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Ghaziabad service tax presentation 8-7-2012

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Appellate Procedures, Advance Ruling & Settlement …

Appellate Procedures, Advance Ruling & Settlement
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Service Tax Law

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  • 1. Certificate Course on Indirect Taxes Appellate Procedures, Advance Ruling & Settlement under Service Tax LawOrganized By A Presentation ByThe Institute of Chartered Accountants of India Dr. Sanjiv Agarwal@ Ghaziabad . FCA, FCS,8th July, 2012 Jaipur © Dr. Sanjiv Agarwal 1
  • 2. Certificate Course on Indirect Taxes This Presentation covers  Appellate Procedures  Advance Rulings  Settlement Provisions 2
  • 3. AppealWhat is Appeal No absolutely fixed and definite meaning Creature of statute, not a fundamental right Appeal is- • Complaint or a petition • to a superior court or authority • against an order / judgment / injustice / error • done by a competent court or authority of a lower authority • with a request / prayer • seeking to remove • grievance / injustice done by such lower authority • involving reconsideration or review • of facts or law or both. Continuation of original proceedings and power of first appellate authority are co- extensive with those of original authority [Hastmatrai v. Raghunath Prasad AIR (1981) SC 1711] 3
  • 4. Appeal before Commissioner (Appeals) Commissioner (Appeals) is a Quasi (as if judicial, analogous to) Judicial Authority By Department (Section 84) (w.e.f. 19.8.2009) By Assessee /Aggrieved person (Section 85) 4
  • 5. Appeal before Commissioner (Appeals)Appeal u/s 84 Prior to 19.8.2009, Commissioner had power to review orders Commissioner can satisfy himself about legality/ propriety of any order passed by subordinate adjudicating authority Direct such authority to apply to Commissioner (Appeal) by an order. Order giving such direction to be issued within 3 months of date of communication of order of adjudicating authority Adjudicating authority to apply within one month to Commissioner (Appeal) Such application to be considered as appeal. 5
  • 6. Appeal before Commissioner (Appeals)Appeal u/s 85 Who can appeal - Any person aggrieved, other than revenue (somebody affected) Against what - Any decision or order passed Against which order - Orders passed by adjudicating authority subordinate to Commissioner (Appeals) [ Assistant / Deputy/ Joint/ Additional Commissioner] Date of filing - Date on which papers are received by the office of CCE(A). Date of posting or signing is not relevant Appeal u/s 85 only to Commissioner (Appeal) and not to Tribunal 6
  • 7. Appeal before Commissioner (Appeals) Decision / order appealed against must relate to following under Chapter V  Service Tax  Interest  Penalty Such order could be in relation to  Assessment order u/s 73  Denying of refund  Limitation period  Imposing penalty under various Sections viz, sections 76,77 or 78 Independent conclusion, not bound by CBEC instructions 7
  • 8. Appeal before Commissioner (Appeals) Form of Appeal • Appeals to be made as per prescribed rules (Rule 8) • No fee payable at first appeal stage • Prescribed form – Form No ST.4 • To be filed in duplicate • Accompanied by copy of order appealed against 8
  • 9. Appeal before Commissioner (Appeals)Filling Form Service Tax 4Mandatory Hints To be filed in duplicate Accompanied by order of adjudicating authority being appealed (original or attested copy) Form to be verified in prescribed manner To be accompanied by statement of facts and grounds of appeal To be signed by appellant or his authorized representative. To be datedOther points to be considered Attach power of attorney Prepare a index of papers / documents submitted Number the pages annexed. List out cases referred to / relied upon 9
  • 10. Appeal before Commissioner (Appeals) FORM ST-4 Under Section 85 of the Finance Act, 1994 (32 of 1994) Form of Appeal to the Commissioner of Central Excise (Appeals)1. No. of 20 ...............2. Name and address of the appellant.3. Designation and address of the officer passing the decision or order appealed against and the date of decision or order.4. Date of communication of the decision or order appealed against to the appellant.5. Address to which notice may be sent to appellant.5(A) (i) Period of dispute(ii) Amount of service tax, if any. demanded for the period mentioned in Col. (i).(iii) Amount of refund. if any. claimed for the period mentioned in Col. (i)(iv) Amount of interest(v) Amount of penalty(vi) Value of the taxable service for the period mentioned in Co!. (i). Cont….. 10
  • 11. Appeal before Commissioner (Appeals)6. Whether service tax or penalty or interest or all the three have been deposited?6(A) Whether the appellant wishes to be heard in person?7. Refund claimed in appeal. Statements of Facts Grounds of AppealSignature of the authorised Signature of the appellantrepresentative, if any appellant VerificationI,------------------------------------------------------------- the appellant, do hereby declare that what isstated above is true to the best of my information and belief.verified today, the --------------------day of ---------------------Place :Date :Signature of the authorised Signature of the appellantRepresentative, if any or his authorised representative 11
  • 12. Appeal before Commissioner (Appeals)Steps involved in Appeal Study order -in -original passed by adjudicating authority Amount Issues involved – classification / valuation etc. Limitation Penalties Specific issues – export / import etc. Examine the background Revenue intelligence Investigation / search Audit paras Show cause notice (SCN) Reply to SCN Cont……. 12
