Service Tax - Appeals - No Time Limit for filing Stay Application
THIS is yet another interesting case, which shows how, the might of the Government, befalls a citizen and how the benevolence of governance is denied, Modi and Jaitley notwithstanding.
An assessee (a hospital) was served with an order demanding an irregularly taken CENVAT Credit of about Rs. 9 lakhs, with the associated interest and penalty. Before filing the appeal with the Commissioner (Appeals), the assessee paid the demand with interest, but did not pay the penalty. They did not file a stay application along with the appeal, but filed the stay application at the time of personal hearing. The learned Commissioner (Appeals) did not like this audacity and he rejected the appeal itself.
Pearls of wisdom from the order of the learned Commissioner (Appeals):
1. There is no explanation/elaboration whatsoever as to why and the reason for such admitted long delay and lapse in filing the said (stay) application dated 20.01.2014, when the same ought to have been necessarily filed along with their ST-4 application as is prescribed.
2. They cannot choose to file application in such haphazard and improper manner as and when they choose to do so, without observing the legal provisions in this regard which are binding on them.
3. There is no explanation also on their part with proper basis urged for allowing the same, if permissible, in the given circumstances. They cannot be allowed to file application belatedly for waiver of the penalties imposed on them (involving long and unexplained lapse and gap of more than seven months) in such manner for consideration by this Authority.
4. They cannot be allowed to profit from their own lapse and error. The provisions of Section 35F of the CEA are mandatory - if waiver application is not filed along with (simultaneously) the appeal memorandum (where penalty imposed is not deposited in full), the same is liable to be rejected as improper and not valid in law.
5. The position in this regard is well known and settled. In such binding circumstances, the proviso urged cannot be applied in their favour.
6. The issue is not also of mere technical, minor and procedural nature-it goes to the root of the issue involved.
7. The Lower Authority's Impugned Order has to be applied till it is stayed or reversed by a superior authority - not otherwise.
8. They cannot have the cake and eat it too.
9. The waiver application was required to be filed along with the appeal memorandum for its consideration, being dependent and relying thereon - not separately and in disconnected manner subsequently, and here further belatedly involving long and unexplained lapse and delay of more than seven months.
10. The error and lapse committed by them is serious and cannot be considered to be inconsequential/ignorable.
11. Revenue interests have to be safeguarded, as mandated in the sub-section.
12. Moreover, if their submission is accepted, the need for filing waiver application with appeal memorandum, as is mandated u/s. 35F would be rendered otiose and of no material consequence, in such circumstances, which cannot be allowed.
All great thoughts, but would have been nice, if the learned Commissioner knew a little law also.
Hon'ble Commissioner Sir,
1. Where is it laid down that the Stay application has to be filed along with the appeal?
2. Who has prescribed this condition?
3. What do they profit from their error and lapse?
4. When and where was this issue well settled?
5. What is the root of the issue?
6. You say, "The Lower Authority's Impugned Order has to be applied till it is stayed or reversed by a superior authority - not otherwise." - Do that, how can you reject the appeal?
7. How does having the cake and eat it too apply here?
8. How did you safeguard the revenue interests?
9. Where is it mandated in Section 35F that waiver application has to be filed with appeal memorandum?
The hospital filed an appeal before CESTAT.
The CESTAT observed, "contrary to the observations of the learned Commissioner about the legal position being settled, the settled legal position is that even if a stay application has not been filed, before rejecting the appeal the appellant should be given an opportunity to file such an application and consider the same rather than rejecting the appeal."
In the absence of any legal provision prescribing the time limit for filing stay application and having regard to the fact that appellant had filed application for waiver of pre-deposit before the appeal was being considered and personal hearing was granted, the Tribunal held that the Commissioner's decision to reject the appeal was not maintainable cannot be sustained.
Accordingly the impugned order was set aside and the matter was remanded to the learned Commissioner to consider the application for waiver of pre-deposit in accordance with law.
Now, what did the Commissioner (Appeals) achieve by this great order? He pretty well knew that the assessee would go in appeal to the Tribunal. If his intention was only to punish the assessee, he could have as well ordered pre-deposit; at least that would have saved the case doing a repeat round. Did he protect any Government revenue? Who bears the cost of appeal/remand/second time appeal?
Is this the governance that the Prime Minister talks about often? Is this the ease of doing business that the Finance Minister promises?