Case: M/s. Shoeline Vs. Commissioner of Service Tax &amp; Others

arise w.e.f. April 18, 2006. Relevant portion of the said order reads as under:"2. In view of the aforementioned judgments of the Honble Supreme Court, the service tax liability on any taxable service provided by a non resident or a person located outside India, to a recipient in India, would arise w.e.f. 18.4.2006, i.e., the date of enactment of section 66A of the Finance Act, 1994. The Board has accepted this position. Accordingly, the instruction F No. 275/7/201 0-CX8A, dated 30.6.2010 stands rescinded.3. Appropriate action may please be taken accordingly in the pending disputes."17. It is clear from the aforesaid circular that in pending disputes, the Government decided not to press for payment of service tax in such cases. Intention was clear, namely, this circular would not apply to those cases which were already over and were not pending on that date. Otherwise, all those persons who had already paid the demand earlier without protesting the same would start claiming refund of those payments. Therefore, this circular would not come to the aid of the appellant.18. Learned counsel for the appellant had relied upon the judgment of this Court in M/s. D. Cawasji & Co. & Ors. v. State of Mysore & Anr., (1975) 1 SCC 636. We have gone through the said judgment minutely. There is no need to discuss the facts of that case in detail. Suffice is to mention that in that case, claim for refund of the tax paid was made which tax was paid by mistake under legislation and was subsequently held to be void. The writ petitions were dismissed on the ground of delay and the Supreme Court upheld the decision of the High Court. We, therefore, fail to understand how this judgment helps the appellant. If at all, ratio of that judgment goes against the appellant.19. As pointed out above, insofar as present case is concerned, the appellant never challenged adjudicating orders dated February 27, 2008 and woke up only after the issue was settled in other cases.20. Having said so, we find one peculiar thing in the instant case. Though the service tax levied for the period in question was to the tune of Rs.11,62,728/- which stands paid by the appellant, liability on account of penalty and interest is also fastened upon the appellant. The legal position which is settled is that this service tax was not payable for the period in question i.e. July 9, 2004 to March 31, 2006 inasmuch as such a liability arises only w.e.f. April 18, 2006 after the insertion of the relevant charging Section 66A in the Finance Act, 1994. This legal position is not confined to only those who approached the Court but is a declaration of law. It can be treated as judgment in rem. We may reproduce following observations from the case of Arvind Kumar Srivastava & Ors.:"22. The legal principles which emerge from the reading of the aforesaid judgments, cited both by the appellants as well as the respondents, can be summed up as under."22.1. The normal rule is that when a particular set of employees is given relief by the court, all other identically situated persons need to be treated alike by extending that benefit. Not doing so would amount to discrimination and would be violative of Article 14 of the Constitution of India. This principle needs to be applied in service matters more emphatically as the service jurisprudence evolved by this Court from time to time postulates that all similarly situated persons should be treated similarly. Therefore, the normal rule would be that merely because other similarly situated persons did not approach the Court earlier, they are not to be treated differently.22.2. However, this principle is subject to well-recognised exceptions in the form of laches and delays as well as acquiescence. Those persons who did not challenge the wrongful action in their cases and acquiesced into the same and woke up after long delay only because of the reason that their counterparts who had approached the court earlier in time succeeded in their efforts, then such employees cannot claim that the benefit of the judgment rendered in the case of similarly situated persons be extended to them. They would be treated as fence-sitters and laches and delays, and/or the acquiescence, would be a valid ground to dismiss their claim.22.3. However, this exception may not apply in those cases where the judgment pronounced by the court was judgment in rem with intention to give benefit to all similarly situated persons, whether they approached the court or not. With such a pronouncement the obligation is cast upon the authorities to itself extend the benefit thereof to all similarly situated persons. Such a situation can occur when the subject-matter of the decision touches upon the policy matters, like scheme of regularisation and the like (see K.C. Sharma v. Union of India [K.C. Sharma v. Union of India, (1997) 6 SCC 721 : 1998 SCC (L&S) 226] ). On the other hand, if the judgment of the court was in personam holding that benefit of the said judgment shall accrue to the parties before the court and such an intention is stated expressly in the judgment or it can be impliedly found out from the tenor and language of the judgment, those who want to get the benefit of the said judgment extended to them shall have to satisfy that their petition does not suffer from either laches and delays or acquiescence.21. In a case like this, equities would be balanced by not insisting on payment of penalty and interest. Thus, when the appellant approached belatedly, it may not be entitled to refund of service tax already paid but at the same time, the appellant should not be called upon to pay any interest and penalty levied on a tax which was not payable at all in law. The High Court, to this extent, committed an error by not dealing with this aspect of the matter and dismissing the writ petition in its entirety.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]9. From the aforesaid narration of facts, one thing is clear. The Joint Commissioner had passed the orders on February 27, 2008. No statutory appeal was preferred by the appellant challenging that order. The writ petition was filed only in March, 2012. During this period, the appellant was also making payment towards service tax demanded by the respondents without challenging the order. The appellant now wants to take advantage of other litigation pending in respect of same subject matter. When the appellant had not challenged the demand and was merely sitting on the fence, watching the proceedings in other similar cases, the decision in those cases cannot furnish any cause of action to the appellant to file the writ petition. Law on this behalf is crystal clear.It is clear from the aforesaid circular that in pending disputes, the Government decided not to press for payment of service tax in such cases. Intention was clear, namely, this circular would not apply to those cases which were already over and were not pending on that date. Otherwise, all those persons who had already paid the demand earlier without protesting the same would start claiming refund of those payments. Therefore, this circular would not come to the aid of theis no need to discuss the facts of that case in detail. Suffice is to mention that in that case, claim for refund of the tax paid was made which tax was paid by mistake under legislation and was subsequently held to be void. The writ petitions were dismissed on the ground of delay and the Supreme Court upheld the decision of the High Court. We, therefore, fail to understand how this judgment helps the appellant. If at all, ratio of that judgment goes against the appellant.19. As pointed out above, insofar as present case is concerned, the appellant never challenged adjudicating orders dated February 27, 2008 and woke up only after the issue was settled in other cases.20. Having said so, we find one peculiar thing in the instant case. Though the service tax levied for the period in question was to the tune of Rs.11,62,728/which stands paid by the appellant, liability on account of penalty and interest is also fastened upon the appellant. The legal position which is settled is that this service tax was not payable for the period in question i.e. July 9, 2004 to March 31, 2006 inasmuch as such a liability arises only w.e.f. April 18, 2006 after the insertion of the relevant charging Section 66A in the Finance Act, 1994. This legal position is not confined to only those who approached the Court but is a declaration of law. It can be treated as judgment in rem.In a case like this, equities would be balanced by not insisting on payment of penalty and interest. Thus, when the appellant approached belatedly, it may not be entitled to refund of service tax already paid but at the same time, the appellant should not be called upon to pay any interest and penalty levied on a tax which was not payable at all in law. The High Court, to this extent, committed an error by not dealing with this aspect of the matter and dismissing the writ petition in its entirety.