whether order of the Honble’High Court is binding on the Commissioner Appeals?

PJ/CASE LAW/2015-16/2953

Case: TRAVEL MASTERS INDIA (P) LTD. VersusCOMMISSIONER OF S.T., CHENNAI

Citation:2015 (40) S.T.R. 33 (Mad.)

Issue: whether order of the Honble’High Court is binding on the Commissioner Appeals?

Brief Fact:The issue relates to non-payment of Service Tax on incentives received from another company, who had developed software and that software is used by the petitioner company in its business. The software developers have given certain incentives to the petitioner company, which according to the respondent Department is taxable under Service Tax.
In the present case, the order passed by the Commissioner of Service Tax was challenged before this Court in W.P. No. 28666 of 2001 and this Court directed the petitioner to file an appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), within a time frame.
Admittedly, the petitioner did not comply with the said direction of this Court. That order was however later modified, giving liberty to the petitioner to file appeal before the Commissioner of Central Excise (Appeals) - the third respondent herein. It appears the petitioner filed the appeal belatedly and therefore, the Commissioner of Central Excise (Appeals) rejected the appeal stating that the direction of this Court has not been complied with and therefore, the appeal is dismissed as not maintainable and that order is under challenge in this petition.

Appellant contention: On prima facie case, the petitioner pleads that for the subsequent period, on the very same issue, the Assistant Commissioner of Service Tax, Chennai-I, passed an order dated 30-3-2012 in original No. 54/2012, determining the Service Tax, and that order was taken on appeal to the Commissioner of Central Excise (Appeals) in Appeal No. 135 of 2012 (MST), which was allowed by the Commissioner (Appeals) by an order dated 11-10-2012, holding as follows :
“5.02 I find from the records that the appellant were issued with show cause notice for non-payment of Service Tax on the incentive received from M/s. Galileo India Pvt. Ltd., for continued usage and patronage of the software developed by M/s. Galileo India Pvt. Ltd. The Department had alleged that the appellants by continued usage of the software are providing service by promoting the business of M/s. Galileo India Pvt. Ltd. Hence, they are liable to pay Service Tax on the incentive received by them. I find from the records that the Department had not made any effort to prove that there is service provider/received relationship between the appellants and CRS developer. When such relationship is not there, there is no service involved between them. The incentive is given by the CRS developer to the appellants as a loyalty amount for using their software for booking tickets. The appellants are only using the software provided by M/s. Galileo India Pvt. Ltd., but by any stretch of imagination it cannot be concluded that the appellants are promoting the business of M/s. Galileo India Pvt. Ltd. The department had not brought any corroborative evidence to prove this allegation. The contention of the appellants is that the amount received as incentive/commission has nothing to do with the service they are providing to their customers in air ticket booking. In support they have relied upon the case law of Tribunal Bangalore’s decision in the case of Kerala Publicity Bureau v. CCE reported in 2008 (9)S.T.R.101 (Tri.-Bang.). I find that the case law relied upon by the appellant is applicable to them......”
5.3. . . . . . . In fact the amount collected as incentive is in no way connected to the service rendered by the appellant to their clients in providing the service of booking air tickets nor it is billed to the clients. Hence, I hold that the appellants are not liable to pay Service Tax on the incentives received from M/s. Galileo India Pvt. Ltd.”
7. On the above prima facie plea, the learned Counsel for the petitioner pleaded that the Commissioner of Central Excise (Appeals) should be directed to hear the appeal No. 134/2012 (MST) on merits as in the above case. The present case was dismissed only on the ground that it has been filed, belatedly and that is purely the fault of the Counsel in choosing the forum of appeal. The delay it is stated by Mr. Sathish Sundar, Advocate is due to inadvertence.

Reasoning of Judgment:Though no reason has been given in the affidavit , the learned Counsel for the petitioner Mr. Sathish Sundar owns responsibility for the delay and the Court is inclined to accept the same and the apology. Accordingly, the impugned order is set aside and the writ petition is allowed directing the Commissioner, Central Excise (Appeals) the third respondent herein, to dispose of the appeal filed by the petitioner on merits, after considering the prima facie case as is prevalent at the time of disposal of the appeal. It is clarified that if the order of the Commissioner (Appeals) said to be in favour of the petitioner has been reversed or modified by higher forum then the same will be binding.
In the result, the writ petition is allowed as above. Consequently, connected miscellaneous petition is closed.

Decision: Petition allowed.

Comment:The crux of the case is that any order of higher forum, whether it is reversed or modified, same will be binding on lower authority.

Prepared By:Anash kachaliya

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PJ/CASE LAW/2015-16/2953

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