  • 13. Appeal before Commissioner (Appeals) Prepare a broad sketch / strategy for appeal Chronology of events / important dates Legal issues / interpretation involved Prepare  Statement of facts  Grounds of appeal Complete Form S T-4 (no fee for first appeal) File full set of papers / documents Stay application Personal hearing Evidences / written submissions Order 13
  • 14. Appeal before Commissioner (Appeals)Statement of Facts Identify important facts of case assessee Arrange them in chronological order of happening Highlight only relevant points  Name, address, type of assessee  Registration details  Taxable services covered  Nature of services / activities undertaken  Background of order in original o Audit o Investigation o Revenue intelligence o SCN  Reply to SCN – brief points  Order in original - brief points (whether principle of natural justice followed, evidences considered, speaking order etc)  Reasons for appeal Annexures / work sheets 14
  • 15. Appeal before Commissioner (Appeals)Grounds of Appeal Contains various grounds for appeal filing Lists issues on which order is being contested Particulars of order by which person is aggrieved Issues where relied upon facts are factually incorrect Issues where wrong classification has been done Issues where incorrect valuation is determined Issues involving legal interpretation and appellant / CCE not accepting the same Areas where adjudicating authority has erred in facts / law Adjudicating authority has not been just and fair Reasonable opportunity not given (principles of natural justice not followed) Speaking order / reasoned order not in place Judicial discipline not observed Precedents 15
  • 16. Appeal before Commissioner (Appeals) Time Period for Appeal Prior to 28.5.2012 (sub-section 3)  To appeal within there months from date of communication of order appealed against  Period of 3 months can be extended by further 3 months (total 6 months) by Commissioner (Appeals)  Condonation of delay/ extension beyond 3 months is beyond the power of Commissioner (Appeal) to be contd………. 16
  • 17. Appeal before Commissioner (Appeals)w.e.f. 28.5.2012 (sub-section 3A)  To appeal within two months from date of communication of order passed after 28.05.2012  Period of 2 months can be extended by further 1 month (total 3 months) by Commissioner (Appeals)  Condonation of delay/ extension beyond 1 month is beyond the power of Commissioner (Appeal) 17
  • 18. Appeal before Commissioner (Appeals) Extension up to 3 months (1 month w.e.f. 28.5.2012) will be allowed only if Commissioner (Appeals) is satisfied about appellant being prevented by sufficient cause from presenting the appeal within 3 months (2 months w.e.f. 28.5.2012) ( condonation of delay ) Sufficient cause would depend upon circumstances of each case / merit. Sufficient cause :Some thing adequate or enough- can not be a straight jacket formula for accepting/ rejecting the explanation. (contd..) 18
  • 19. Appeal before Commissioner (Appeals)• Condonation of delay has to be sought with clean hands and mentioning correct facts [Singh Enterprises v CCE (2008) 221 ELT 163 (SC); Bhilwara Zila Ex Service ……v Dy CCE, Bhilwara (2011) 24 STR 651 (Raj)].• Service of copy of order to advocate being a mandatory requirement of natural justice, its non compliance resulted on 260 days condonation of delay. Quality Constructions v CST, Bangalore (2011) 201 STR 713 (Cestat, Bangalore )].• No power to condone delay beyond 3 months [Sr. Suptd. of Post Office v. Union of India (2012) 34 STT 84 (Gujarat); Director of Mines & Geology v. CCE (Appeal) (2012) 34 STT 203 (Karnataka)]• Section 85 overrides provisions of Limitation Act 1963 in view of specific provision of 3 months.• Section 86 does not contain any express provisions for condoning delay and as such section 5 of Limitation Act would apply. 19
  • 20. Appeal before Commissioner (Appeals)Condonation of Delay Allowed+ Delay (within condonable limit ) not condoned by Commissioner (Appeals) holding poor health not a sufficient cause. Tribunal held the reasons of proprietress being pregnant as sufficient cause and delay condoned. [Bobby Tours & Travels Pvt Ltd v CCE (Appeals) Jalandhar (2011) 24 STR 371 (Cestat, New Delhi)].+ Marginal delay of 2-20 days could have been condoned on existence of sufficient reasons [Hindustan Zinc Ltd v CCE (Appeals), Visakhapatnam (2006) 199 ELT 360 (Cestat, Bangalore)].+ Delay of 2 days not to be held against substantive right of appellant to file appeal [ Birla Corporation Ltd v CCE, Bhopal (2007) 8 STJ 399 (Cestat, New Delhi] 20
  • 21. Appeal before Commissioner (Appeals)+ Delay to be condoned only if there is good case for the delay [Hindustan Devdut Tools Ltd. v. Union of India (1981) ELT 13 (Delhi)]+ Refusal to admit appeal on the ground that it is barred by limitation is appealable+ For limitation, time taken for obtaining certified copy to be excluded+ Time taken by court in winding up process held to be a sufficient cause+ ‘Sufficient cause’ must receive a liberal construction and justice oriented approach so as to advance substantial justice. Generally delay to be condoned in interest of justice where no gross negligence or deliberate inaction is not found – (2007) 11 STJ 186 (Madras)+ Delay of 30 days condoned on account of appellant’s sickness+ Delay due to change of standing counsel condonable by tribunal [CCE v. Rajendra Narain (2012) 281 ELT 38 (Delhi)]+ Failure of consultant should not result in denying to appellant remeady of hearing when delay was of only 30 days and Tribunal had powers to condone – Shaiekh Shahnawaz Ali v. CCE (2012) 26 STR 490 (Bombay) 21
