2012 (6) TMI 792 - HC - Service Tax

Summary

Issues involved:
The petition seeks quashing of Section 65(105)(zzd) and 65(39a) of the Finance Act, 1994 and a show cause notice issued by the Commissioner of Central Excise, Shillong.

Judgment Details:

Issue 1: Legislative Competence and Taxable Service Definition
The petitioner argued that the provisions of Section 65(105)(zzd) and Section 65(39a) are ultra vires as they pertain to services on erection, commissioning, and installation, falling under the domain of State Legislature. The petitioner contended that the work in question was not a taxable service as it was for security purposes, not commerce or industry. The petitioner also claimed that the demand was against circulars issued by the Respondent. The respondents argued that the impugned provisions cover only the service aspect in taxable service, not covered by State legislation. The petitioner's failure to respond to the show cause notice hindered the determination of service tax liability.

Issue 2: Legislative Competence and Tax Levy
The court examined the legislative competence of Parliament to levy service tax on erection, commissioning, and installation services. The petitioner cited precedents to support their argument that the levy was beyond legislative competence. The respondents countered that the notifications under Section 93 did not apply to turnover covered by taxable service. The court referenced previous cases to uphold the validity of the levy of service tax under Entry 97 of List II.

Separate Judgment:
The court emphasized that the coverage of erection, commissioning, and installation services under taxable service did not encroach on the subject matter of sale and purchase under Entry 54 of List II. The court deferred detailed consideration of the petitioner's submissions to the adjudicating authority, directing them to decide on the matter and provide a reasoned order. The petitioner was granted the option to pursue legal remedies if aggrieved.

Conclusion:
The writ petitions seeking the quashing of specific sections of the Finance Act and the show cause notice were disposed of by the court, with the matter deferred for adjudication by the relevant authority.