2017 (7) TMI 1066 - HC - Service Tax

Maintainability of petition - alternative remedy of appeal - Principles of Natural Justice - Held that - The question as to whether the building put up by the petitioner falls within the definition of construction of residential complex is purely a question of fact. That apart the question of limitation also is not purely a question of law but a mixed question of fact and law. The challenge is with regard to invocation of extended period of limitation. This aspect has to be factually challenged by the petitioner. Thus for all the above reasons the writ petition cannot be maintained and the petitioner has to necessarily avail the alternate remedy of appeal provided under the Act - petition dismissed being not mi aintainable.

Summary

Issues:
Challenge to service tax demand order, application of construction of residential complex definition, maintainability of writ petition, limitation period for show cause notice.

Analysis:
The petitioner challenged a service tax demand order of ? 5,41,01,083 for the period from 2008-09 to 2011-12 under Section 73(2) of the Finance Act, 1994. The petitioner previously succeeded in a writ petition due to a violation of natural justice principles. However, the respondent conducted de novo proceedings leading to the impugned order. The court raised a preliminary objection on the maintainability of the writ petition due to the availability of an alternate remedy before the CESTAT. The petitioner argued against the application of the definition of construction of residential complex, claiming to have constructed only single dwelling units, which should not fall under the said definition based on certain clauses in the development agreement.

The petitioner also filed a writ petition seeking declaratory relief that their activities do not attract service tax, but with no interim order and the initiation of proceedings culminating in the service tax demand order, the writ petition became practically infructuous. Additionally, the petitioner contended that the show cause notice was time-barred, and the extended limitation period should not apply in this case. The court emphasized that the issues raised by the petitioner were factual, including the determination of whether the building falls within the definition of a residential complex and the application of the limitation period, which involves a mixed question of fact and law. Consequently, the court held that the writ petition was not maintainable, dismissing it and advising the petitioner to pursue the alternate remedy of appeal before the CESTAT. No costs were awarded, and the connected miscellaneous petition was closed.