1. The Misc. application for early hearing is allowed. This appeal has been filed against the Order No. C.No. IV/16/38/05 ST.Tech dated 09.01.2006 issued by the Commissioner of Service Tax, Bangalore.
The appellant is engaged in the business of International Courier.
They are registered with the Excise Department under the category of 'Courier Agency'. In addition to Courier business, they undertake transshipment of commercial cargo through Air, which is known as 'International Freight'. They were of the opinion that International Freight service is not a taxable service under the Courier Agency service category in terms of Section 65(105)(f) of the Finance Act, 1944. However, they represented to the Commissioner of Central Excise vide their letter dated 20.03.2002 for a clarification on the applicability of Service Tax in respect of International freight.
The Commissioner of Service Tax, through the concerned Additional Commissioner, gave a clarification vide C.No./IV/16/38/2004-ST Tech/3855/04 dated 23.12.2004. In the said clarification, it was communicated that the activity mentioned in Sl. No. 2 of the appellant's letter does not come under the purview of Service Tax.
Based on the clarification, the appellant neither charged nor collected Service Tax on International Freight business. However, the appellant received a communication dated 09.01.2006 (which is impugned), informing that the clarification issued in letter dated 23.12.2004 is contrary to legal position and accordingly the said clarification is ab initio void and hence nullified. The appellant is aggrieved over the above clarification and has come before this Tribunal for relief.
3. S/Shri K.S. Ravi Shankar and N. Anand, the learned Advocates, appeared for the appellant and Shri R.K. Singla, the learned JCDR, for the Revenue.
(i) The impugned order/decision is ex facie illegal. This order is clearly an appealable one in law having been passed under the Act, as is evident from para 1 of the order, which states that the issue has been re-examined in accordance with legal provisions and the earlier decision dated 23.12.2004 has been held to be contrary to law and ab initio void.
(ii) The present appeal is filed in terms of Section 86 of the Finance Act, 1994. In terms of the above section, any assessee aggrieved inter alia by an order passed by a Commissioner of Central Excise under Section 73 or Section 84 of the Act may appeal to the Appellate Tribunal against such order. The appellant submits that the impugned order dated 09.01.2006 is nothing but an 'order' as envisaged under Section 86 of the Act and, therefore, the same is appealable before the Tribunal.
(iii) The order has been issued contrary to Section 84, having been passed without giving an opportunity and holding an enquiry in the manner required by law, and hence, the order is in gross violation of justice, equity, good conscience and fair play.
(iv) According to Black's Law Dictionary, the expression 'order' means - 'A mandate; precept; command or direction authoritatively given'. It is submitted that the impugned order dated 09.01.2006 is an 'order' as it satisfies the ingredients of an 'order' and, therefore, an appeal under Section 86 of the Act clearly lies before the Tribunal.
(v) The A.P. High Court in Divisional Forest Officer v. District Judge, Godavari District AIR 2002 AP 224, has examined the word 'order' occurring in Section 13 of the A.P. Forest Act 1967 and held that the term 'order' in legal parlance, would always indicate some expression of opinion which is to be carried out or enforced. In other words, an 'order' is a conclusion of a Court or an authority or a Tribunal upon any motion.
(vi) As per Advanced Law Lexicon by P. Ramanatha Aiyar, "an order is the mandate or determination of the Court upon some subsidiary or collateral matter arising in an action, not disposing of the merits, but adjudicating a preliminary point or directing some step in the proceedings.
(vii) The very fact that the Additional Commissioner of Service Tax, in his earlier communicated dated 23.12.2004, had clarified that the International Freight activity of the appellant did not fall under the ambit of Service Tax clearly indicates that the same was in the nature of an order or decision, having the effect of no tax liability as far as the appellant was concerned.
(viii) The Respondent has directed the appellants to discharge proper Service Tax liability during the period involved immediately.
It is therefore, submitted that the impugned communication dated 09.01.2006 has adversely and manifestly faulted the interest in law of the appellant and has the effect of saddling the appellant with tax liability when there was none.Lala Shri Bhagwan and Anr. v. Ram Chand and Anr.
bodies which are given jurisdiction by statutory provisions to deal with the rights of the citizens, may be required to act judicially.
