Whether CESTAT can examine and go into the question of application of mind on merits by the Committee of Chief Commissioners or Commissioners?

PJ/CASE LAW/2015-16/3033

Case:COMMISSIONER OF SERVICE TAX versus JAPAN AIRLINES INTERNATIONAL CO. LTD.

Citation:2015 (40) S.T.R. 420 (Del.)

Brief Fact:The present appeal is directed against the order dated 18th September, 2013 passed by the Customs, Excise and Service Tax Appellate Tribunal (‘CESTAT’) [2014 (35)S.T.R.358 (Tri. - Del.)] dismissing the appeal preferred by the Appellant herein i.e. the Commissioner of Service Tax (‘CST’) on the ground that the filing of the appeal was not preceded by an application of mind by the Committee of Chief Commissioners (COCC) on two aspects viz., “due consideration of the material pertaining to the adjudication/appellate order and the appropriateness/desirability of preferring an appeal.”
This Court by an order dated 15th December, 2014 noticed that there was inconsistency in two decisions of this Court C.C.E. Delhi v. Kundalia Industries - 2012 (279) E.L.T. 351 (Del.) and Commissioner of Service Tax v. L.R. Sharma-I 2013-TIOL-944-CESTAT DEL = 2014 (33) S.T.R. 319 (Tri.-Del.) and, therefore, referred the following two questions to a Larger Bench :
“(1) Whether the Custom, Excise & Service Tax Appellate Tribunal (CESTAT) in an appeal under Sub-Section (2) and (2A) of Section 86 of the Finance Act, 1994 read with applicable provisions of the Central Excise Act, 1944, can examine and go into the question of application of mind on merits by the Committee of Chief Commissioners or Commissioners?
(2) In case the aforesaid question is answered in affirmative, Le. against the Revenue and in favour of the assessee, then, whether the decision of the Committee of Chief Commissioners or Commissioners should be treated as null and void if they have appended signatures to the elaborated notes and objections prepared by the subordinate officers, before the file is put to the Chief Commissioners or Commissioners for examination?”
The Full Bench of this Court delivered a judgment dated 20th July, 2015 [2015 (39) S.T.R. 541 (Del.)] answering the aforementioned two questions as under :
“16. Having regard to the aforesaid discussion, our decision, with respect to the two questions of law, referred to us, is as follows :
(i). In so far as question no. 1 is concerned, the same is answered in favour of the Revenue. The Tribunal, as indicated above, cannot examine the issue beyond the factum as to whether or not a decision has been taken by a Committee of Commissioners to institute the appeal.
(ii). In view of our answer rendered qua question no. 1, question no. 2 does not arise for consideration. In any event, in our discussion hereinabove, we have clearly indicated that the act of appending of signatures by the members of the Committee of Commissioners, would suffice, as long as, the record placed before them, contains the necessary material and the reasons for approving the action to institute the appeal.
In view of the above judgment of the full Bench, the impugned order of the CESTAT is hereby set aside and the appeal of the CST being Service Tax Appeal No. 56279/2013 along with the miscellaneous application No. 59967/2013 is restored to the file of CESTAT for being disposed of on merits. It is clarified that the delay of six days in filing the said appeal will be taken to have been condoned.

Appellant contention: Ms. Sonia Sharma, Senior Standing Counsel with Ms. Neha Chugh and Shri Karan Chawla, Advocates, for the Petitioner.

Respondent contention:Mr. J.K. Mittal, learned counsel appearing for the Respondent sought to urge certain contentions regarding the decision of the COCC to permit filing of the appeal before the CESTAT. He submitted that in terms of the decision of the Full Bench, the CESTAT itself could not any longer examine that question and, therefore, it should be open to the Respondent to do so.

Reasoning of Judgment:The Court finds that the scope of the present appeal is confined to the correctness of the impugned order of the CESTAT dismissing the CST’s appeal at the threshold after holding that the decision of the COCC was vitiated for non-application of mind. It is evident from the order of the Full Bench that the CESTAT could not have gone into the merits of the decision. Consequently, in the present appeal the Court cannot permit the Respondent to challenge the decision of the COCC. It will, however, be open to the Respondent to raise such challenge to the decision of the COCC in any other appropriate proceedings, if permissible, in accordance with law.
Service Tax Appeal No. 56279/2013 along with the miscellaneous application No. 59967/2013 shall be listed for directions before the CESTAT on 1st October, 2015.

Decision: Appeal allowed.

Comment:The analogy of the case is that In view of decision of Full Bench of High Court, Tribunal cannot examine beyond factum of decision having been taken by Committee.
Present appeal filed by Revenue on correctness of order of dismissal by Tribunal by holding that decision of Committee of Chief Commissioners vitiated by non-application of mind. Assessee is at liberty to challenge decision of Committee before appropriate proceedings, if permissible.

Prepared By: Monika Tak

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PJ/CASE LAW/2015-16/3033

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