2015 (9) TMI 420 - HC - Service Tax

Supply of tangible goods - assessee did not file reply to the SCN - assessee contended that authority has made up his mind and is bound to create unnecessary and abnormal demand and calling for his reply to the impugned notice remains a empty formality and is not going to serve any purpose. It is further contended that the statements recorded during search and indicated in the show cause notice impugned herein, are under duress and cannot be read against him - Assessee contended that the authority is biased in approach from the initial stage of issuing notices, show cause notice, impugned herein, further opportunity is of no use and in these facts & circumstances, the petitioner had no option except to approach this Court under the extraordinary jurisdiction of this Court u/Art. 226 of the Constitution of India. Held that - On perusal of the show cause notice, we feel that it is only a prima facie view which the Commissioner, as a quasi-judicial authority, has expressed at this stage, placing reliance on the material collected, at the time of search and in our view, it cannot be said that the Commissioner has prejudged the matter of imposition of service tax and that may be considered after the reply to show cause notice is submitted by the petitioner. The instant petition, preferred by the petitioner at this stage, is premature and does not require interference of this Court u/Art. 226 of the Constitution of India. - Decided against the assessee.

Summary

Issues:
Challenge against show cause notice for service tax evasion on supply of tangible goods under the Finance Act, 1994.

Analysis:
The petitioner, a private limited company engaged in transportation, challenged a show cause notice from the Central Excise Commissionerate for alleged service tax evasion. The notice demanded explanation for the alleged evasion of Rs. 55.604 crores, interest recovery, penalties for non-filing of returns, and suppressing taxable services. The petitioner argued that the authority prejudged the matter, ignored documentary evidence, and the statements recorded were under duress. The petitioner also claimed violation of natural justice principles and cited relevant case laws to support their argument.

The High Court observed that the show cause notice provided a detailed narration of facts and expressed a prima facie view based on collected material. The Court noted that the Commissioner's view was preliminary, awaiting the petitioner's response. As the petitioner had not submitted any explanation despite multiple opportunities, approaching the Court prematurely was deemed inappropriate. The Court emphasized that the Commissioner's view was not final and could be reconsidered based on the petitioner's reply. The Court distinguished the case from precedents cited by the petitioner, stating they were not applicable to the current situation.

Ultimately, the Court found the petition premature and dismissed it, emphasizing that the observations made were specific to the disposal of the petition and should not influence the quasi-judicial authority's independent decision-making process. Both the writ petition and stay application were dismissed, with a directive for the authority to proceed in accordance with the law independently.