C.S.T. vs Karam Chand Thappar and Bros. (Coal Sales) Ltd.

This appeal is directed against the judgment and order of the learned Single Judge dated 22nd July, 2009 [ Karamchand Thapar and Bros. (Coal Sales) Ltd. Vs. Union of India (UOI), by which the learned Single Judge had been pleased to set aside the reasoned order passed by the Commissioner of Service Tax, Service Tax Commissionerate, Kolkata dated 27th November, 2007 which was passed in pursuance of the order passed by the learned Single Judge in the writ jurisdiction. Bereft of all the details, we record factual score as follows, which are relevant for the purpose of deciding this appeal :

The respondent-company claims to have been carrying on business of business auxiliary and as such, they applied under the provisions of the Service Tax Act for registration, so that they could discharge their statutory obligations. It is also its case, in Bhuvaneswar the registration has been granted for carrying on business of "business auxiliary". In Kolkata, similar application was made. However, the same was not decided within the stipulated time. Therefore, they claimed that in view of non-disposal of the application by fiction of law, they are deemed to have been registered under the heading business auxiliary.

Taking the aforesaid ground, the respondent-company filed a writ petition for appropriate order to bind the respondent on account of deemed registration. It appears from the record that the Commissioner by order dated 3rd September, 2007 issued a registration under the category of clearing and forwarding agent for which never applied for. Challenging the aforesaid order, the said writ petition was filed and the Hon''ble Justice Aniruddha Bose was pleased to pass the order directing the respondent authority to rehear the matter and decide afresh and by the said order it was made clear that the petitioner should go on carrying on business as business auxiliary and registration granted should be deemed to have been issued.

It appears that previously a show cause notice was issued by the department calling upon the respondent-company to pay service tax on account of carrying on business of clearing and forwarding agent, and the said show cause notice was replied to, and the adjudicating authority passed an unfavourable order against the respondent-company. Naturally, the respondent-company approached the learned Tribunal claiming that such an order was not sustainable under the law as the respondent-company had never carried on business of clearing and forwarding agent and it was the imagination or inference of the department that such business was being carried on. However, this aforesaid issue is pending adjudication before the Tribunal.

We find that the primary issue before the Tribunal is whether the respondent-company at the material point of time had been carrying on business as clearing and forwarding agent or not. In the meantime, the officer concerned, pursuant to the order of the Hon''ble Justice Aniruddha Bose [2008 (11) S.T.R. 577 (Cal.)] passed an order and found upon hearing that the applicant, the respondent-company had been carrying on business as clearing and forwarding agent. Therefore, it was stated that the application for centralized registration would fall under the category of clearing and forwarding agent u/s 65(25) of the Finance Act, 1994.

Challenging the aforesaid order, the writ petition was filed by the respondent-company on which the impugned judgment and/or order was passed.

It appears that the learned Trial Judge allowed the writ petition substantially and set aside the order and also held that the respondent-company was not carrying on business of clearing and forwarding agent, rather carrying on business of business auxiliary.

The present appeal has been filed by the department challenging the aforesaid order of the learned Trial Judge.

It is contended by Mr. Maity, learned advocate, appearing on behalf of the appellant that the observation of the learned Trial Judge with regard to the subject matter of the Tribunal was not called for. He submits that at all material times, the respondent-company has been carrying on business of clearing and forwarding agent and indeed huge amount of service tax has been collected from the customer and the same has not been deposited. Therefore, in order to dodge and/or evade the tax liability, this application for registration in the category of business auxiliary has been made, and this has been made in the year 2005 and after the issuance of the show cause notice and this was really resorted to intending to frustrate the action taken by the department. Accordingly, observation of the learned Trial Judge and also the direction will have serious adverse impact in the appeal pending before the learned Tribunal.

Per contra, Mr. Poddar, learned Senior Advocate, appearing with Mr. Gupta, contends that previous order passed by the department concerned is patently illegal and the same was done without any jurisdiction on the subject matter. His client had applied for registration for carrying on business of business auxiliary and did not apply for registration of clearing and forwarding agent. It is the department who either upon consideration of all the materials can reject or grant on merit. The provision of law is clear that in the event there is no rejection within certain point of time, the registration is deemed to have been granted and it is a fact that this application was kept pending for some time and after expiry of the stipulated time the order was passed and unilaterally the registration was granted under the category of clearing and forwarding agent for which no application was made.

While considering the contentions of both the parties, we are in agreement with the submission of Mr. Poddar that the application was made for registration under the category of business auxiliary, and no application was made for clearing and forwarding agent. Therefore, either the application ought to have been allowed or ought to have been rejected on its own merit without making any third party''s case. It may be the contention of the department that the respondent-company has been carrying on business as clearing and forwarding agent, but it is the precise issue before the learned Tribunal, and we fail to understand how the department concerned could prejudge the same. We are, therefore, of the view that the observation and findings of the department in the impugned order passed pursuant to the order of this Court that the respondent-company is liable to be registered in the category of business of clearing and forwarding agent, is not sustainable and the observation is, accordingly, set aside.

We also find substance in the submission of Mr. Maity that the learned Trial Judge has committed some mistakes while observing that the respondent-company has been carrying on business of business auxiliary. This is the precise issue before the Tribunal. The Tribunal is well equipped with all the machinery for deciding the matter with regard to nature of business being carried on and this can be thrashed out before it. The rejection of the application for registration of the business category cannot be done and it must be kept pending. Accordingly, the same is restored on file and this can only be considered after decision is rendered by the Tribunal. In the meantime, there must be some interim measure, and we feel that Justice Bose has not taken any measure till the decision of the Tribunal is arrived at, which we do hereby. We, therefore, direct the department to treat the respondent-company''s registration as the provisional registration in the category of business auxiliary and, accordingly, all the statutory obligations shall be discharged by-the company, Mr. Poddar''s client, from the date of making application for the time being.

We direct the Tribunal to hear out the matter within a period of three months from the date of communication of this order without fail, and after the decision is rendered, the department will take action in accordance with law. We clarify if before the learned Tribunal Mr. Poddar''s client succeeds to persuade that his client at all material time had and still has been carrying on business of business auxiliary, the application for registration shall be considered on its own merit. If Mr. Poddar''s client fails, our order treating his client''s registration as provisional shall not have any effect.

We also direct the learned Tribunal not to take note of the findings and/or decisions of the department or departmental officer or of the learned Trial Judge, and will decide on its own way in accordance with law.

Similarly, our direction for provisional registration shall not have any influence, or binding effect on the Tribunal.

The appeal is disposed of accordingly. Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.