Bharat Sanchar Nigam Ltd vs The Principal Commissioner
2022 Latest Caselaw 1687 Raj/2

       HIGH COURT OF JUDICATURE FOR RAJASTHAN
                   BENCH AT JAIPUR

               D.B. Civil Writ Petition No. 1081/2020

Bharat Sanchar Nigam Ltd., Chief General Manager Telecom -
Rajasthan Circle- Through Chief Accounts Officer (F And C)
Sardar Patel Marg, C-Scheme, Jaipur - 302008.
                                                                   ----Petitioner
                                    Versus
1.     The Principal Commissioner, Central Goods And Service
       Tax    Commissionerate            Commissionerate-Jaipur,           Ncrb,
       Statue Circle, C-Scheme, Jaipur 302005.
2.     Assistant Commissioner, Central Goods And Service Tax
       Commissionerate Central Excise Building, Sector 10,
       Vidyadhar Nagar, Jaipur 302023.
3.     Secretary, Ministry Of Finance-Department Of Revenue-
       Government Of India, North Block, New Delhi - 110 001.
                                                                ----Respondents

For Petitioner(s)        :     Mr. Sanjeev Pandey
For Respondent(s)        :     Mr. Siddharth Ranka

HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI HON'BLE MR. JUSTICE SUDESH BANSAL

Order

23/02/2022

This petition is filed by the Bharat Sanchar Nigam Limited

(BSNL) to challenge an order dated 03.06.2019 passed by the

Assistant Commissioner, Central Goods and Service Tax Division.

Operative portion of this order reads as under:-

"I hereby sanction refund amounting to Rs.11,49,852/- (Rupees eleven lakhs fourty nine thousand eight hundred and fifty two only) (Rs.9,12,066/- against the Pre-deposit amount and Rs.2,37,786/- against the interest of pre- deposit) to M/s Bharat Sanchar Nigam Limited, Opp. GPO, MI Road Jaipur-302001 under Section 11B of Central Excise Act, 1944. I also order to adjust the above said refund claim of

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Rs.11,49,852/- against Government dues pending for recovery which was confirmed vide OIO No. JAI-EXCUS-000-COM-30-15-16 dated 06.08.2015."

Three more similar orders were passed by the said authority

dated 31.01.2019, 22.07.2019 and 16.09.2019. The petitioner has

challenged these orders also. This challenge arises in the following

background.

The Commissioner, Central Excise Commissionerate as

adjudicating authority had issued a show-cause notice to the

petitioner on 20.10.2014 calling upon why:-

            "(i)    Service      Tax     amounting     to
            Rs.13,05,49,937/-      [Rs.12,62,95,889    +

38,57,094 + 3,96,954] (including education cess) should not be recovered from them under Proviso to Section 73(1) of the Finance Act,

(ii) Interest should not be recovered under Section 75 of the Finance Act, 1994 on the short/non payment of Service Tax.

(iii) Interest of Rs.179568/- should not be recovered under Section 75 of the Finance Act, 1994 on belated payment of Service Tax.

(iv)Penalty should not be imposed upon them in terms of the provisions of Section 76, 77 & 78 of the Finance Act, 1994 for contravention of the provisions of Section 67, 68 and 69 of the Finance Act, read with Rule 4 and 6 of the Service Tax Rules, 1994."

The petitioner opposed the show-cause notice. The

adjudicating authority passed the order in original on 06.08.2015,

operative portion of which reads as under:-

(i) I confirm under section 73(2) of the Finance Act, 1994 service tax demand of Rs.12,62,95,889/- (Rs. Twelve Crore Sixty Two Lacs Ninety Five Thousands Eight Hundred and Eighty Nine Only) + Rs.38,57,094/- (Rs. Thirty Eight Lacs Fifty Seven Thousands and Ninety Four only) +

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Rs.3,96,954/- (Rs. Three Lacs Ninety Six Thousands Nine Hundred Fifty Four Only) including Education Cess and Secondary & Higher Education Cess and order it to be recovered from M/s Executive Engineer (E), Bharat Sanchar Nigam Limited, 1st Floor, new Admn, Building, Jhalana Dungri, Jaipur (Raj.) alongwith interest in terms of section 75 of the said Act.

(ii) I confirm the demand of interest of Rs.1,79,568/- (Rs. One Lacs Seventy Nine Thousands Five Hundred and Sixty Eight only) under Section 75 of the Finance Act, 1994 in respect of service tax late paid by M/s Executive Engineer (E), Bharat Sanchar Nigam Limited, 1st Floor, New Admn, Building, Jhalana Dungri, Jaipur (Raj.) for the period from April 2011 to September 2013.