  • 22. Appeal before Commissioner (Appeals)+ Delay of 26 days condoned when officer left the organization without handing over papers.+ Delay of 130 days not condoned by CCE (A) in appeal filed by revenue but condoned by Cestat so as to afford opportunity to petitioner government to pursue appeal.Condonation Denied_ Application not disclosing number of days delay; no cogent reason given for delay ; reasons given for delay flimsy – Delay not condoned by Tribunal [CST, Delhi v. Gautam Auto (2011) 24 STR 314 (Cestat, Delhi)]_ Closure of factory, lack of experience, order given to consultant etc not sufficient cause [ Singh Enterprises Ltd. v. CCE (2008) 121 ELT 163 (SC)]_ Inefficiency in organization (lower staff not informing) is not a sufficient cause._ Delay of 10 months for the reason of incorrect advise by consultant not condoned [Space Exim Pvt. Ltd v CCE Rajkot (2010) 25 STR 60 (Cestat, A’bad)]._ Service on daughter in law in same address is a proper service, delay not condoned- [Dhan Lashmi Steels v Cestat, Chennai (2012) 25 STR 126 (Madras)] 22
  • 23. Appeal before Commissioner (Appeals)Hearing / Order Commissioner (Appeal ) to hear the appeals, determine the appeal and pass orders, as he thinks fit Hearing is a statutory right – can not be denied Order includes order enhancing the amount of service tax / interest / penalty Service tax/ interest/ penalty to be enhanced only after provision of reasonable opportunity of showing cause against proposed enhancement 23
  • 24. Appeal before Commissioner (Appeals)Remand by Commissioner (Appeal) Section 35A (3)- Central Excise Act, 1944 CCE (A) has no powers to remand cases for fresh adjudication to original adjudication authority ( withdrawn in 2010) CCE (A) to- - make further enquiry, as may be necessary - pass such order - as he thinks just and proper  Confirming  Modifying  Annulling the original order / decision Cont…… 24
  • 25. Appeal before Commissioner (Appeals) CCE (A) continues to exercise power of adjudicating authority in assessment matters- order treated as order of assessment [MIL India Ltd (2007) 210 ELT 188 (SC); Enkay (India) Rubber Co Pvt Ltd; CCE Jallandhar v B.C. Kataria (2008) 221 ELT 508 ( P & H)] CBEC Circular No 275 /34/2006-CX 8 A dated 25.7.2008 and 21.8.2010 CCE (A) to exercise same proves and follow same procedure as he exercises in hearing appeals [section 85(5)] Remand Order dismissed [CST Kolkatta v Bahubali International Ltd (2011) 24 STR 473 (Cestat, Kolkata ); CCE v Automotive Manufacture Pvt Ltd (2012) 25 STR 70 (Cestat, Mumbai)] Circular No 275 /34/2006-CX 8A dated 18.2.2010-CCE (A) divested of power to remand case back to adjudicating authority in terms of section 35A (3) of Central Excise Act. Remand by CCE (A) justified when adjudicating authority violated principles of natural justice and assessee not given opportunity of SCN reply and hearing [CST Delhi v World Vision (2011) 24 STR 650 (Delhi)]. 25
  • 26. AppealNew Plea in Appeal New ground / plea at hearing stage generally not allowed. The High Courts, being the second appellate authority, generally do not allow new plea to be raised before the High Courts and have rejected the same. In the High Court, only question of law is decided. As such, new plea is not allowed before the High Court. The Tribunals have held that question of law, as a new plea, can be raised at any stage of appeal and allowed new plea on such ground. The stand of the Department for raising new plea for changing the category of service is not allowed by the Tribunal. New plea cannot be raised in the revisionary proceedings. If new plea is admitted, the other party should be given a reasonable opportunity of being heard. If new plea is admitted, the Tribunal generally remands the matter back to the lower authority for deciding the case afresh after taking into consideration the new issues raised before it, if any. 26
  • 27. AppealInterpretation Issues Settled law on interpretation of scope of taxing – constitutional power under article 246. Tax is on event of taxation or object Nature of tax levied (subject of tax) is different from measure of tax. Beneficial provision is to be interpreted and applied liberally but within the scope of provision Benefit of doubt must be given to assessee Dictionary meanings are helpful but not final. Once a phrase / expression is defined in statute, that definition alone will apply. It may or may not coincide with ordinary or natural meaning Cont…. 27
  • 28. Appeal If statutory provision on its plain reading leads to clear meaning, only that should be inferred out of it without any external aid Principle of strict interpretation applies to taxing statutes. One has to look merely at what is clearly said. There is no consideration for equity or presumption Purpose for which provision was made should also be seen – legislative intention Primacy to notifications over rules and rules over section need not be given Charging section can not be brought by notification Taxing statute can not be interpreted on any presumption or assumption. Purpose of provision must be kept in mind. It should give effect to legislative purpose Interpretation must depend on text and context. 28
  • 29. AppealJudicial Discipline / Precedent Order can not be passed which is inconsistent with judgment of apex court Tribunal’s decision have overriding effect over departmental clarification Larger bench decisions to be followed by smaller bench. Stay orders can be varied or vacated and are not precedents Decision delivered on peculiar set of facts can not be applied to situation in different set of facts One can not pick a sentence from here and there in judgment and characterize it to be ratio of case. Judicial propriety demands that coordinate bench to follow decision of another coordinate bench of same Tribunal [Gammon India Ltd v CCE (2011) 269 ELT 289 (SC)]. 29
