Service Tax - Department loses huge Case on Limitation
ONLY for failure on the part of the adjudicating authority to exercise jurisdiction vested in him, extended period is not invokable.
This was a huge case and had all the drama of Indian litigation and had gone up to the Supreme Court at the stage of Stay.
The Commissioner had demanded a Service Tax of more than Rs. 87 Crores and imposed a penalty of Rs. 150 Crores on Sri Chaitanya Educational Committee for the Service Tax payable for the period 2003-2007.
The Tribunal granted full waiver of pre-deposit on the ground of limitation till the disposal of the appeal.
The Department was not impressed and took the matter to the High Court. The High Court of Andhra Pradesh set aside the order of the Tribunal and remanded the case by holding that the Tribunal ought not to have granted the order of stay or dispensation of pre-deposit without imposing conditions.
In remand proceedings, the Tribunal again did not order any pre-deposit keeping in view the fact of attachment of property valued at Rs 27 crores can be considered as enough security to safeguard the interest of revenue.
Against this order, the department filed appeal again in the High Court. The High Court held that the order of the Tribunal granting blanket waiver of pre-deposit ex facie constituted a clear erroneous exercise of discretion. In the High Court, Revenue suggested a pre-deposit of 50% of the service tax liability that is about 44 crores. The High Court ordered pre-deposit of Rs. 80 crores.
So, the Revenue got more than what it pleaded for. It asked for only 50 percent of 87 Crores, but it got 80 Crores!
Obviously, the party had to appeal to the Supreme Court, which it did. In the Supreme Court also, the Counsel for Revenue fairly pleaded for a pre-deposit of 50 percent of the tax and the Supreme Court allowed a pre-deposit of a third of the Service Tax demand, which would come to about Rs. 30 Crores. -
This case was decided by the Tribunal recently, by majority.
The Member (T) set aside the penalty of over Rs. 150 crores but confirmed the Service Tax;
Member (J) set aside most of the Service Tax of Rs. 87 crores on limitation and agreed with the Member (T) on setting aside the penalty.
The Third Member agreed with both the Members, with the result that most of the demand of over Rs. 240 crores, is gone on the ground of limitation. This is exactly the ground on which the Tribunal had granted unconditional stay in the first place five years ago.
In the course of his judgement, the Member (J) observed, only for failure on the part of the adjudicating authority to exercise jurisdiction vested in him, extended period is not invokable.
We will bring you this very recent judgement of the Tribunal tomorrow.