2016 (3) TMI 955 - HC - Service Tax

Legality of second show cause notice - Violation of Articles 14, 19(1)(g) and 30A of the Constitution of India and the orders of this court - Held that - when the respondent is bound by the directions given by this Court and when this Court had directed the petitioner to submit their objections by treating the impugned proceedings as show cause notice and when this Court directed the respondent to consider the same and pass orders in accordance with law, after giving an opportunity of personal hearing to the petitioner Company, the issuance of the 2nd show cause notice, contrary to the direction of this Court is liable to be set aside. Also the respondent cannot violate the orders of this court on the guise of filing an application for modification. If the respondents are really aggrieved over the order passed by this Court in the earlier Writ Petition, they should have filed modification petition at the earliest point of time. As already stated, even the modification petition has not yet been numbered and brought before the Court for hearing. Therefore, the show cause notice is set aside. - Decided in favour of petitioner

Summary

Issues:
1. Validity of the notice issued by the respondent for service tax payment.
2. Compliance with the directions of the court in a previous writ petition.
3. Allegations of arbitrary actions by the respondents.

Issue 1: Validity of the Notice
The petitioner, a power generation company, challenged a demand letter for service tax issued by the respondent. The court directed the petitioner to treat the demand letter as a show cause notice and respond. Despite the petitioner's reply and request for a personal hearing, the respondent delayed the process for over a year. Subsequently, the respondent issued a second show cause notice with different allegations, contrary to the court's directions. The court held that the second notice was unjustified and set it aside.

Issue 2: Compliance with Court Directions
The court emphasized that the respondent must adhere to its directions given in a previous writ petition. The court had directed the petitioner to submit objections and ordered the respondent to consider them, provide a personal hearing, and refrain from coercive measures until a final decision. The court found that the issuance of the second show cause notice violated its previous order, leading to the petition being allowed and the notice set aside.

Issue 3: Allegations of Arbitrary Actions
The petitioner argued that the respondent's actions were arbitrary, as they issued a second show cause notice despite being bound by the court's previous directions. The court noted that the respondent had not filed an appeal against the earlier order and filed a modification petition after a significant delay. The court held that the respondent cannot disregard court orders under the guise of seeking modification and set aside the second notice, allowing the writ petition without costs.