  • 30. AppealNatural Justice Principle not capable of a definition root of judicial process to check arbitrary exercise of power duty to act fairly to secure justice or to prevent miscarriage of justice No person should be condemned or held guilty unheard or an opportunity should be given for being heard Orders without giving adjournment sought Denial of cross examination Non- return of RUDs 30
  • 31. AppealReasoned / Speaking order Countering grounds / defense Order should give reason for arriving at conclusion showing proper application of mind Order should be supported by reasons of rationality Out come of observance of principles of natural justice Orders without assigning any valid reason and without discussion are not- speaking orders Mere reproduction of submissions in the body of order is not enough. Findings of deciding authority on those submissions is necessary. Order must give specific findings on submission, judgments relied upon and distinguishing features pointed out by both parties Cryptic orders not bringing out reason why assessee faced demand set aside. 31
  • 32. AppealStay/ Waiver of Pre-depositSection 35 F Central Excise Act 1944 Pre-deposit : means deposit of duty (Service tax) and penalty pending the disposal of appeal. Any person desirous of appealing against the order shall pending the appeal, deposit the duty demanded or penalty levied thereon Right to appeal by itself does not waive requirement of payment of pre- deposit. To be paid unless it is waived or stayed. Duty demanded include – duty / service tax erroneous cenvat credit taken interest payable 32
  • 33. AppealPrinciples of Pre-deposit• Prima facie case, balance of convenience and irreparable loss has to be considered• On merely establishing a prima facie case, interim order of protection should not be passed.• When denial of interim relief may lead to public mischief, grave irreparable private injury or shake citizen’s faith in impartiality of public administration, pre-deposit could be waived.• ‘undue’ add some thing more to hardship, excessive hardship• Pre-deposit can not waived in every case of undue hardship, interest of revenue have also to be protected.• Balance of convenience must be clearly in favor of making an interim order with no indication of likely prejudice to revenue.• Twin considerations of undue hardship and conditions to safeguards interest of revenue must be kept in view. 33
  • 34. AppealWhen can pre- deposit be waived / stayed Opinion of CCE (A) or CESTAT Duty / penalty would cause undue hardship to appellant Deposit can be dispensed with / without conditions Conditions may be imposed as deemed fit to safeguard interest of revenue Pre deposit application to be considered by CCE (A) within 30 days from date of its filing (Circular No. 396 dated 2.6.1998); No time limit for tribunal. Pre deposit neither an absolute right nor ingredient of natural justice Appeal to be considered only on fulfillment of conditions of pre-deposit. Statutory right subject to conditions of grant Mere filing appeal does not amount to grant of stay Pre deposit of only duty and penalty are required Where demands are huge, advisable to simultaneously seek grant of stay / waiver of pre deposit. Cont……. 34
  • 35. AppealWhen can pre- deposit be waived / stayed Separate application to be made alongwith appeal (not after filing appeal) Application to request for stay of recovery of demand till appeal is decided Fee payable with stay application -  before Commissioner (Appeal) - Nil  before Tribunal - Rs. 500  by Department - Nil Pre deposit to be waived only if its non – waiver would result in undue hardship Undue hardship – depends upon facts and circumstances of each case Cont……. 35
  • 36. AppealWhen can pre- deposit be waived / stayed Principles followed –  prima-facie case in favour of assessee  balance of convenience qua deposit  irreparable loss if any to be caused,if stay not granted  discourage frivolous appeals  safeguarding of public interest No automatic stay / waiver Order for stay / waiver of recovery to be specifically passed, not assumed Sole discretion of appellate authority 36
  • 37. AppealDisposal of Pre -deposit Payment of amount as required for pre- deposit, Stay of pre-deposit, or Waiver of requirement of pre-deposit. 37
  • 38. AppealOut come of pre- deposit If stay granted – interim stay on demand till appeal is decided / 180 days If stay granted and appeal fails – demand becomes payable forth with If stay granted and appeal succeeds - pre deposit becomes refundable unless stayed by higher court Pre-deposit to be refunded within 3 months of communication of order to adjudicating authority After expiry of 3 months, interest on delayed refund is payable as per rate in section 11BB . Presently, (@ 6%p.a) During pendency of stay application, generally coercive steps are not taken for recovery; no interest can be claimed 38
  • 39. AppealDocuments required for refund of pre-depositFollowing documents should filed for claiming refund of pre-deposits made under section 35 F of the Central Excise Act, 1944 Application in plain form. Copy of order of Appellate Authority consequent to which the deposit made becomes returnable. Copy of Challan evidencing payment of pre-deposit (in original). Any other document in support of the refund claim. 39
