RITES Ltd vs Commissioner Of Service Tax Delhi

M/s RITES Limited, Gurgaon has filed this appeal against order-in- appeal no19/App01/STAX/Div-II/Delhi-I/07/976 dated t1h3 April 2009 of

Commissioner of Central Excise (Appeals), Delhi-I concurring with the rejection of the refund claim by the Deputy Commissioner of Service Tax,

Division-III, Delhi.

M/s RITES, vide their application dated 24th June 1998, had sought refund claim of Rs.13,05,690/-being tax stated to have been paid in excess as

providers of 'consulting engineers' service. They also sought clarification from the Directorate General of Service Tax, Central Board of Excise and

Customs, on their entitlement for refund because operation and maintenance of railway tracks as well as maintenance of rolling stock did not fall

within the ambit of that taxable entry. Director General of Service Tax informed the appellant that the service rendered by them was taxable under

that head as defined under section 45(48) of the Finance Act, 1994. During the pendency of this clarification, appellant deposited a further sum of

Rs.16,16,423/- for which refund was sought vide application dated 23rd  February 2001. Both these refund claims were rejected by the Deputy

Commissioner of Service Tax vide order dated 26th March 2001. The appellant thereafter filed two appeals before the Commissioner (Appeals) who,

vide order-in-appeal dated 21st November 2001 allowed consequential relief after setting aside the rejections. These orders were not challenged by

Revenue and thus acquired an undeniable finality.

Instead of complying with the order of Commissioner of Central Excise (Appeals), the original authority chose to issue show cause notice dated

28th September 2005 following which a refund of  Rs.2,45,172/- against the first refund claim was sanctioned while rejecting the remaining claims on

the ground of being barred by limitation of time. The impugned order concurred with the findings of the lower authority and hence this appeal.

In the grounds of appeal it is contended that the earlier order of the Commissioner of Central Excise (Appeals) should have resulted in sanction of

the refund claim without further delay. It is further contended that the refund sanctioning authority had failed to carry out the clear-cut direction of the

higher appellate authority which is a violation of basic norms of judicial discipline and that the action of the original authority is tainted by grave

impropriety in re-examining an order that had been set aside. It is also contended that the impugned order has failed to appreciate the amendments

made w.e.f 12th May 2000 which extended the period of refund from six months to one year.

Learned Authorized Representative contends that the order which had been set aside had not adjudicated upon the issue of limitation and hence it

was open to the proper officer to issue a show-cause notice and adjudicate thereon.

We have hard the rival contentions and cannot but fail to note that this is the second round of appeal. The orders of the first appellate authority in

the first round are crystal clear in setting aside the rejection of the refund claim after detailed appreciation of facts and circumstances in which the tax

had been paid by the appellant besides taking into account the eligibility of the appellant for the refund claim. The original authority was merely

required to implement the direction relating to consequential relief

Contrarily, it appears that the refund sanctioning authority took it on himself to sit in judgment on the higher appellate authority by issue of a fresh

notice for rejection on the ground of limitation without applying his mind to the scope of his authority, the extant legal provision and the importance of

judicial discipline in taxation. The failure of the first appellate authority in not appreciating the claims of the appellant does not appear to do credit to his

exalted level in the hierarchy, the breadth of administrative experience and the depth of understanding of tax law.

It is an accepted position in law, as well as in ethical practice, that all grounds to the detriment of an assessee are to be stated comprehensively and

completely in the first instance without resort to piecemeal objections. It would appear that the original authority in its determination to deny refund

sought to clutch at any straw to achieve that end. By resorting to such tactic, the original authority has, in effect, challenged the appellate as well as

the executive authority - by refusal to comply with the order of the former and refusal to acquiesce in the acceptance of that order by the latter.

The first order of the Commissioner (Appeals) having attained a finality, the original authority had no option other than to release the refund sought

In any proceedings under the tax laws, jurisdiction and limitation of time are the twin legs of maintainability. These are not subject to discretion of

flexibility by condonation and, thereby, a decision on merit - in favour of, or to the detriment of, the applicant - implicitly accepts the maintainability of

the proceedings. To reverse the legal sequence subsequently by raising maintainability in a fresh proceeding after having decided on merit is not only

an act of impropriety but is also indicative of an obduracy that exceeds normal fidelity to the institution.

Tax is, fundamentally, an intrusion into individual liberty; it is tolerated and finds acceptance to the extent that the competent legislative authority

has imposed it. That same tolerance and acceptance cannot be expected when the determination by the tax collector is seen to exceed legislative

sanction. It is for that reason that autonomy is conferred on the tax collector by law but subordinated to a hierarchical appellate mechanism created by

the competent legislative authority. In such a scheme for protection of the rights of the individual against arbitrariness of the tax executive, a lower

authority is mandated to comply with the orders of the higher appellate authority or to act in accordance with the decision of the reviewing authority.

Here the two have coalesced and, by its action of choosing a third option, the original authority has placed himself beyond the pale of acceptable

behavior.

This egregious act of indiscipline and impropriety on the part of the refund sanctioning authority has compelled the appellant to traverse needlessly

once more through the appellate process and has also added to the burden of an over-burdened appellate mechanism.

For the above reasons, we set aside the impugned order and also impose a cost of Rs.10,000/- on the Deputy Commissioner of Central Excise,

Service Tax Division -Ill, Delhi.

(Pronounced in Court)