2015 (7) TMI 821 - HC - Service Tax

Demand of service tax - Repair and maintenance service - Held that - It is not in dispute the 4th respondent has initiated recovery proceedings to recover the amount determined as tax by order dated 22.3.2013. It is also not in dispute that the petitioner availed the statutory remedy of appeal which is pending adjudication and that its application seeking stay of the impugned order has not yet been considered, consequent to which the impugned order is executable. In the given fact situation, when the statutory remedy of appeal is availed by the petitioner, it will be entitled to protection till adjudication of the grounds of appeal against the impugned order. If the impugned order as passed by the 4th respondent is allowed to be executed, it is obvious the appeal will become infructuous or will lead to multiplicity of proceedings - petitioner has made out a case for grant of relief which, undoubtedly , will be for the limited purpose of ensuring petitioner to exercise the right of appeal. - Stay granted.

Summary

Issues:
1. Liability of service provider for service tax.
2. Show-cause notice issued by the Additional Commissioner of Central Excise.
3. Appeal filed by the petitioner before the Commissioner of Central Excise.
4. Recovery notices issued by respondent no.4.
5. Failure of the appellate authority to consider the appeal and stay application.
6. Coercive action for recovery of tax.
7. Availability of statutory remedy of appeal.
8. Grant of relief to ensure the right of appeal.

Analysis:

1. The petitioner, a service provider, did not collect or remit tax for services rendered, believing they were not taxable. The Additional Commissioner of Central Excise issued a show-cause notice regarding tax liability, which was confirmed in an order. The petitioner appealed to the Commissioner of Central Excise, seeking interim stay, which was pending. Meanwhile, recovery notices were issued by respondent no.4 to enforce the tax liability.

2. The respondents argued that the petitioner should seek relief through the statutory remedy of appeal rather than a writ action. It was acknowledged that recovery proceedings were initiated by the 4th respondent, and the appeal was pending adjudication. The court noted that allowing the impugned order to be executed would render the appeal ineffective or lead to multiple proceedings.

3. The court found that the petitioner had a valid case for relief to ensure the right of appeal. Consequently, the court granted a stay on all proceedings related to the impugned order until the stay application in the appeal was considered. The appellate authority was directed to dispose of the application within three weeks to protect the petitioner's right to appeal.

This judgment highlights the importance of statutory remedies, the right to appeal, and the need to prevent actions that could render the appeal ineffective. The court's decision to grant a stay on enforcement proceedings until the appeal is adjudicated demonstrates a balance between protecting the petitioner's rights and ensuring proper legal processes are followed.