  • 40. AppealPre deposit – some instances from Judicial pronouncements Retired appellant- pre deposit of Rs. 6 lakhs ordered in 12 instatements Partial pre deposit Pre deposit by way of bank guarantee allowed Mere financial hardship is not undue hardship- to be substantiate with evidence BIFR cases Even prima facie case is not enough but if it appear that demand raised has no leg to stand, it would be undesirable to require assessee to pay full / substantive part of demand [(2009) 237 ELT 3 (SC)] Order should be sustained on touch stone of fairness, legality and public interest. Where denial of interim relief may lead to public mischief, grave irreparable private injury or shake citizen’s faith in the impartiality of pubic administration, interim relief can be given [(2009) 23 STT 400 (Delhi)] Order rejecting appeal for want of pre-deposit on one hand and also rejecting the same on merits not sustainable [( Timeline Ship Management Pvt Ltd v CST, Mumbai (2011) 24 STR 312 (Cestat, Mumbai)] Discretion vested with appellate authority to dispense with pre-deposit. Enhancement not sustainable- [Hussnain International (2012) 25 STR 191 (SC)] 40
  • 41. Appeal Before Tribunal- Section 86 Finance Act, 1994- Second stage Appellate Platform- Appeal against order of Commissioner or Commissioner (Appeal)- Appealable order passed under section- - 73 Recovery of Service tax - 83 A Adjudication - 85 First stage appeal orders- Appellate Tribunal is called CESTAT(Customs, Excise & Service tax Appellate Tribunal ) 41
  • 42. Appeal Before Tribunal• Last court of appeal on facts• Bound to take note of all possible issues arising out of dispute including legal issues• Appeal before Tribunal to be preferred within 3 months from the date of communication of order by assessee• 90 days period can be extended on show of sufficient cause (period not specified ).• W.e.f. 28.5.2012, Department can file appeal within four months from date on which order to be appealed is received by Committee of CCCEs / CCEs• Both parties are entitled to file memorandum of cross objection within 45 days of receipt of notice.• Tribunal order are binding in nature unless it is set aside by superior authority• Procedures at CESTAT as per Cestat (Procedure) Rules, 1982. 42
  • 43. Appeal Before TribunalCestat Benches (6 in all) Principal bench at New Delhi Coordinate benches at Kolkata Mumbai Chennai Bangalore Ahmedabad 43
  • 44. Appeal Before TribunalLimitations of CESTATCESTAT functions with the following limitations as it cannot – grant compensation owing to unlawful action of revenue authorities. review its own order as any quasi judicial authority cannot review its own order. exercise powers beyond statute as it is a creature of statute only. It cannot issue writs or grant relief which ought to be granted by high court. comment on legitimacy of statute and has to presume legal validity of the provisions of Act and Rules. punish for its own contempt but has to forward it to high court for its consideration. act as a court as it is a tribunal and cannot be equated to a court. Members of tribunal are not judges and their decisions are orders, not judgments. over rule any high court judgment and are bound by judgments of high courts and Supreme Court. 44
  • 45. Appeal Before TribunalFee payable to Tribunal (w.e.f. 1.11.2004)Vide Notification No 31/2004-ST dated 25.10.2004 Amount of Service Tax/Interest/Penalty Involved Prescribed FeeRs. five lakh or less Rs 1,000More than Rs five lakh but not exceeding Rs fifty lakh Rs 5,000More than Rs fifty lakh Rs 10,000 Fee for Application for Rs 500 Grant of stay Rectification of mistake Restoration of appeal or application, or For any other purpose (clubbing of appeals, early hearing etc) No fee for - Filing memorandum of cross objection - Filing appeal by Department - Adjournment 45
  • 46. Appeal Before TribunalForms of appeal to Tribunal (Rule 9)u/s 86 (1) Form ST 5u/s 86 (2) Form ST 7u/s 86 (2A) Form ST 7u/s 86 (4) Form ST 6 (Memorandum of cross objections) 46
  • 47. Appeal Before TribunalForm ST-5- Filed by aggrieved assessee against order of CCE or CCE (A)- Within 3 months of communication of order- Filed in quadruplicate- Accompanied by four copies order appealed against, one of which shall be certified copy (certified by departmental officer)- Statement of facts- Grounds of appeal- Verified in prescribed manner- Dated & signed- Stay application to be filed simultaneously 47
  • 48. Appeal Before TribunalForm ST-6 Filed by assessee/ department Four copies of memorandum of cross-objections must be filed, duly signed and verified. Contain relief claimed in memorandum of cross objection Ground of cross objection – concise , under distinct heads without any argument or narrative, numbered consecutively Form ST-6 should be preferably typed in English or Hindi. It should be filed within 45 days of the notice. It has to be submitted to Appellate Tribunal. To be verified in prescribed manner Fill number any year of appeal as per notice 48
  • 49. Appeal Before TribunalForm ST-7 Used for appeal u/s 86 (2) and 86 (2A) Form ST-7 should be used for appeal to Appellate Tribunal under Section 86(2) or 86(2A) against orders under Section 85. Appeal should be filed in four copies. Four copies of order or decision appealed against should be attached (at least one such copy should be a certified copy). The form should be verified in the prescribed manner. Memorandum of cross objections should be made in Form ST-6 within 45 days of the receipt of notice. Appeal should be preferred within 3 months of the date on which the order sought to be appealed against is received by the Board or Commissioner. No fee is payable on filing of appeals under Section 86(2) or 86(2A) by the Department. Appeal under Section 86(2A) should be accompanied by copy of order of the Commissioner (Appeals) and copy of the order passed by the Commissioner directing the Deputy/Assistant Commissioner to apply to the Appellate Tribunal. 49
