2014 (5) TMI 1045 - HC - Service Tax

Denial of refund claim - Held that - it is not a show cause notice which would lead to any imposition of liability against the petitioner. In fact the petitioner had filed an application for refund and it is towards consideration of the same that the authority has issued a show cause notice, disclosing the prima facie findings, so as to afford an opportunity to the petitioner to put forth contentions which would counter the same effectively. Hence, neither can it be said that the show cause notice is totally non est; nor that it is without jurisdiction. It is under a specific statutory provision that the petitioner has invoked the power of refund conferred on the authority. In such circumstance, this Court is not persuaded to interfere with the proceedings at this stage, especially since entertaining the writ petition would eventually result in either rejection of the claim of the petitioner or allowing the same, which exercise this Court would not be entitled to embark upon, under Article 226. - Decided against assessee.

Summary

Issues:
Refund claim by works contractor under Finance Act, 1994 for exempted buildings' work not leviable to Service Tax; Show cause notice issued for refund claim; Pre-conceived issuance of show cause notice; Jurisdiction of High Court under Article 226 to entertain writ petition challenging show cause notice.

Analysis:
The petitioner, a works contractor assessed under the Finance Act, 1994, sought a refund for amounts paid for work on exempted buildings not liable to Service Tax. The appropriate authority issued a show cause notice (Exhibit P2) to the petitioner, questioning the refund claim and considering appropriation against pending arrears. The petitioner's counsel argued that the notice was pre-conceived, rendering it futile to approach the authority. However, the Standing Counsel contended that the notice was valid, citing a Supreme Court decision emphasizing High Court intervention only if the notice lacked jurisdiction to investigate. The Court noted that the notice aimed at assessing refund eligibility, not imposing liability, and provided the petitioner an opportunity to contest the findings effectively.

The Court found that the show cause notice was not void or beyond jurisdiction, as the petitioner had applied for refund under a specific statutory provision. Consequently, the Court declined to interfere with the proceedings at that stage, stating that entertaining the writ petition would lead to either rejection or acceptance of the claim, a decision not within the Court's purview under Article 226. Ultimately, the Court dismissed the writ petition while leaving the petitioner's contentions open for future consideration.