Whether Tribunal can pass an order by relying on its earlier order which was not in existence?

PJ/CASE LAW/2016-17/3038

Case:V. SATHYAMURTHY AND CO. Vs CESTAT, CHENNAI

Citation:2015 (40) S.T.R. 65 (Mad.)

Brief Facts:This appeal arises out of an order passed by the Customs, Excise and Service Tax Appellate Tribunal, directing the appellant to make a pre-deposit of Rs. 2 crores, as a condition for entertaining the appeal.
The appellant is a partnership firm carrying on business as Civil Engineering Contractors. They have executed several projects for the Tamil Nadu Slum Clearance Board, Tamil Nadu Housing Board and Tamil Nadu Police Housing Corporation Limited.
On 25-2-2011, the Officers attached to the Preventive Unit, Salem Commissionerate of the department of Service Tax, inspected the premises of the appellant and recorded a statement of the Managing Partner. Thereafter, a show cause notice dated 19-10-2011 was issued, contending that the appellant had rendered services, which attract payment of Service Tax under various sub sections of Section 65. The total Service Tax liability of the appellant was quantified at Rs. 7,71,71,776/- for the period from 1-4-2006 to 31-4-2011.
Though the appellant was granted an opportunity of personal hearing, the appellant appears to have failed to appear for all the hearings. Therefore, an ex parte order was passed on 14-2-2014.
As against the said order, an appeal was filed. But, the appeal was dismissed. Therefore, the appellant filed an appeal before the Tribunal on 20-5-2014 with two applications, one for stay and one for waiver of pre-deposit condition.
Even before the Tribunal, the counsel for the appellant did not appear. Therefore the Tribunal passed an order directing the appellant to deposit Rs. 4 crores as pre-condition for entertaining the appeal. The appellant, thereafter filed an appeal in C.M.A. No. 300 of 2015 before this Court. By an order dated 26-2-2015, this court allowed the appeal and remanded the matter to the Tribunal to give one opportunity to the appellant to appear before the Tribunal.
After the order of remand, the counsel for the appellant appeared before the Tribunal and after hearing the arguments, the Tribunal passed a fresh order on 3-6-2015, directing the appellant to make a pre-deposit of Rs. 2 crores. This order further directed the appellant to pay only the balance amount after adjusting the deposits that he had earlier made. The appellant had deposited a sum of Rs. 48,60,872/- on various dates. They have also deposited another sum of Rs. 50,00,000/- to show their bona fides before the miscellaneous petition was ordered by the Tribunal. The net result is that the appellant has deposited more than about Rs. 98.60 lakhs. As a consequence of the order passed on 3-6-2015, the appellant is to make payment of the balance amount of little over 1.10 crores. Aggrieved by the said order, the appellant is before this court.
The total liability determined by the original order was Rs. 7,71,71,776/-. Out of the said amount, the appellant has now deposited nearly Rs. 98.60 lakhs. Therefore, the only issue to be considered is as to whether the appellant should be made to comply with the order of the Tribunal by depositing Rs. 1 crore more or not.

Reasoning of Judgement: The order of the Tribunal shows that the Tribunal had relied upon its earlier order dated 31-12-2014, to come to the conclusion that the balance of convenience was in favour of the revenue. But, the Tribunal has omitted to see that the earlier order dated 31-12-2014 had actually been set aside by this Court by the order dated 26-2-2015. Once the order is set aside and the matter is remanded, the Tribunal was obliged to look into the issue afresh. It is relevant to note that the earlier order dated 31-12-2014 was passed, in the absence of the counsel for the appellant. Therefore, placing reliance upon the earlier order was erroneous.

Decision: Appeal is allowed and Tribunal is directed to dispose the appeal on merits

Comment: The matter is related to pre-deposit. On second round of litigation, Tribunal has decided the matter against the assessee and directed pre-deposit of ` 2 crore. The Tribunal has passed the order relying on its earlier order which was set aside by the High Court.
Assessee has filed the appeal before High. The High Court held that the tribunal obliged to look into issue afresh, more so when earlier order passed in absence of counsel for appellant. The High Court held that as the Tribunal has decided the matter relying on its earlier order therefore the order of Tribunal is set aside.

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PJ/CASE LAW/2016-17/3038

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