M/S. R.K. Interior And Exterior,(M/S R.K. Traders), Cuttack vs. Pr. Commissioner, GST, Central Excise, Bhubaneswar

Facts

The petitioner, M/s. R.K. Interior and Exterior, was issued demand-cum-show-cause notices for non-payment of service tax for the financial years 2015-16 and 2016-17, based on third-party data from the Income Tax Department. The Additional Commissioner, GST and Central Excise, Bhubaneswar, dropped the proceedings via an Order-in-Original dated April 28, 2023. Subsequently, the Commissioner, GST and Central Excise, Bhubaneswar, exercising powers under Section 84 of the Finance Act, 1994, directed the filing of an appeal. This resulted in an appeal being filed by the department, which was allowed by the Commissioner (Appeals) on November 22, 2024, holding the petitioner liable for service tax amounting to Rs. 75,63,563/- along with interest and penalties. The petitioner challenged these orders before the High Court.

Held

The High Court dismissed the writ petition on the grounds that the petitioner has an efficacious alternative remedy available under the Finance Act, 1994, to approach the Appellate Tribunal. The Court explicitly stated that it was not expressing any opinion on the merits of the case. The petitioner was advised to challenge the impugned Order-in-Appeal before the competent Tribunal, where they could raise all contentions, including jurisdictional issues. The Court disposed of the writ petition and any pending interlocutory applications.

Key Issues

1. Whether the appeal filed by the department before the Commissioner (Appeals) was barred by limitation under Section 85 of the Finance Act, 1994, as it was filed on August 1, 2023, against an Order-in-Original dated April 28, 2023. 2. Whether the Order-in-Appeal dated November 22, 2024, is non est and violates principles of natural justice because the adjudicating authority (Additional Commissioner) filed an appeal against its own order dropping proceedings, as directed by a higher authority. Petitioner's arguments: The petitioner contended that the departmental appeal was filed beyond the prescribed three-month period under Section 85 of the Finance Act, 1994, rendering the Commissioner (Appeals)'s order invalid. Furthermore, the petitioner argued that the adjudicating authority could not appeal against its own order, making the subsequent appellate order a violation of natural justice. Revenue's arguments: The revenue argued that Section 86 of the Finance Act, 1994, provides an alternative remedy to the petitioner by way of an appeal to the Appellate Tribunal. They contended that the issues raised by the petitioner involve factual determination and can be addressed by the Tribunal.