Koluthara Exports Ltd. V. Union of India and The Additional Commissioner, Office of the Commissioner, Central GST and Central Excise and The Commissioner of Central Tax and Central Excise (Appeals)

WP(C)/6830/2021

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Koluthara Exports Ltd., engaged in processing and exporting fish, was initially not registered under the Central Excise Act as they believed their activities did not attract service tax. However, after a show-cause notice and subsequent orders, service tax was levied on them. The petitioner contested these orders, and the Tribunal ruled in their favor, stating their activities amounted to manufacturing. Despite this, the 3rd respondent issued a new order levying service tax for subsequent years, ignoring the Tribunal's earlier decision. The petitioner sought rectification of this order, which was denied by the 3rd respondent, leading to the filing of this writ petition.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 803544 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 28-09-2021
• Assessment Year: misc
• Other Referred Cases: Honda Siel Power Products Ltd. v. Commissioner of Income Tax, Delhi [2008 (221) E.L.T. 11 (S.C.)]
• Laws Referred To: Central Excise Act, Finance Act, 1994
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: P VIJAYAKUMAR; SREELAL WARRIER
• Assessee Lawyers: M NAMBIAR; K MATHAI; JOSON MANAVALAN; KURYAN THOMAS; PAULOSE ABRAHAM; RAJAKANNAN; KESHAVRAJ NAIR
• Keywords: Binding decision; Jurisdictional Tribunal; Manufacture; Rectification petition; Service tax
• Section: 74