(iii) I impose under section 78(1) of the Finance Act, 1994 a penalty equal to service tax Rs.12,62,95,889/- (Rs. Twelve Crore Sixty Two Lacs Ninety Five Thousands Eight Hundred and Eighty Nine only) + Rs. 38,57,094/- (Rs. Thirty Eight Lacs Fifty Seven Thousands and Ninety Four Only) + Rs.3,96,954/- (Rs. Three Lacs Ninety Six Thousands Nine Hundred Fifty Four only) payable and outstanding during 2009-10 to 2013-14 upon M/s Executive Engineer (E), Bharat Sanchar Nigam Limited, 1st Floor, New Admn, Building, Jhalana Dungri, Jaipur (Raj.). However, in terms of second and third proviso to section 78(1), if service tax of Rs.12,62,95,889/- (Rs. Twelve Crore Sixty Two Lacs Ninety Five Thousands Eight Hundred and Eighty Nine only) + Rs.38,57,094/- (Rs. Thirty Eight Lacs Fifty Seven Thousands and Ninety Four Only) + Rs.3,96,954/- (Rs. Three Lacs Ninety Six Thousands Nine Hundred Fifty Four only) and interest thereon is paid within a period of thirty days of the date of receipt of this order, the penalty payable shall be twenty five percent of the service tax subject to the condition that the amount of such reduced penalty is also paid within the said period of thirty days.

(iv) I impose penalty of Rs.10,000/- under section 77(1) of the Finance Act, 1994 upon M/s Executive Engineer (E), Bharat Sanchar Nigam Limited, 1st Floor, New Admn, Building, Jhalana Dungri, Jaipur (Raj.)"

The petitioner preferred appeal before the Customs, Excise

and Service Tax Appellate Tribunal. This appeal was disposed by

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an order dated 11.09.2018. Relevant portion of this order reads as

under:-

"10. Once no taxability is involved question of evasion of tax does not arise. The question for assessee to suppress or mis-represent the fact with the intent to evade tax also retains no relevant. Resultantly the department was not entitled to invoke the extended period of limitation. Show cause notice is thereof held to be time barred. Resultantly, we opine, that commissioner has wrongly imposed the penalty, while adjudicating a time barred show cause notice.

11. We accordingly set aside the order under challenge and allow the appeal."

Thus by an appellate order, the Tribunal had set aside the

order in original passed by the Commissioner. Despite this, when

the petitioner applied for refund of a sum of Rs.98,04,713/-

deposited by way of pre-deposit to file appeal before the Tribunal,

the Deputy Commissioner issued a show-cause notice and

proposed to adjust the refund against pending recovery of the

Government confirmed vide order in original dated 06.08.2015

amounting to Rs.1,20,87,217/-. He passed the final order thereon

on 31.01.2019, relevant portion of which reads as under:-

"In view of above, I find that the refund of pre- deposit of Rs.98,04,713/- is payable to the assessee. However I adjust confirm demand of Service Tax amounting to Rs.42,54,048/- and Penalty amounting to Rs.42,54,048/- and interest of Rs.12,96,617/- of OIO dated 07.08.2015 from the pre-deposit amount of Rs.98,04,713/-. However an interest amounting to Rs.22,82,504/- of OIO dated 07.08.2015 remains recoverable despite adjusting the entire pre-deposit amount of Rs.98,04,713/- In view of above, I pass the following order:-

ORDER I hereby sanction refund amounting to Rs.98,04,713/- (Rupees ninety eight lakhs four

(5 of 8) [CW-1081/2020]

thousand seven hundred and thirteen only) to M/s Bharat Sanchar Nigam Limited, Trunk Room, First Floor, TAX Building, PGMTD, Campus, M.I. Road, Jaipur-302001 under Section 11B of Central Excise Act, 1944. I also order to adjust the above said refund claim of Rs.98,04,713/- against Government dues pending for recovery which was confirmed vide OIO No.JAI-EXCUS-

000-COM-30-15-16 dated 06.08.2015 amounting to Rs.1,20,87,217/-."

Learned counsel for the petitioner submitted that the CESTAT

has set aside the entire order in original. Thereafter there was no

scope for the adjudicating authority to withhold any part of pre-

deposit amount.

On the other hand, learned counsel Mr. Siddharth Ranka

appearing for the department submitted that the petitioner had

not challenged before the CESTAT two parts of demand of

Rs.38,57,094/- and Rs.38,69,054/- in the appeal that was filed

before the Tribunal. Such order of the adjudicating authority qua

these amounts therefore became final. The pre-deposit made by

the petitioner had to be adjusted towards such confirmed demand.

