IMPORTANT POINTS
When a party keeps watching proceedings in other similar cases as a fence sitter, decision in those cases cannot furnish cause of action to the said party.
Interest and penalty cannot be levied on a tax which was not payable at all in law.

JUDGMENT

A.K. SIKRI, J.

By way of this appeal, correctness of the order dated June 22, 2016 passed by the Division Bench of the High Court is questioned. Vide the said order, Division Bench affirmed the order of the learned single Judge passed in the writ petition filed by the appellant herein and, thus, dismissed the writ appeal. Writ petition was filed in the High Court by the appellant challenging the validity of demand which was confirmed by the Joint Commissioner of service tax vide order dated February 27, 2008. Writ petition was, in fact, not considered on merits and was dismissed as barred by delay and laches of four years. The Division Bench has also concurred with the single bench thereby affirming its order.

2) Show cause notice dated August 23, 2007 was received by the appellant for non-payment of service tax on ‘commission paid to overseas agents’ under ‘Business Auxiliary Service’. The appellant contested the said show cause notice by filing his reply. However, rejecting the objections raised by the appellant, the Joint Commissioner confirmed the demand vide order dated August 27, 2008. Writ petition was filed in the High Court in March, 2012. As it was filed four years after the demand was confirmed, for this reason, writ petition and writ appeal of the appellant have been dismissed.

3) If one goes by the aforesaid facts alone, it may not be wrong to form an opinion that the challenge laid to the demand was belated. However, the question is as to whether the appellant had duly and satisfactorily explained the delay in approaching the Court after a period of four years. Entire focus of the arguments of the learned counsel for the appellant was on this aspect with the submission that the High Court totally overlooked and ignored the explanations given which furnished sufficient cause for approaching the Court in March, 2012.

4) In this behalf, the learned counsel referred to the following facts about which there is no dispute. As aforesaid, the show cause notice was issued to the appellant for non-payment of service tax on ‘commission paid to overseas agent’. It was for the period from July 9, 2004 to March 31, 2006 during which period the appellant was paying commission to the overseas agent. The Commission was being paid for the outsourcing of business of export of shoe-uppers for soliciting orders by the overseas agents on behalf of the appellant in foreign exchange. Simply put, the overseas agent was appointed by the appellant for securing export orders of shoe-uppers. On the orders which were so procured by the overseas agent and were given to the appellant, the appellant could make exports of shoe uppers. It is on these orders the appellant had paid commission to the foreign party. As per the respondent department, service tax was payable on the said commission as the said activity would come within the sweep of ‘Business Auxiliary Service’. That was a reason for issuing show cause notice and demand service tax from the appellant who was supposed to deduct the same on the payments made to a foreign agent.

5) The appellant had resisted the show cause notice by submitting its reply dated January 2, 2008 and stating that the liability of payment of service tax, on amounts being remitted to overseas agent, would not fall on the payment prior to June 16, 2005 in view of the inapplicability of The Finance Act, 1994. However, after the passing of the order by the Joint Commissioner on February 27, 2008 rejecting the aforesaid contention and confirming the demand of service tax, the said demand was not challenged immediately by filing statutory appeal which was available. Not only this, when the amount as confirmed vide order dated February 27, 2008 was not paid and the appellant was threatened with coercive action stating that his bank accounts would be attached, the appellant started making payments and paid the entire service tax in five instalments. Some of these instalments were paid in the year 2011 and one i