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS TUESDAY, THE 28TH DAY OF SEPTEMBER 2021 / 6TH ASWINA, 1943 WP(C) NO. 6830 OF 2021 PETITIONER: KOLUTHARA EXPORTS LTD. KELTRON ROAD, AROOR P.O., ALAPUZHA-688534, REPRESENTED BY ITS MANAGING DIRECTOR, ANTONY VARGHESE. BY ADVS. M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM SRI.RAJA KANNAN SRI.KESHAVRAJ NAIR RESPONDENTS: 1 UNION OF INDIA REPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI-110004. 2 THE ADDITIONAL COMMISSIONER, OFFICE OF THE COMMISSIONER, CENTRAL GST AND CENTRAL EXCISE, P.B.NO.13, GST BHAVAN, PRESS CLUB ROAD, THIRUVANANTHAPURAM-695001. 3 THE COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE (APPEALS), I.S.PRESS ROAD, COCHIN-682018. ASGI.SRI.P.VIJAYAKUMAR, SRI.SREELAL N.WARRIER, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 28.09.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 6830 OF 2021 2 BECHU KURIAN THOMAS, J. ---------------------------------------- W.P.(C)No. 6830 of 2021 ---------------------------------------- Dated this the 28th day of September, 2021 JUDGMENT Petitioner challenges Ext.P7 order as well as Ext.P9 communication issued by the 3rd respondent rejecting the rectification petition filed by the petitioner against Ext.P7 order. Petitioner is engaged in the processing of raw fish, manufacture of frozen fish and its export. Claiming that the activity carried on by the petitioner amounts to manufacture and since the end product was claimed to be exported out of the country, petitioner had not registered itself under the Central Excise Act, since according to the petitioner, the activity did not attract serve tax. 2. However, petitioner was issued with a show-cause notice on 16.04.2007 proposing to treat the activity of the petitioner as a service. Pursuant to the objection raised by the petitioner, the adjudicating authorities rejected the same WP(C) NO. 6830 OF 2021 3 and confirmed the levy of service tax. Petitioner challenged those orders of adjudication before the Appellate Tribunal. After considering all the contentions raised by the petitioner, the Tribunal as the Appellate Authority, had, by Ext.P1 order dated 24.02.2020 allowed the appeals after finding that the activity undertaken by the petitioner amounts to manufacture and therefore, excluded from the purview of service tax. 3. While so, the respondents had initiated proceedings for the subsequent periods i.e., 2015-16 and 2016-17 wherein also identical issue, as covered by Ext.P1 order, was raised. By order dated 18.02.2019, the assessing authority confirmed demands of service tax on the petitioner. Challenging the two orders of assessment, petitioner had preferred two appeals as appeal No.50/2019 and 51/2019 before the third respondent. Since the jurisdictional Tribunal had already considered the question and rendered Ext.P1 order, petitioner assumed that the third respondent as a subordinate authority cannot enter into a finding contrary to that in Ext.P1. During the virtual WP(C) NO. 6830 OF 2021 4 hearing conducted, petitioner had pointed out the Tribunal's order. However, by Ext.P7 dated 19.11.2020, the 3rd respondent took a contrary stand and assessed the petitioner for service tax, treating the activity of the petitioner as a service. 4. Immediately, petitioner filed Ext.P8 and Ext.P8(a) seeking rectification of Ext.P7 order. Without even granting an opportunity of hearing, the 3rd respondent by Ext.P9 communication dated 25.2.2021, intimated the petitioner that the request for rectification of orders in appeal will amount to a revision of the order and that the same is not permissible under law. 5. I have heard Adv.Kuryan Thomas, learned counsel for the petitioner as well as Adv.Sreelal N. Warrier, learned Standing Counsel for the respondents. 6. It is noticed that Ext.P1 is an order of the jurisdictional Tribunal relating to the petitioner on an identical issue for an earlier assessment year. When identical issues WP(C) NO. 6830 OF 2021 5 are raised, that too by the same assessee for a subsequent year, the order of the jurisdictional Tribunal, which has become final too, is bound to be adhered to by the authorities subordinate to the Tribunal. Judgments or orders inter parties cannot be ignored. Viewed in that perspective, Ext.P1 can primarily be seen as a binding decision for the third respondent. 7. When binding decisions are pointed out and the same are not relied upon by the authority to render its decision, it will tantamount to an error apparent on the face of the record, as held in Honda Siel Power Products Ltd. v. Commissioner of Income Tax, Delhi [2008 (221) E.L.T. 11 (S.C.)]. Hon'ble Supreme Court had observed in the said judgment that the Tribunal in that case was justified in exercising the power under section 254(2) of the Income Tax Act, 1961, when it was pointed out to the Tribunal that the judgment of the coordinate bench was mistakenly omitted to be considered when the material was available on record. WP(C) NO. 6830 OF 2021 6 Acknowledging the said mistake it was held that the omission amounts to an error apparent on the face of the record enabling rectification. 8. Similar orders have been passed by other High Courts as well and the aforesaid proposition holds the field even now. The observation of the 3rd respondent in Ext.P9 that if the contention of the petitioner is accepted it will amount to a revision and not a rectification, according to me, is incorrect. The petitioner had brought the order of the Tribunal to the notice of the appellate authority still the said order of the Tribunal was not considered. Omitting to consider the order of a jurisdictional Tribunal by the subordinate authorities, when the same was brought to the notice of the authority, is certainly a ground for rectification. Therefore, refusal of the 3rd respondent to consider the petition for rectification filed as Ext.P8 and Ext.P8(a) is wrong in law. 9. Hence, I set aside Ext.P9 and direct the 3rd respondent to reconsider Ext.P8 and Ext.P8(a) petitions for WP(C) NO. 6830 OF 2021 7 rectification and pass fresh orders thereon after affording an opportunity of being heard to the petitioner. The wit petition is allowed as above. Sd/- BECHU KURIAN THOMAS JUDGE AJ/28.09.2021 WP(C) NO. 6830 OF 2021 8 APPENDIX OF WP(C) 6830/2021 PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE FINAL ORDER NO.20221- 20236/2020 DATED 24.2.2020 PASSED BY THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, BANGALORE. EXHIBIT P2 TRUE COPY OF THE SHOW CAUSE NOTICE NO.21/2018-19 ST (JC) DATED 13.4.2018 ISSUED BY THE JOINT COMMISSIONER TO THE PETITIONER FOR THE PERIOD APRIL 2015 TO MARCH 2016. EXHIBIT P2(A) TRUE COPY OF THE SHOW CAUSE NOTICE NO. 42/2018-ST DATED 15.10.2018 ISSUED BY THE ADDITIONAL COMMISSIONER TO THE PETITIONER FOR THE PERIOD APRIL 2016 TO JUNE 2017. EXHIBIT P3 TRUE COPY OF THE ORDERS-IN-ORIGINAL NO.11 & 12/2018-19 ST (ADC) DATED 18.2.2019 PASSED BY THE 2ND RESPONDENT. EXHIBIT P4 TRUE COPY OF THE APPEAL MEMORANDUM DATED 4.5.2019 IN APPEAL NO.50/ST/TVM/2019 (WITHOUT ANNEXURES) FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. EXHIBIT P4(A) TRUE COPY OF THE APPEAL MEMORANDUM DATED 4.5.2019 IN APPEAL NO.51/ST/TVM/2019 (WITHOUT ANNEXURES) FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT. EXHIBIT P5 TRUE COPY OF THE EMAIL DATED 11.11.2020 SENT BY THE COUNSEL FOR THE PETITIONER TO THE 3RD RESPONDENT AT THE TIME OF PERSONAL HEARING. EXHIBIT P6 TRUE COPY OF THE RECORD OF PERSONAL HEARING DATED 11.11.2020. WP(C) NO. 6830 OF 2021 9 EXHIBIT P7 TRUE COPY OF THE ORDER-IN-APPEAL NO.TVM- EXCUS-000-APP-419 & 420-2020 DATED 19.11.2020 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER. EXHIBIT P8 TRUE COPY OF THE PETITION FOR RECTIFICATION OF MISTAKE (WITHOUT ENCLOSURES) FILED BY THE PETITIONER UNDER SECTION 74 OF THE FINANCE ACT, 1994 DATED 4.12.2020 AGAINST ORDER-IN-APPEAL NO.TVM- EXCUS-000-APP-419-2020. EXHIBIT P8(A) TRUE COPY OF THE PETITION FOR RECTIFICATION OF MISTAKE (WITHOUT ENCLOSURES) FILED BY THE PETITIONER UNDER SECTION 74 OF THE FINANCE ACT, 1994 DATED 4.12.2020 AGAINST ORDER-IN-APPEAL NO.TVM- EXCUS-000-APP-420-2020. EXHIBIT P9 TRUE COPY OF THE LETTER NO.DIN- 20210258XJ000000C9E2 DATED 25.2.2021 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER. "