Deputy Commissioner has therefore committed no error in passing

the impugned orders. He pointed out that since against the

demand of the department of Rs. 1,20,87,217/-, the pre-deposit

came to only 98,04,713/-, the authority has passed further orders

adjusting the refund of the petitioner to the extent of deficit.

Certain important documents to enable us to come to correct

conclusions were not on record. At our request learned counsel for

the department has produced on record copy of the reply filed by

the petitioner to show-cause notice issued by the adjudicating

authority and the appeal memo filed by the petitioner to challenge

the order of adjudication. These documents are taken on record.

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From the materials on record what emerges is that in the

show-cause notice there were three different independent tax

demands. One was for a sum of Rs.12,62,95,889/- for providing

services to use towers by the petitioner. Second one was

Rs.38,57,094/- on account of discrepancy in the taxable value

shown in the ST-3 return vis-a-vis financial records and third was

of Rs.3,96,954/- under reverse charge mechanism in respect of

goods contract services from 01.07.2012 onwards. The petitioner

had filed a detailed reply to the show-cause notice however in the

entire reply only opposition was made to the proposed recovery of

Rs.12,62,95,889/-. In other words with respect to the other two

heads of Rs.38,57,094/- and Rs.3,96,954/- there was no ground

to oppose such demands. This reply to the show-cause notice is

quite elaborate which we have perused with the assistance of

learned counsel for the parties and thereby come to this

conclusion. In the appeal memo against the order of adjudication,

averments have been made opposing both these recoveries in

specific terms. However in the grounds in such appeal memo no

specific grounds are included. All grounds only concern the

opposition to the confirmation of demand of Rs.12,62,95,889/-

The prayer clause in the appeal memo is also specific and reads as

under:-

"set aside the impugned order dated 06.08.2015 passed by the Ld. Commissioner wrongly ordering for recovery Service Tax demand of Rs.126295889/- along with interest of Rs.179568, together with penalty of Rs.126295889/- and Rs.10,000/-; and"

Despite such facts, the Tribunal by the judgment dated

11.09.2018 has set aside the entire order in original and thus

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allowed the appeal as can be seen from the portion of this

judgment reproduced hereinabove.

In view of such facts, in our opinion the Deputy

Commissioner Service Tax could not have on his own interpreted

the judgment of the Tribunal as being limited to striking down the

demand of Rs.12,62,95,889/-. Learned counsel for the revenue

however vehemently contended that when there was no

opposition to other demands in the reply filed to the show-cause

notice and when the appeal of the assessee was also confined only

to the tax demand of Rs.12,62,95,889/-, the judgment of the

Tribunal must be seen in light of such facts. He may be right in

pointing out that the assessee had not filed any grounds opposing

these demands in the reply to the show-cause notice and the

prayer in the appeal memo is also limited to challenging the

principal demand of Rs.12,62,95,889/-. However it is not open for

the subordinate authority to interpret the judgment of the superior

Tribunal and bestow unto himself the powers to adjust the pre-

deposit amount by coming to the conclusion that the order setting

aside the order in original must be given limited effect. We are

conscious that even in the judgment the Tribunal has not

discussed any aspect of striking down the other two demands of

Rs.38,57,094/- and Rs.3,96,954/-. Even in such circumstances it

was the duty of the Deputy Commissioner to approach the

Tribunal and seek rectification of the order. The other clear option

was to challenge the same and have the offending portion of the

judgment set aside by the High Court. Without resorting to either

of these two remedies he could not have adjusted the pre-deposit

amounts as he has done in the present case. He was thus

labouring under a wrong belief and perhaps bonafide to protect

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interest of the revenue has passed the order which is challenged

before us. His intention however would not be sufficient to save

the order from the vice of illegality. He may if so advised challenge

the judgment of the Tribunal even now before the High Court if he

could make out good grounds for condonation of delay.

Under the circumstances subject to above observations

petition is allowed. Impugned orders are set aside. The

adjustment of the pre-deposit amounts of the petitioner made by

the Deputy Commissioner is quashed. The department shall

refund the said sum within a period of four months from today.

This would of-course be subject to right of the department to file

the appeal against the judgment of the Tribunal and if such appeal

is allowed surely it would be open for the department to raise the

demand of all such taxes from the petitioner. All pending

applications are also disposed of.

                                   (SUDESH BANSAL),J                                                    (AKIL KURESHI),CJ

                                   BRIJ MOHAN GANDHI/S-87









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