection of non-maintainability of misc. Application is not sustainable as the same is neither a rectification of mistake application nor any mistake stand pointed out by the Revenue. In view of the fact of non-disclosure of the development at the Apex Court level, we invoke our inherent powers for recalling the said order dated 2-8-2016 and order accordingly." The appeal filed against this order was dismissed by the Hon'ble Supreme Court as reported at [2017 (51) S.T.R. J186 (S.C.)] 4.8 Hon'ble Allahabad High Court has in case of Sameer Ispat [2018....
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....ould merge with the order of the High Court. 8. Further, the Tribunal cannot entertain the M.A. for restoration of appeal, in view of the specific observations made by the Hon'ble High Court vide order dated 8-122005, which were to the effect that if the petitioner-applicant fulfils the condition of such order, then the Tribunal shall hear and decide the appeal on merits. Since, the said order has not been complied with by the applicant in true letter and spirit, entertaining the application for restoration of appeal will be contrary to the principles of judicial discipline, which require that the orders of the higher courts should be followed unreservedly by the subordinate/lower authorities. In view of above, we agree with the submissions of the Learned A.R. for Revenue that the applicant can seek legal remedy, if any, only from the Hon'ble High Court and not from the Tribunal." 13. The substantial questions of law that have been framed in this appeal are as follows : 1. Whether the CESTAT was justified in rejecting the recall application by declining to recall the order dated 101-2006 and to adjudicate the appeal on merits despite the appellant having ....
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....ubmissions advanced by Learned Counsel for the parties. 16. It is not in dispute that the appeal filed by M/s. Sameer Ispat under Section 35F of the Act was dismissed for non-compliance of the directions for deposit of the amount. Section 35F of the Act provides that the person desirous of appealing against the order imposing duty or penalty has to deposit with the Adjudicating Authority the duty demanded or the penalty imposed. However, where in any particular case, the Appellate Tribunal is of the opinion that the deposit of duty demanded or the penalty levied would cause undue hardship to such person, the Appellate Tribunal may dispense with such deposit subject to such conditions as it may deem fit to impose to safeguard the interests of the revenue. 17. In the present case, the Appellate Tribunal had directed M/s. Sameer Ispat to deposit the amount within eight weeks but this direction was modified by the High Court in Writ-Tax No. 1615 of 2005 by directing that it may deposit Rs. 5 lacs within one month. This direction was also not complied with as a result of which the Appellate Tribunal dismissed the Appeal on 10 January, 2006. The application filed by M/s....
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....98 Karnataka 1510] held as follows: "9.2 What is doctrine of merger ? It is the fusion or absorption of a lesser right with a greater right; or merger of the order of an inferior Tribunal or authority with the order of a superior Tribunal or authority; or merger of the decree of a lower Court with the decree of the appellate Court or order of a revisional Court. It often becomes a nagging point of dispute relating to limitation and execution. 9.3 The scope of doctrine of merger was considered by the Supreme Court in CIT vs. Amritlal Bhogilal & Co. . The Supreme Court held : "There can be no doubt that, if an appeal is provided against an order passed by a Tribunal, the decision of the appellate authority is the operative decision in law. If the appellate authority modifies or reverses the decision of the Tribunal, it is obvious that it is the appellate decision that is effective and can be enforced. In law, the position would be just the same even if the appellate decision merely confirms the decision of the Tribunal. As a result of the confirmation or affirmation of the decision of the Tribunal by the appellate authority, the original decision merges in ....
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....r authority cannot remain to stand simultaneously with the order of the higher authority on the very same subject matter. In such an event, the order of the lower authority gets merged with the order of the higher authority, so that there is only one order holding the field. But if the order of the lower authority related to several distinct matters and the appeal or revision is filed only in regard to one or few of the matters, there cannot be a merger of the entire order of the lower authority with the order of the appellate/revisional authority. In that event, subject to any statutory provisions, what will merge in the order of the appellate or revisional authority is not the entire order of the lower authority, but only that part of the order which related to the subject-matter of the appeal or revision. This is recognised by the Supreme Court in the following passage in State of Madras vs. Madurai Mills Co. Ltd. : "But the doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior Tribunal and the other by a superior Tribunal, passed in an appeal or revision, there is a fusion o....
