Custom, Excise & Service Tax Tribunal
Divisional Railway Manager vs Cce & St, Jaipur-Ii on 1 October, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Date of Hearing : 1.10.2013
No. ST/COD/58056/2013, ST/Misc./60542-60543/2013, ST/Stay/58055/2013 in Appeal No. 57471/2013
[Arising out of Order-in-Appeal No. 216(RDN) ST/JPR-II/2012 dated 27.12.2012 passed by the Commissioner (Appeals), Customs & Central Excise, Jaipur]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. Sahab Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
Divisional Railway Manager Appellant
Vs.
CCE & ST, Jaipur-II Respondent
Appearance:
Shri Joydeep Majumdar, Advocate - for the appellant Shri Rohit Dutta, Advocate Shri Govind Dixit, D.R. - for the respondent Shri Sanjay Jain, D.R. Coram : Honble Mr. Justice G. Raghuram, President Honble Mr. Sahab Singh, Member (Technical) F. Order No.57871/2013 Per Justice G. Raghuram :
These applications seek condonation of delay of 36 days in preferring the appeal and the other applications seek leave to amend the cause title to bring on record the Union of India, Ministry of Railways represented by the Secretary Railway Board, as the first applicant.
2. Proceedings were initiated for recovering service tax due on account of providing the taxable renting of immovable property service during the period 1.6.2007 to 31.12.2008. Railway property within the territorial limits of Ajmer, North Western Railways local jurisdiction was rented to several tenants. The rents received there from were considered by Revenue to be the taxable value received for having provided the specified taxable service. No ST-3 returns were filed nor any service tax remitted. Hence the Show Cause Notice dated 29.1.2010 was issued. The Show Cause Notice was addressed to the Divisional Railway Manager, North Western Railway, Ajmer. Thereafter the entire correspondence and adjudication process proceeded on the assumption that the assessee is the Divisional Railway Manager, North Western Railway, Ajmer. At no stage of the process, culminating into the adjudication order dated 13.5.2011 passed by the Supdt., Central Excise, Ajmer was the Union of India, Department/Ministry of Railways represented by either the Secretary/Chairman, Railway Board arrayed as a party to the adjudication proceedings. The adjudication order merely imposed a penalty of Rs. 200 per day from 16.3.2008, for failure to provide information regarding the provision of service and receipt of consideration in respect of the taxable service of renting of immovable property.
3. Aggrieved thereby, the Senior Divisional Manager, North Western Railway, Ajmer, preferred an appeal before the Commissioner, Central Excise (Appeals), Jaipur-I, who by the order dated 27.12.2012 rejected the appeal. Aggrieved thereby, the present appeal is preferred before this Tribunal under the provisions of Section 86 of the Finance Act, 1994, again by the Divisional Railway Manager, North Western Railway, Ajmer Division.
4. The material on record including the Show Cause Notice, the adjudication order and the order passed by the Commissioner (Appeals) clearly reveal that the taxable service of renting of immovable property is in respect of immovable property belonging to the Railways, a department of the Central Government.
5. Qua provisions of the Constitution (Article 300) and settled and binding precedential authority, it is clear and beyond disputation that suits or proceedings against the State can be pursued only in the name of the Union of India or the concerned State, as the case may be. It is axiomatic that neither the Secretary to the Government; the Railway Board nor as has been done in the present case, the Divisional Railway Manager, Ajmer Division may in law and per se represent the Indian Railways or the Union of India, in the absence of the Central Government being arrayed as a party. A decree passed against the Divisional Railway Manager cannot be executed against the Union of India nor can a decree or award passed against the Divisional Railway Manager be satisfied by drawals from the Consolidated Fund of India. The provisions of Chapter II, in particular, the elaborate provisions relating to procedure in financial matters set out in Articles 112 to Article 114 in the Constitution clearly indicate that a charge upon or an appropriation from the Consolidated Fund of India could only be in respect of expenditure of the Government of India. It is noticed in several cases, clearly oblivious of this fundamental constitutional mandate, proceedings are initiated against state actors instead of the State as duly designated under the Constitutional mandate.
