2007 (9) TMI 684 - HC - Income Tax

Summary

Issues Involved:
1. Legality and validity of the investigation initiated by DGCEI.
2. Jurisdiction of the authority to issue summons.
3. Prematurity of the writ petition.
4. Petitioner's obligation to produce documents and cooperate in the investigation.

Summary:

1. Legality and Validity of the Investigation:
The petitioner, a Public Limited Company, challenged the investigation initiated by the Directorate General of Central Excise Intelligence (DGCEI) u/s 83 of the Finance Act, 1994 read with Section 14 of the Central Excise Act, 1944. The petitioner also contested the summons issued on various dates asking for documents and deposition regarding an enquiry into evasion of service tax and contravention of the Finance Act, 1994 and its Rules.

2. Jurisdiction of the Authority to Issue Summons:
The petitioner questioned the jurisdiction of the authority to issue the summons, arguing that the investigating officer himself admitted that he was not the appropriate authority to decide on the applicability of service tax at this stage. The petitioner cited the Supreme Court decision in Whirlpool Corporation Vs. Registrar of Trade Marks to argue that the High Court has jurisdiction under Article 226 of the Constitution of India to entertain the writ petition despite alternative statutory remedies.

3. Prematurity of the Writ Petition:
The respondents contended that the writ petition was premature as the investigation was still ongoing and the petitioner would have ample opportunity to present its case before the departmental authority. The respondents argued that the investigation was being conducted as empowered u/s 14 of the Central Excise Act, 1944, applicable to service tax via Section 83 of the Finance Act, 1994.

4. Petitioner's Obligation to Produce Documents and Cooperate:
The petitioner claimed that some of the requested documents were not in its possession and argued that the nature and foundation of the enquiry had not been disclosed. The court found that the authorities were conducting an enquiry into service tax evasion and had summoned the petitioner to produce relevant documents and depose. The court held that if the petitioner did not have certain documents, it could inform the authority accordingly.

The court concluded that the investigation was approved by the competent authority and that the petitioner had been given the opportunity to represent its case. The court emphasized that the matter was still at the investigation stage and that the petitioner could raise any pertinent contentions before the investigating authority. The court also noted that the petitioner would have legal remedies available upon completion of the investigation, including the opportunity to appeal any adverse decisions.

Conclusion:
The court dismissed the writ petition, stating that it was not a fit case for exercising writ jurisdiction to thwart the investigation process. The interim order was vacated, and there was no order as to costs.