The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) directed denovo adjudication since the rectification order passed by original adjudicating authority on application under section 74 of Finance Act,1994 without hearing.
Ahmedabad Network Systems Pvt Limited, the appellant was engaged in the business of providing cable television services which were brought to the taxability under the provisions of Chapter-V of the Finance Act, 1994 with effect from 10.09.2004. The appellant could not pay service tax in timely manner. The search was conducted at the premises of the appellant and pursuant to which the show cause notice was issued determining the total service tax of Rs. 28,48,560/-.
Due to internal disputes of the appellant’s management, the hearing were not attended by the appellant and the order- in-original was passed ex-parte by the Adjudicating Authority. On receipt of order-in-original by the appellant, they noticed that there exists certain mistakes in the order-in-original and accordingly they preferred application for rectification of mistake under Section 74 of the Act.
The Adjudicating Authority considering the application for ROM passed the rectified order-in- original. Thereafter the appellant preferred appeal against the rectified order-in-original before the Commissioner (Appeals) as regards the imposition of penalty on the confirmed demand of service tax.
On the other side Revenue also preferred appeal against the rectified order-in-original before the same appellate authority. Commissioner (Appeals) dismissing the appeal preferred by the appellant and allowing the appeal preferred by Revenue by setting aside the rectified order-in-original and restored the order-in-original.
Shri Rahul Patel, Chartered Accountant appearing on behalf of the appellant submitted that the Adjudicating Authority considering the application of the appellant exercising the power under Section 74 rightly rectified the order by reducing the demand therefore, as per the provisions of Section 74, the Adjudicating Authority has correctly rectified the order-in- original.
On the other hand Shri P. Ganesan, Superintendent (AR) appearing on behalf of the Revenue reiterated the findings of the impugned order.
As per Section 74 it was evident that Adjudicating Authority can rectify own order only for the limited purpose i.e. if there is apparent error on the face of the order. It was evident that the rectification of the order was not made only on apparent error but the issue in the rectification of order was mixed question of law and fact that on which date service tax is leviable even the Cenvat credit issue also involve a detailed scrutiny.
The Tribunal viewed that the adjudication order does not suffer from apparent error whereas the issue under rectification was required a detailed analysis and therefore such issue could not have been decided by rectifying the order nor the issue which was rectified by the Adjudicating Authority was required to be agitated in an appeal and not by way of rectification. It was found that the appellant have not attended the hearing and the order was passed ex-parte. The rectification was made on the date provided subsequently to the Adjudicating Authority therefore, at the time of passing the order the data was not available before the Adjudicating Authority.
Since the adjudication order was passed without any hearing and as per the order there was error in computing the demand, the two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar Member (Technical) remanded the matter to the Adjudicating Authority for passing denovo adjudication order after considering the appellants submission to be made.
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