2019 (3) TMI 1592 - HC - Service Tax

Permanent injunction restraining the defendants from demanding service tax - main contention raised by the learned Senior Standing counsel for the petitioners is that the suits are not maintainable as the Civil Court has no jurisdiction to entertain the service tax matter - HELD THAT - As against the order passed by the Joint Commissioner of Customs Central Excise, there is an appeal remedy to the Commissioner of Customs Central Excise (Appeals) - Thus, the dilatory and time consuming proceeding of a suit before a Civil Court has been impliedly barred. The Civil Court has got no jurisdiction to entertain the suit relating to service tax matter and therefore, the Court below ought to have allowed the application filed to decide the issue of jurisdiction and should not have entertained and passed ex parte decree - petition allowed.

Summary

Issues:
1. Jurisdiction of Civil Court to entertain service tax matters.

Analysis:
The judgment involves two Civil Revision Petitions (CRP) filed against orders made in suits related to service tax matters. In CRP 132/2011, the plaintiff sought a declaration exempting them from service tax payment and an injunction against the defendants. The defendants filed an application questioning the court's jurisdiction, which was dismissed. In CRP 398/2012, the plaintiffs sought a declaration against a service tax order, leading to an ex parte decree. The main contention raised was the maintainability of the suits in Civil Court due to lack of jurisdiction. The Senior Standing Counsel argued citing a Supreme Court judgment and an appeal remedy available to the plaintiffs.

The Court examined the appeal remedy available against the service tax order, as mentioned in the proceedings of the Joint Commissioner of Central Excise. Referring to the Supreme Court judgment in Hindustan Laminators Pvt. Ltd. vs. Union of India, the Court emphasized that statutory provisions under the Central Excise Act provide detailed appeal procedures up to the High Court and Supreme Court for revenue-related matters. The Court noted that pursuing a suit before a Civil Court in such cases would be dilatory and time-consuming, implicitly barring such proceedings.

Based on the Apex Court's judgment, the Court concluded that the Civil Court lacked jurisdiction to entertain suits concerning service tax matters. It held that the lower court should have allowed the application to decide the jurisdiction issue instead of proceeding with the suits and passing an ex parte decree. Consequently, the orders in both cases were set aside, and the Civil Revision Petitions were allowed without costs. The judgment highlights the exclusive jurisdiction of specialized forums for service tax matters and the need to follow statutory appeal procedures for efficient resolution of such disputes.