  • 50. Appeal Before TribunalAppeals before CESTAT – Some points Appeals decided on merit / ex-partie if appellant / respondent fails to appear on appointed date or fails to seek adjournment If appellant does not wish to appear in person or through AR, he may intimate that matter be decided on merit Clubbing of similar appeals can be sought Before main appeal is taken up, compliance of stay order to be advised Main appeal can be dismissed for non-compliance Certified Copy – Original copy of order received by party or copy duly authenticated by department Can be sent by registered post. Cont….. 50
  • 51. Appeal Before TribunalAppeals before CESTAT – Some points One appeal for each Order-in-Original. Each aggrieved person to file a separate appeal Date of presentation Typed in double space Tribunal in deciding appeal shall not be confined to grounds in appeal. Commissioner shall be made respondent. If appeal filed by department, assessee should be made respondent. Document authorizing representative to be attached to appeal memo. Same bench to hear application for rectification of mistake. 51
  • 52. Appeal Before Tribunal Appellant should prepare the appeal in proper paper book form To be submitted within one month of appeal  4 copies to be submitted  copies of documents  statements of witness  other papers referred in order  RUD’s etc Respondent can also file paper book Duly paged, indexed, taged, foldered Documents produced with appeal to be attested as true copy . At least 7 days before hearing, following may be submitted-  List of important events concerning dispute with respective dates  List of decisions of Tribunal, other authorities and judgments of high court/ Supreme court proposed to be relied upon during hearing . 52
  • 53. Appeal Before TribunalCESTAT orders Common order in group of appeals is permissible Division bench decision precedes the judicial authority over single bench decision. Law laid by DB to be followed by SB. Tribunal empowered to remand matters Tribunal can refer the matters to larger bench by way of reasoned orders, not just desire. Proceedings in open court. 53
  • 54. Appeal Before TribunalMonetary limits for filing appeal before Tribunal by Department Rs. 5,00,000 (w.e.f. 1.9.2011) Determinative element – Duty / tax under dispute alone Interest or penalty not be clubbed Where penalty is disputed – Further litigation only if amount exceeds Rs. 5 lakh No monetary limit for –  Challenge of constitutional validity  Notification / order / circular held illegal or ultra vires Same limit to apply to refund. 54
  • 55. Appeal Before TribunalRepresentation before CESTAT- POA/ Vakalatnama to be filed with appeal memo- A C.A. is allowed to represent his client’s case before CESTAT- Others eligible are • Cost accountant • Company Secretary • Advocate • Commerce graduate (H)/ post graduate • Post graduate in business administration / MBA • Retired employee of CBEC with > 10 years experience 55
  • 56. Appeal Before TribunalAppeal to Court (High Court, Supreme Court) Section 35 G of Central Excise Act, 1942 Against Cestat order Only when substantial question of law arises Within 180 days of receipt of order sought to be appealed against Prescribed fee Order of high court appealable in Supreme Court if high court certifies it to be fit for appeal. 56
  • 57. Appeal Before TribunalMonetary Limits for appeals by department (CBEC)(Instruction No 390/ Misc/ 163/2010-JC dated 17.8.2011) Monetary limit Before CESTAT > Rs 5 lakh Before High Courts > Rs 10 lakh Before Supreme Court > Rs 25 lakh Determinative element would be duty / tax under dispute If penalty or interest is under dispute and amount exceeds the limits, further litigation can follow. Same limits to apply in refund cases. Adverse judgments to be contested irrespective of amount if- - Constitutional validity is under challenge - Notification / Circular has been held ultra vires / illegal 57
  • 58. Revision Mechanism Introduced by Finance Act, 2012 Section 35EE of Central Excise Act, 1944 made applicable to Service Tax w.e.f. 28.05.2012 All appeals against Commissioner (Appeals) orders lied before Tribunal prior to 28.05.2012. Like Excise, in Service Tax also, revision authority shall hear matters relating to –  Cenvat Credit  Rebate of Exports to be contd…….. 58
  • 59. Revision Mechanism Revision by Central Government (Joint Secretary in MOF) Revision application to be heard and order passed Order may be annulled or modified Minimum amount of dispute Rs. 5000 To be filed within 3 months of communication of order Revision can be sought by CCE/ assessee Central Government can also suo moto revise No provisions for appeal against revisionary order. Only remeady is writ Jurisdiction Quasi judicial proceedings 59
  • 60. ADVANCE RULING IN SERVICE TAX Statutory provisions in Chapter VA of Finance Act, 1944 (Introduced by Finance Act, 2003) Section 96A to 96J Service Tax (Advance Ruling) Rules, 2003 The authority for Advance Ruling (Customs, Central Excise and Service Tax) Procedure Regulations, 2005 60
  • 61. ADVANCE RULING IN SERVICE TAX Pronounced by AAR (CE, C & ST), New Delhi Quasi judicial body Chaired by retired judge of Supreme Court To obtain in advance a ruling from AAR Rulings are final and binding in nature. Facilitate determination of a question of law or fact on liability to pay Service Tax Taxability of proposed service business activity to be provided Saves time consuming and costly litigation. 61
