Bom | CESTAT to exercise appellate jurisdiction as a fact finding authority; ‘cryptic order’ with a single observation set aside

Bombay High Court: S.C. Dharmadhikari and M.S. Karnik, JJ., allowed an appeal filed by the Commissioner of GST against the order of the Customs, Excise and Service Tax Appellate Tribunal, Mumbai.

Rashtriya Chemicals and Fertilizers Ltd. (assessee) was registered with the Central Excise Department. In 2009, the assessee entered into an agreement with the Central Railway for leasing out 416 wagons for 20 years. The Commissioner of Central Excise raised a service tax demand on the said activity. This was appealed against by the assessee and the CESTAT set aside the demand raised by the CCE and disposed of the entire appeal by a ‘single sentence order’ stating that there was no foundation in the show cause notice issued to the assessee in bringing out whether any service element is involved while renting the wagons to the Railways.

Not impressed by the manner in which the CESTAT dealt with the appeal, the High Court said: “It is by now well settled that in Appeal field before the CESTAT, it is required to refer to all the materials before the Commissioner (Appeals). The order passed by CESTAT is devoid of any reasons. It has only recorded an abrupt finding without discussing the issue raised before it and without mentioning any reason for the conclusion.”

It was next observed: “CESTAT while deciding the Appeal has to exercise its jurisdiction as a fact-finding authority. We find that the CESTAT has recorded only an abrupt finding without discussing the issue and without mentioning any reason for their conclusion.”

Holding that the ‘cryptic order’ was not sustainable, the Court remitted the matter back to CESTAT for such fresh consideration in accordance with law. [Commissioner (GST) v. Rashtriya Chemicals and Fertilizers Ltd., 2019 SCC OnLine Bom 666, dated 18-04-2019]

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