(x) Assuming that the impugned order is not under Section 84 or under Section 73 as it stood during the relevant period providing for demand of tax on the value of taxable services escaping assessment, the Section 73 provided for issue of Show Cause Notice on the 'assessee' and proceed to 'assess' or 're-assess' the value of taxable service under certain circumstances within certain specified time limit. The earlier communication of Additional Commissioner dated 23.12.2004 clearly held that the activity of International Freight did not come within the purview of Service Tax and the impugned letter has held that the earlier letter to be ab-initio void and nullified. Therefore, the communications were clearly in the nature of 'assessment orders'. The impugned order dated 09.01.2006 is, therefore, appealable under Section 86.In Commissioner of Central Excise v. Radhaballabh Silk Mills Pvt. Ltd. 2004 (169) ELT 165 (T-Mumbai), it was held by the Tribunal that a letter issued by the Department directing the assessee to determine classification and thereby declaring rights and imposing a fiscal liability on the assessee was an 'appealable order' and an appeal lies against the said communication. The ratio of the above citation is squarely applicable to the present case.
(xii) In the OIL Ltd. v. CC 1992 (59) ELT 477 (T-B2), it was held that the letter of information to the appellant that in respect of goods imported against REP license, no project import benefit would be available, is clearly a decision or order, even if it is not a proper order of adjudication. It would be an appealable order.
(xiii) The respondent should have afforded an opportunity of hearing and of making a representation and should have issued a Show Cause Notice before taking any decision on the earlier letter dated 23.12.2004, which has retrospectively created a liability. It is, therefore, submitted that the impugned order has seriously prejudiced the right, liability and position of the appellant. The order violates the principles as held in Travancore Rayons v. UOI ; Siemens Engg. & Mfg. Co. Limited v. UOI and Anr.
, East India Commercial Co. Ltd. v. CC 4. On behalf of the Revenue, it was stated that under Section 86 of the Finance Act 1944, an appeal can be filed if a person is aggrieved by the order/decision passed/made by the Commissioner as an Adjudicating Authority. The letter dated 09.01.2006 was not issued by the Commissioner as an Adjudicating Authority. It was a mere letter communicating to the assessee that their service is liable to Service Tax in view of the Board's Circular F.No. 341/43/96/TRU dated 31.10.1996. Hence, the appeal is not maintainable.
5. We have gone through the records of the case carefully. The appellant who is engaged in the activity of International Courier and International Freight is having registration for payment of Service Tax in the category of Courier Agency. However, they were of the view that their activity of International Freight is not liable to Service Tax.
They sought for a clarification in their letter dated March 20, 2002.
The said letter is very elaborate and gives the difference between International Courier and International Freight. In response to the above letter, the Additional Commissioner informed the appellant that the activity mentioned at Sl. No. 2 (International Freight) of their letter dated 20.03.2002 does not come under the purview of Service Tax.
We agree with the appellant that this is an 'order' which determines the rights of the appellant. The above order, indicating non-liability of the appellant to Service Tax in respect of International Freight, has been passed after due consideration of the detailed letter written by the appellant seeking clarification. When the department made its mind very clear, the appellant did not discharge service tax liability on the activity of International Freight. Neither did they collect the same from the customers. If this position is to be altered, then the course open to the Commissioner is to follow the procedure outlined in Section 84 of the Finance Act, 1994. In terms of Section 84, the Commissioner may call for the record of a proceeding, which has been taken by AC or DC subordinate to him and pass suitable order. In any case, such an order cannot be passed without giving an opportunity to the assessee of being heard. This is as per Section 84(2). In the present case, the decision communicated in the letter dated 23.12.2004 has been held to be ab initio void and the appellant has been directed to discharge proper Service Tax liability for the relevant period. This letter dated 09.01.2006 which is impugned, is indeed an 'order' and we hold that it is an appealable inasmuch as it alters the rights and liabilities of the appellant communicated in Commissioner's letter dated 23.12.2004. The impugned letter is definitely an order and there is no doubt about it in the light of the various decisions cited by the learned Advocate. This order has been passed without observing the Principles of Natural Justice in the sense that no Show Cause Notice had been issued and the appellant had not been heard before passing of the order. To this extent, the order violates blatantly the Principles of Natural Justice. After advising the appellant that they are not liable to Service Tax, all on a sudden, Revenue informs them that their earlier advice was not correct and they had to discharge the duty liability. The point is that no one is infallible. Anybody can commit errors. However, in an important matter like this, in order to rectify an earlier decision, action should be taken only in terms of law and also with due observance of the Principles of Natural Justice. What we want to emphasis is before reversing the decision communicated in letter dated 23.12.2004, a Show Cause Notice should have been issued and the appellant should have been heard. Inasmuch as these requirements had not been fulfilled, the order-dated 09.01.2006 is bad in law. We set aside the same and allow the appeal with consequential relief, if any