  • 62. Who can seek Advance Ruling a non-resident setting up a joint venture in India in collaboration with resident or non-resident, or a resident setting up a joint venture in India in collaboration with a non-resident, or a wholly owned subsidiary Indian company, whose holding company is a foreign company. an existing joint venture in India, a resident under any class of service, as the Central Government may notify (public sector companies notified vide Notification No 27/2009-ST dated 20.8.2009) a resident as an applicant who proposes to import any goods from the Republic of Singapore under Comprehensive Economic Co-operation Agreement (CECA). 62
  • 63. Conditions to be satisfied for seeking Advance Ruling by non-resident There must be existence of a joint venture or a proposal to set up a joint venture. Joint venture must be set up in India. Joint venture must be in collaboration with a resident or a non-resident. Atleast one person to be non resident Joint venture – participation by both parties Collaboration – financing / managerial / technical 63
  • 64. What is Advance RulingAdvance ruling is - a process of determination by the prescribed authority only of a question of law or fact relating to liability of service tax on proposed service to be provided by an applicant 64
  • 65. Benefits of Advance Ruling Clarity and certainty of tax liability or activities proposed to be undertaken Finality of issue and avoidance of litigation Speedy decisions (within 90 days) Inexpensive process Transparency and simple procedure (natural justice followed) Binding on applicant / Department No appeals against ruling 65
  • 66. Matters on which Advance Ruling can be sought Any subject touching upon question of fact or law relating to proposed service and its taxability  Scope of service regarding taxability  Classification of service into a particular category of service  Valuation of a service for charging service tax including valuation principles  Availability of exemption or any abatement  Applicability of notifications (not circulars)  Availability of Cenvat credit of duty or tax as per rules  Determination of liability to pay service tax.  Any matter relating to law in respect of above 66
  • 67. Who can be applicant (Section 96A)(i) (a) a non-resident setting up a joint venture in India in collaboration with a non-resident or resident; or (b) a resident setting up a joint venture in India in collaboration with a non-resident; or (c) a wholly owned subsidiary Indian company, of which the holding company is a foreign company, who or which as the case may be, proposes to undertake any business activity in India;(ii) a joint venture in India; or(iii) a resident falling within any such class or category of persons, as the Central Government may, by notification in the Official Gazette, specify in the behalf(iv) Public sector company can be applicant 67
  • 68. Advance Ruling binding on the applicant transaction on which ruling is sought, and the departmental officers concerned.  writ jurisdiction is invokable against advance ruling  if there is change in law, AR will not be binding 68
  • 69. Binding nature of Advance Ruling leads to Assessing officers (Commissioner or Officers subordinate to him) shall be bound to follow the advance ruling pronounced. Commissioner will not be able to exercise his revisionary powers to deviate from the ruling. No appeal is permissible against the advance ruling by anyone; i.e., applicant or the Commissioner. Once pronounced, advance ruling cannot be revoked, revised or altered. Advance ruling is binding on the applicant only and no one else. Advance ruling shall be in force so long as there is no change in law or rules and fact of the question. 69
  • 70. Application for Advance Ruling (Section 96C) Prescribed form and manner [Form AAR (ST)] Fee Rs. 2500 (non-refundable) Form to be duly singed and verified Contains Statement of Facts and Applicant’s Interpretation Can be withdrawn within a period of 30 days from date of application AR not to be given on pending/already decided questions To be rejected if matter already pending before assessing officer/ Tribunal/ Court Opportunity of being heard to be provided if sought in writing Copy of application also forwarded to Department Application can be allowed and Ruling pronounced if not rejected 70
  • 71. Conditions for rejection Opportunity of being heard should be granted to the applicant. Reasons for rejection of application shall be recorded and given in order Copy of order should be sent to both, Applicant and Commissioner of Central Excise. 71
  • 72. If allowed, AAR can Seek and examine further material placed before it by the applicant or obtained by the authority Provide an opportunity of being heard to the applicant before pronouncing the ruling, if, requested by the applicant, either personally or through authorized representative Pronounce its advance ruling on the question specified in the application. Advance ruling is to be pronounced in writing Advance ruling should be given within ninety days of the receipt of valid application Order of advance ruling should be signed by the members of the authority. Certified copies of the order should be sent to - (a) Applicant, and (b) Commissioner of Central Excise soon after the pronouncement of the advance ruling 72
  • 73. Applicability of Ruling (Section 96E) on the applicant himself on the Jurisdictional Commissioner and Assessing Officers pertaining to the applicant on the question of law or facts only on which advance ruling was sought can not be applied generally to all assessee 73
  • 74. Advance Ruling will be void if There is change in law There is change of facts Ruling was obtained by fraud or mis- representation of facts To be declared void by order in writing Copy of order to be sent to applicant / department 74
