CESTAT, AHMEDABAD BENCH
v.
Commissioner of Service-tax
ARCHANA WADHWA, JUDICIAL MEMBER
ORDER NO. A/24/9/WZB/AHD/2007
APPEAL NO: ST/265/2006
September 9, 2007
Section 74 read with section 76 of the Finance Act, 1994 - Rectification
of mistake - Whether once an appeal stands filed and
dismissed on whatsoever grounds, same attains finality and if no further appeal
is filed against that matter becomes final and cannot be reopened and that too
at level of the Asst. Commissioner, by filing any rectification of mistake
application - Held, yes - Whether mistake which has been referred to in
section 74 relates to clear mistake from records, which may be typographical
mistake or a calculative mistake or any arithmetic mistake and same by no
stretch of imagination, can be extended to an interpretation of legal provision
of law - Held, yes - Whether where mistake pointed out by assessee was a
mistake relating to method to be adopted for purpose of calculating number of
days delay for imposition of penalty, it could not be said that mistake was
mistake apparent from records and same definitely involved interpretation of
provision of law - Held, yes - Whether where appeal of assessee was dismissed
by Commissioner (Appeals) of non compliance of predeposit direction and same
was not appealed before Tribunal in such a scenario, assessee could not
approach original adjudication authority for fresh calculation of penalty
amount under guise of rectification of mistake - Held, yes (Paras 6 and 7)
FACTS
The assessee was a security service provider. Show-cause notice was issued to it alleging late deposit of service tax and thus proposing penal action against it. The Assistant Commissioner confirmed the demand and imposed equal amount of penalty under section 76 and penalties under other provision. The said order was put to challenge by the assessee before Commissioner (Appeals) along with an application for dispensing with the condition of pre-deposit of duty and penalty. The said application was decided by Commissioner (Appeals) vide his stay order directing the assessee to make a pre-deposit. Inasmuch as the assessee did not comply with the above stay order, its appeal was dismissed. The said order of Commissioner (Appeals) was not appealed against by the assessee. Subsequent to the above development, assessee filed an application in terms of section 74 for rectifying the mistake in the earlier order on the ground that the number of days delay in depositing the tax considered by the adjudicating authority was 12486 days instead of 1418 days and if the said mistake was modified the penalty amount would reduced. However, Addl. Commissioner vide his letter rejected the application. The assessee filed appeal against order of the Additional Commissioner before the Commissioner (Appeals) who proceeded to calculate the number of day’s of delay and arrived; at a finding that the same were to the tune of 6671 and the penalty amount would be Rs.6,67,111.
On appeal:
The order of Commissioner (Appeals) was self-contradictory inasmuch as
on one hand it was being observed that the earlier order-in-appeal, which had attained finality was not being
interfered with and on the other hand penalty amount was being reduced to Rs.6.67 lakhs. No doubt the provisions of
section 74 gives jurisdiction to the Central Excise Officer who passed any
order under the provisions of this chapter, to rectify any 'mistake apparent
from the record, within a period of 2 years of the date on which such order was
passed. Sub-clause 2 of the said section is to the effect that where any matter
has been considered and decided in any proceeding by way of appeal, the Central
Excise Officer may amend the order in relation to any matter other than the
matter which has been so considered and decided. A cumulative reading of the
above two sub-rules clearly indicate that the officer who has passed the order
can rectify the mistake, which was apparent
from the records. As such, it could be
safely concluded that the mistake which has been referred to relates to the
clear mistake from records, which may be a typographical mistake or a
calculative mistake or any arithmetic mistake. The same by no stretch of
imagination, can be extended to an interpretation of the legal provisions of
law. Inasmuch as in the present case, the mistake pointed out by the assessee
was a mistake relating to the method to be adopted for the purpose of
calculating the number of days delay it could not be said that the mistake was
a mistake apparent from records. The same definitely involved interpretation of
the provisions of law. This became clear from the fact that Commissioned
(Appeals) had herself also not accepted the assessee’s stand and had adopted a
different methodology for calculating the number of days delay. That showed
that the issue was not a simple issue of calculation but involves legal
interpretation. As such, first of all, it could not be said to be a mistake
apparent from the records. (
Secondly, the earlier order of the Asstt.
Commissioner was appealed against by the assessee and it’s appeal dismissed for
non-compliance with the provisions of section 35F. The result of such dismissal
was as if the order of the Assistant Commissioner had attained finality.
Admittedly the Appellate Commissioner’s order was not taken to appeal before
Tribunal. The question arises as to whether in such a scenario, the assessee
can approach the original Adjudicating Authority for fresh calculation of
penalty amount under the guise of rectification of mistake. The answer to the
above question was emphatic
“NO”. The strict interpretation to the expression “other than matter which has
been so considered and decided” given by Commissioner (Appeals) in the instant
matter to suggest that if the appeal was
dismissed for non-compliance, the matter could not be said to be
considered and decided by him, was not
in accordance with the principles of jurisprudence. Once an appeal stands filed
and dismissed on whatsoever grounds, same attains finality and if no further
appeal is filed there against, matter becomes final and cannot be reopened and
that too at level of the Asstt. Commissioner, by filing any rectification of
mistake application. Admittedly, the assessee was within the rights to
re-approach the Commissioner(Appeals) either for modification of the said order
or after depositing the directed amount, for disposal of appeal on merits.
Neither course having been adopted by the assessee, it was to be held that the
orders of Addl. Commissioner stood confirmed by Commissioner(Appeals) and could
not have been subsequently modified by him. (
In view of above, the Addl. Commissioners order
as contained in his letter rejecting the prayer for modification was correct
and Commissioner (Appeals)’s impugned order
lowering the penalty amount was not in accordance with law. However, there was no appeal by the revenue
against such reduction of penalty and
as such the same could not be enhanced to the original quantum of penalty. In any case, having held
Commissioner (Appeals) order was not
justified for interfering in the quantum of penalty, appeal was to be rejected on that, limited ground
itself. (