The decision to be followed in case of conflicting judgments of High courts.

PJ/Case Law/2014-15/2238

Case:- COMMISSIONER OF CENTRAL EXCISE, JALANDHAR VERSUS M/s. BHAGAWATI FOREX

Citation:- 2014-TIOL-1173-CETSTA-DEL

Brief facts:-Revenue has preferred the appeal against the order dated 12.1.2009 passed by the Commissioner (Appeals), Chandigarh. The appellate Commissioner partly allowed the appeal preferred by the respondent/assessee against the order dated 31.3.2008 of the Assistant Commissioner, Central Excise, Jalandhar.

Proceedings were initiated against the assessee who was engaged in the business of money transfer under an agreement with M/s Western Union Financial Services, USA. Alleging, that the petitioner had provided the taxable Business Auxiliary Services (BAS) to the overseas entity from India and is therefore liable to tax, proceedings were initiated. The primary authority confirmed tax demand of Rs.61,721/- and imposed penalties under Section 75A, Section 76, Section 77 and Section 78 of the Act as well, apart from interest under Section 75.

Aggrieved, the assessee preferred an appeal. The ld. appellate Commissioner confirmed the primary order to the extent of the demand of service tax, interest and penalties under Sections 75 and 78 but dropped the penalty imposed by the primary authority under Section 76 on the ground that no penalty simultaneously could be imposed, following the judgment of this Tribunal in The Financers Vs. CCE, Jaipur 2007 (8) STR 7 (Tri.-Del.) 2007-TIOL-1778-CESTA T-DEL.

Aggrieved by the aforesaid order, the department has preferred an appeal in this Tribunal.

Appellant contention:- According tothe appellant, the decision of the appellate commissioner were without any base because there are different opinions on the issue of penalty imposition under Section 75 , 76 , 77 & 78. So the revenue pleaded that penalty under section 76 should be imposed on the assessee.

Respondent’s contention:- The issue of imposition of simultaneous penalties under Sections 76 and 78 was considered by several High Courts and there are conflicting views expressed on this aspect. While High Courts of Kerala and Delhi opined that prior to the amendment w.e.f . 10.5.2008 by a proviso introduced to Section 78, by the Finance Act, 2008, penalties under Sections 76 and 78, which operate on different aspects could be imposed vide Assistant Commissioner of Central Excise Vs. Krishna Poduval - 2006 (1) STR 185 (Ker.) 2006-TIOL-77-HC-KERA LA - ST and Bajaj Travels Ltd. Vs. CST 2012 (25) STR 417(Del.)=2011-TIOL-896-HC-DEL-ST and on the other hand, the Punjab & Haryana High Court in CCE Vs. First Flight Couriers Ltd. - 2011-TIOL-67-HC-P&H-ST recorded a contrary view, following its earlier judgment in CCE Vs. Pannu Property dealers and on the ground that since Section 78 is more comprehensive and provide for a higher quantum of penalty, though technically the scope of Section 76 and 77 are different, penalty under Section 76 may not be justified where penalty is already imposed under Section 78. To the same effect is the judgment of Karnataka High Court in CST, Bangalore Vs . Motor World - 2012 (27) STR 225 (Kar.) 2012-TIOL-418-HC-KAR-ST. Accordingly, the counsel for the respondent pleaded that the Commissioner Appeals has rightly waived penalty under section 76 of the Finance Act, 1994.

Reasoning of judgment:- After hearing the facts of the case, finally the tribunal concluded that the Larger Bench of this Tribunal in CCE Vs. Kashmir Conductors - 1997 (97) ELT 257 (T) 2002-TIOL-353-CESTAT-DEL-LB had occasion to consider the issue as to the decision of which the High Court should be followed in case of conflicting opinions, particularly in the context of the fact that the Tribunal, an all India Tribunal, operates within the territorial jurisdictions of several High Courts and adjudicates disputes arising from different territories. The Larger Bench clarified that the decision of that High Court within whose jurisdiction the issue arises viz. where the taxable event occurs or the jurisdictional Commissioner passes the initial adjudication order, should be followed. Following the guidance provided by the Larger Bench decision in another appeal preferred by Revenue in a case arising from within the jurisdiction of the Punjab & Haryana High Court, they followed the decision of the Punjab & Haryana High Court in First Flight Couriers Ltd. (supra) to hold that simultaneous penalty under Sections 76 and 78 could not be imposed on that assessee whose transactions and cause of action arose within the jurisdiction of that High Court. This decision was recorded in FO No. ST/A/52161/2014- CU( DB) dated 15.5.2014. Following this decision and the analysis contained therein, they dismiss this appeal by Revenue, without costs.

Decision:- Appeal dismissed.

Comment:-The crux of the case is that in case of conflicting decisions on the same issue by different high courts, the decision of that High Court within whose jurisdiction the issue arises viz. where the taxable event occurs or the jurisdictional Commissioner passes the initial adjudication order, should be followed.

Prepared by:- Kushal Shah

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PJ/Case Law/2014-15/2238

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