MAY 30, 2017

By G Jayaprakash, Advocate

IT is a settled issue that a vested right to a party at the time of initiation of proceedings cannot be unsettled till the end of the proceedings and the rights will be available till the case attains finality. This paper examines the validity of Notification No. 44/2016-S.T dated 28.09.2016 in the light of the reported opinion rendered by the Additional solicitor General in the moderation of mark case in CBSE's 2017 public examination for 12th Standard. It is reported that the ld. Additional solicitor General opined that the eligibility for moderation of marks remained as a vested right since such a right existed when application for examination was submitted by students and withdrawal of such a right by the executive is not permissible as held by the High Court of Delhi and CBSE has accepted the opinion and extended the moderation of marks as per existing rules and regulations.

Pecuniary limits for adjudication of cases are increased periodically for different category of officers over the years for different indirect taxes including Service Tax. Since the changes were for adjudication of cases by the junior level officers and all the first appeals from the decisions of the junior level officer up to the rank of Additional Commissioner being Commissioner (Appeals), no vested right of the party was affected by such decisions. Notification No. 44/2016-S.T dated 28.09.2016 made drastic changes in adjudication of Service Tax cases.

It is well known that an assessee is awarded a reasoned order only from the CESTAT and above and the ever declining percentage of success of departmental cases proves this point. Further, the mandatory pre deposit required for filing an appeal is also creating an additional burden for an assessee to seek justice in cases where judicial discipline is violated by ignoring the ratio of settled cases and confirmed demands. Prior to 28.09.2016 original orders where amount of duty demanded exceeded 50 lakhs, the cases were adjudicated by Commissioner and the appeal has to be filed before CESTAT on payment of 7.5% of the duty confirmed. As per the amendment carried out by Notification 44/2016-ST dated 28.09.2016, such benefit is restricted to those whose alleged evasion of tax exceeds two crores. When cases are decided by the Commissioners, appeals are before the CESTAT and the same is a vested right. First appeal by payment of 7.5% of tax confirmed before CESTAT is also applicable only in such cases. So when a Show Cause Notice is issued by the Commissioner before 28.09.2016 requiring showing cause before him, a right to appeal before CESTAT, on adjudication of the case, vests on the assessee. The assessee will be filing the reply within the stipulated period and waiting for the order in original for further appeal before CESTAT! Now corrigendum is being issued to show cause before the Additional/Joint Commissioners in such cases as per the revised powers of adjudication. Whether it is legal and proper to infringe the vested right of an appeal before CESTAT in such cases by re designating the adjudicating authority and forcing the assessee to pay another 10% of the duty to be confirmed for the already vested right of an appeal before CESTAT? Further more in the cases of frivolous Show cause Notices substantial amount will be blocked as pre deposits before the case is decided by CESTAT.

The opinion of the ld Additional Solicitor General of India, as appeared in press, in the CBSE case cited above regarding vested right of a student for moderation of marks appears to be squarely applicable in the case of Notification 44/2016-ST dated 28.09.2016 and the SCNs issued prior to that date is to be adjudicated by the respective commissioners and cases decided by Joint/Additional Commissioners are null and void. Will the CBE&C take a leaf from the opinion of the ld Additional Solicitor General in the CBSE case and clarify that the said Notification is having only prospective effect?