  • 75. Powers of Authority (section 96G) Discovery and inspection Enforcing the attendance of any person (applicant, officers, etc.) Examination on oath of any persons Issuing commissions, and Compelling production of books of account and other records Vested with power of civil court Proceedings to be judicial proceedings 75
  • 76. Procedures of AAR (section 96H) free to regulate its own procedure and functioning AAR (C, CE & ST) Procedure Regulations, 2005 Ruling procedures application filed in form AAR (ST) in four copies can be submitted in person / by post all annexures to be numbered and signed evidence that authorised person has signed on A-4 size paper date of filing is the date of receipt in office of AAR to be contd. …. 76
  • 77. Procedures of AAR (section 96H) in case of non-residents, postal address and email of representative in India / abroad scrutiny of application and intimation of deficiency serial number to be allotted notice for rejection order to be pronounced in open court 77
  • 78. Settlement Provisions in Service Tax Introduced by Finance Act, 2012 w.e.f. 28.5.2012 Sections 31, 32 and 32A to 32P of Central Excise Act, 1944 made applicable to Service Tax (section 83 of Finance Act, 1994) Service Tax (Settlement of Cases) Rules, 2012 notified (N.No. 16/2012-ST dated 28.05.2012) Objective to encourage quick settlement of disputes and save business from prosecution / penalties Principal bench at Delhi (benches at Mumbai, Calcutta, Chennai) 78
  • 79. Benefits of Settlement Quick settlement of disputes to avoid prolonged litigation A one time tax evader or an un-intending defaulter can make clean his affairs through Settlement Any defaulting person can admit his guilt, pay taxes with applicable interest and avoid further liabilities Settlement Commission can grant waiver/ reduction of penalty, fine or interest Settlement Commission can grant immunity from prosecution to assessee, its directors and partners 79
  • 80. Settlement of Cases Any assessee can approach the Settlement Commission The proceedings / cases should be pending with aggregate amount of more than Rs 3 lakh involved Application to Settlement Commission should be made with prescribed fee and in prescribed form Application once made, can not be withdrawn Application can be made by any assessee including directors or partners of firms Application can also be filed by two or more assessees and joint / co - noticees proceedings or case must be pending before the adjudicating authority on the date of application. A show cause notice should have been issued 80
  • 81. Settlement of Cases Application must make full and true disclosures before the Settlement Commission which is the very basis of settlement. Issues relating to recovery of Cenvat credit can also be taken up before the Settlement Commission Cases involving only penalty or cases which are pending before court or Appellate Tribunal shall not be entertained by the Settlement Commission. Cases involving interpretation of classification and valuation can not be taken up by Settlement Commission . 81
  • 82. Settlement Procedures Form SC (ST)-1 to be used Application in four copies Prescribed fee Rs. 1000 Accompanied by attested copies of all documents Duly signed and verified 82
  • 83. Information to be furnished in Form Details of show cause notice including period of dispute and service tax demanded in the notice Dispute in connection with which the application for settlement is made Adjudicating Authority before whom the notice is pending adjudication Details of service tax returns filed for the period of the dispute and the invoices of taxable services entered in the books of accounts Self attested copies of relevant service tax returns and extracts from books of accounts/register is to be enclosed along with the application to be contd…… 83
  • 84. Information to be furnished in Form Brief facts of the case and particulars of the issues to be settled and terms of settlement sought by the applicant Detailed calculations for the accepted service tax as payable for settlement and interest on the said admitted service tax Payment of the service tax along with interest arrived at as above Details of any application for settlement filed before the Settlement Commission, if any Details of the order debarring the applicant from making further application for settlement by any bench of the Settlement Commission Details of order of Settlement Commission making the order as void by any Benches of the Settlement Commission 84
  • 85. Settlement Procedures Forwarding application to jurisdictional Commissioner Report from jurisdictional Commissioner Copy of report can be supplied on fee (Rs. 5 per page) Attachment of property through jurisdictional Commissioner 85
  • 86. Appeal ManagementGot adverse adjudication order for the client? Don’t be disturbedAppeal is the solution 86
  • 87. Appeal ManagementWhat U require to get started is AttitudeAt SCN Stage At Appeal 87
  • 88. Appeal ManagementBe different from other professionals 88
  • 89. Appeal Management Count on your strengths 89
  • 90. Appeal ManagementAdd value to arguments at appeal stage 90
  • 91. Appeal ManagementPrepare well and Accept the challenge 91
  • 92. Labour hard on arguments and interpretation- theonly edge which could win the game 92
  • 93. Appeal ManagementBe confident and result oriented 93
  • 94. Appeal ManagementAfter all, practising litigation is a uniqueprofessional opportunity 94
  • 95. THANK YOU FOR YOUR PRECIOUS TIME AND ATTENTION Dr. Sanjiv Agarwal FCA, FCS, Jaipur asandco@gmail.comsanjivservicetax@gmail.com 95