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....evise the assessment of the assessing authority by including in the net turnover Rs. 7,74,62,706 representing the value of cotton purchased by the assessee from outside the State of Madras, on the ground that it was wrongly excluded in the computation of the turnover. The assessee objected to the proposed revision inter alia on the ground that the period of limitation prescribed, namely, four years, should be computed from 28th November, 1952 and if so done, proceedings initiated by the Board of Revenue was barred by time. The Board however including the said turnover relating to cotton purchased from outside the State, by order dt. 25th August, 1958 held that the order of assessment dt. 28th November, 1952 having merged in the order dt. 21st August, 1954 passed by the Dy. Commr. of Commercial Taxes in Revision, the four years period should be reckoned from 21st August, 1954 and therefore the proceedings were not barred. On appeal, the High Court set aside the Order of the Board on the ground that it was barred by limitation. That was affirmed by the Supreme Court in an appeal by the State, holding as follows : "In the circumstances of the present case, it cannot be said t....
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....ning under a statute (IT Act) providing for plenary jurisdiction thus, in CIT vs. Rai Bahadur Hardutroy Motilal Chamaria (1967) 66 ITR 443 (Kar) : TC 7R.590. "It would be wholly erroneous to compare the powers of the AAC with the powers possessed by a Court of appeal, under the CPC. The AAC is not an ordinary Court of appeal. It is impossible to talk of a Court of appeal when only one party to the original decision is entitled to appeal and not the other party, and in view of this peculiar position, the statute has conferred very wide powers upon the AAC once an appeal is preferred to him by the assessee. It is necessary also to emphasise that the statute provides that once an assessment comes before the AAC, his competence is not restricted to examining those aspects of the assessment which are complained of by the assessee; his competence ranges over the whole assessment and it is open to him to correct the ITO not only with regard to a matter raised by the assessee but also with regard to a matter which has been considered by the ITO and determined in the course of the assessment". 10.2 This Court has consistently taken the view that the entire order of the low....
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.....12 It is settled principle in law, that no person should be allowed to take advantage of his own wrong doings. In the case of Eureka Forbes Limited [(2010) 6 SCC 193] Hon'ble Supreme Court observed as follows: "37. Maxim Nullus commodum capere potest de injuria sua propria has a clear mandate of law that, a person who by manipulation of a process frustrates the legal rights of others, should not be permitted to take advantage of his wrong or manipulations...." 4.13 In case of Municipal Committee Katra & Ors. Vs Ashwani Kumar [Order dated May 09, 2024 in Civil Appeal No(S). 1497071 OF 2017], Hon'ble Supreme Court observed: 18. The situation at hand is squarely covered by the latin maxim 'nullus commodum capere potest de injuria sua propria', which means that no man can take advantage of his own wrong. This principle was applied by this Court in the case of Union of India v. Maj. Gen. Madan Lal Yadav [(1996) 4 SCC 127] observing as below: - "28. ...In this behalf, the maxim null-us commodum capere potest de injuria sua propria - meaning no man can take advantage of his own wrong - squarely stands in the way of avoidance by the respondent and he is estop....
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....after being restored third time as that goes against the principal of finality of the issues in the taxation matter and the decision of Hon'ble High Court against the order of tribunal, which is in respect of the same impugned order. 4.15 We also do not find much merits in the submissions made by the appellant to the effect that appellant was not providing any leased circuit services to M/s MTNL was not covered by the definition as per section 65 (105) (zd) of Finance Act, 1994 for the reason that the services provided by the appellant were not exclusively for the use of the recipient i.e. MTNL. We do not find much any merits in the said argument simply for the reason that the services provided by the appellant were the input services used exclusively by the MTNL for providing its output services to its subscribers/ client. The subscribers of the MTNL were not the recipient of the services provided by the appellant and the use of the services provided by the appellant to MTNL was exclusively used by the MTNL. The decisions relied upon by the appellant do not support the case of the appellant. In the case of Fascel Ltd. [2007 (7) S.T.R. 29 (Tri. - Ahmd.)] the issue was in respect....
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.... service tax paid by the person availing such services. This is borne out from the fact that the definition of the input service is very clear and it says that taxable service received and consumed by a service provider in relation to rendering of output service. In this case the respondent herein are providing the service that of a internet service provider to the various customers. The respondent has to rely upon the leased line which is given to them by BSNL. Without such leased line, the output service cannot be rendered by the respondent. When the definition itself categorically grants the credit of the service tax paid by the respondent on the input services, to give a narrow meaning to the sub-rule (2) of the Service Tax Credit Rules would deprive the respondent of the benefit of the Service Tax Credit on the input services. To my mind the interpretation sought to be relied upon by the Deptt. in this case would defeat that the intention of the Govt. to provide input stage credit of Service Tax to the service provider." 4.16 The second issue in the appeal is in respect of "installation or commissioning". From the impugned order it is evident that these services are in rela....