Radico Khaitan Ltd. vs. Principal Commissioner of GST & Central Excise Delhi:

The appellant's grievance in the present proceedings under Section 35G of the Central Excise Act, 1944 is that the final order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) remanding the matter for fresh adjudication by the Commissioner is erroneous, inasmuch as, the Tribunal failed to discharge its obligations to consider the record.

The appellant was issued with a show cause notice which alleged that it was receiving services from M/s. Jefferies International Limited (JIL) and that for the period 2006-07 it was liable to pay service tax to the tune of Rs. 1,37,64,000/- and other amounts and penalties under the Finance Act, 1994. The show cause notice (dated 14.10.2011) was replied to and the allegations made by the Revenue were refuted. Apart from various submissions, the appellant contended that it had entered into an agreement dated 30.06.2006 with JIL and that the allegation with respect to its liability on account of a Memorandum of Understanding dated 20.04.2006 was not correct. The Commissioner accepted the assessee's contentions and dropped the demand discharging the show cause notice.

The relevant part of the order reflecting this aspect is as follows:—

“Now, the noticee has submitted the legal agreement dt: 30-06-2006 duly signed by them as well as by M/s. Jefferies with their reply to the show cause notice and has also produced the same for my perusal at the time of personal hearing. I find in the fact and circumstances of the present case the very first issue before me is whether the agreement dated: 30-06-2006 is a legal document are not as alleged in the impugned SCN, in as much as classification of services received by the noticee depends upon the sanctity of the said agreement as the same was discarded by the department ab-initio on failure of the noticee to produce the signed copy during the course of investigation.”

In the impugned order the CESTAT noticed this aspect and remitted the matter for de novo fresh consideration by the Commissioner in the following terms.

“After hearing both the parties and on perusal of record, it appears that in the instance case the main controversy is pertaining to the agreement between the service provider and service recipient. It is the allegation that in the memorandum of understanding, the scope has been enhanced and the new document has been given at the time of adjudication. The contention of the department is that both the agreements has different contents. When it is so, then we set aside the impugned order and remand the matter to the original authority to verify the genuineness of the agreement and decided the issue denovo but by providing an opportunity of hearing to the respondent. Fresh evidence, if need be, may be admitted as per law.”

Before this Court, the appellant contended that given the nature of findings by the Commissioner and the limited nature of the appeal by the Revenue - which did not appear to indicate any dispute vis-à-vis the genuineness of the agreement of 30.06.2006, the open remand on all aspects, was not justified.

 Learned counsel for the Revenue on the other hand submitted that the appellant had disclosed the existence of the agreement for the first time in the reply to the show cause notice and appears to have thereafter produced it and as a result it could not be verified. It was submitted that in view of these peculiar features, the remand order of the Tribunal was in order. It is evident from the consideration of the record that the Commissioner rendered elaborate findings on both the genuineness of the document (agreement dated 30.06.2006) as well as on its interpretation. Given these facts, if the Tribunal was in doubt as to whether the document was genuine, the least that it could have done was to limit the findings on remand while retaining Revenue's appeal on the file. This Court notices that CESTAT has been repeatedly passing remand orders virtually abdicating its responsibility as an Appellate Court. This trend is unhealthy given that it is the final Court of fact and is required to adjudicate both on the issues of fact and law, especially in matters such as the present one i.e. where the appeal before it was by way of the first appeal.

In these circumstances, this Court hereby sets aside the impugned order. The Tribunal is hereby directed to render specific findings on the issue after taking into account the submissions of the parties and calling for a limited remand findings on the issue of genuineness of the document alone. The appeal stands allowed in the above terms.