6. This aspect, of the requisite procedural requirements for valid initiation of proceedings against Union of India or the Govt. of State; and how the State should be described in any such proceedings was considered in several decisions of the Supreme Court. In Chief Conservator of Forests, Govt. of A.P. vs. Collector and others - AIR 2003 Supreme Court 1805, the settled principles in this area were reiterated. The relevant observations in this decision, we extract:
11. It needs to be noted here that a legal entity a natural person or an artificial person can sue or be sued n his/its own name in a court of law or a Tribunal. It is not merely a procedural formality but is essentially a matter of substance and considerable significance. That is why there are special provisions in the Constitution and the Code of Civil Procedure as to how the Central Government or the Government of a State may sue or be sued. So also there are special provisions in regard to other juristic persons specifying as to how they can sue or be sued. In giving description of a party it will be useful to remember the distinction between misdescription or misnomer of a party and misjoinder or non-joinder of a party suing or being sued. In the case of misdescription of a party, the court may at any stage of the suit/proceedings permit correction of the cause title so that party before the Court is correctly described; however a misdescription of a party will not be fatal to the maintainability of the suit/proceedings. Though Rule 9 of Order I of C. P.C. mandates that no suit shall be defeated by reason of the misjoinder or non-joinder of parties, it is important to notice that the proviso thereto clarifies that nothing in that Rule Shall apply to non-joinder of a necessary party. Therefore, care must be taken to ensure that the necessary party is before the Court, be it a plaintiff or a defendant, otherwise, the suit or the proceedings will have to fail. Rule 10 of Order I, C.P.C. provides remedy when a suit is filed in the name of wrong plaintiff and empowers the Court to strike out any party improperly joined or to implead a necessary party at any stage of the proceedings.
12. The question that needs to be addressed is, whether the Chief Conservator of Forest as the petitioner/appellant in the writ petition /appeal is a mere misdescription for the State of Andhra Pradesh or whether it is a case of non-joinder of the State of Andhra Pradesh a necessary party. In a lis dealing with the property of a State, there can be no dispute that the State is the necessary party and should be impleaded as provided in Article 300 of the Constitution and S. 79 of C.P.C., viz., in the name of the State/Union of India, as the case may be, less the suit will be bad for non-joinder of the necessary party. Even post in the hierarchy of the posts in the Government set-up from the lowest to the highest, is not recognized as a juristic person nor can the State be treated as represented when a suit/proceeding is in the name of such offices/posts or the officers holding such posts, therefore, in the absence of the State in the array of parties, the cause will be defeated for non-joinder of a necessary party to the lis, in any court or Tribunal. We make it clear that this principle does not apply to a case where an official of the Government acts as a statutory authority and sues or pursues further proceeding in its name because in that event, it will not be as suit or proceeding for or on behalf of a State/Union of India but by the statutory authority as such. (emphasis added)
7. In view of the clear principles and binding precedents in this area, the adjudication order as confirmed by the order of the Commissioner (Appeals) in this case, (in circumstances where the Union of India, Ministry of Railways represented by the authorised designated authority was not arrayed as a party to the assessment proceedings) are incompetent and consequently the adjudicated liability cannot be recovered by lawful process of law, from the Indian Railways, a department of the Union of India or from any division thereof. The adjudicated liability, in the circumstances cannot be charged on the Indian Railways. Since the very initiation of assessment proceedings, in respect of the alleged liability to service tax of the India Railways is patently misconceived, the entire proceedings are a nullity. The appeal before us preferred by the Divisional Railway Manager is also, for reasons alike, mis-conceived and so are the Misc. applications.
8. On the aforesaid analysis, the Misc. applications are rejected. For reasons alike the substantive appeal No. ST/57471/2013 is rejected as mis-conceived.
9. A copy of this order be forwarded to the Central Board of Excise and Customs for information and issuance of appropriate guidelines to the field formation.
(Justice G. Raghuram) President (Sahab Singh) Member (Technical) SCD/ 1