2016 (4) TMI 241 - HC - Service Tax

Passing of burden of service tax as per Mutual Contract - PUNGRAIN directed the appellant to deposit the service tax on the income received from renting/lending of immovable property and withheld the godown rent - Seeking direction to release the storage charges of godown - Petitioners moved a representation to the Managing Director, PUNGRAIN, Chandigarh for releasing the storage charges of the godowns, but no action has so far been taken thereon , so, praying the liberty to file a detailed and comprehensive representation - Held that - the liberty is granted to the petitioner to file a detailed and comprehensive representation against the notices raising all the pleas as raised in the present writ petition before respondent No.3 within a period of 15 days from the date of receipt of the certified copy of the order. The petitioners shall be entitled to lead any evidence to substantiate their claim before respondent No.3. - Petition disposed of

Summary

Issues:
1. Jurisdiction under Article 226 for quashing notices related to service tax and storage charges.
2. Dispute over construction of covered godowns under the Scheme.
3. Failure to release storage charges and seeking direction for a time-bound decision on representation.

Issue 1: Jurisdiction under Article 226 for quashing notices related to service tax and storage charges:
The petitioners invoked the writ jurisdiction of the High Court under Article 226 of the Constitution to quash notices issued by Punjab Grains Procurement Corporation Limited (PUNGRAIN) related to depositing service tax on income from renting/lending of immovable property and withholding godown rent. The petitioners sought a writ of certiorari for quashing the notices and a writ of mandamus to release storage charges for godowns hired under the Scheme. The High Court granted liberty to the petitioners to file a detailed representation against the notices within 15 days, directing a decision within three months.

Issue 2: Dispute over construction of covered godowns under the Scheme:
The petitioners participated in a tender under the Scheme in 2010 for building covered godowns for Food Corporation of India (FCI) storage needs. While some petitioners received counter offers for construction at lower rates, others had their tenders accepted at quoted rates. Agreements were executed between PUNGRAIN and the petitioners for construction, subsequent inspection, and takeover of the godowns. Financial arrangements included payment by PUNGRAIN to petitioners, reimbursement from FCI, and supervision charges. Central Excise and Service Tax Range issued notices regarding service tax on income from property rental, leading to PUNGRAIN's notices to stop storage charges, prompting the present writ petition.

Issue 3: Failure to release storage charges and seeking direction for a time-bound decision on representation:
Despite representations to release storage charges, no action was taken by PUNGRAIN. The petitioners requested permission to file a comprehensive representation before the appropriate authority, incorporating grievances from the writ petition, and sought a time-bound decision. The High Court disposed of the petition by granting liberty to file a detailed representation against the notices, directing a decision within three months, with an opportunity for the petitioners to present evidence.

This judgment addresses the jurisdictional aspect of invoking Article 226 for challenging notices, the dispute surrounding the construction of covered godowns under a specific Scheme, and the failure to release storage charges, emphasizing the importance of a time-bound decision on representations. The High Court's directive allows the petitioners to present their case comprehensively and ensures a fair opportunity for resolution within a specified timeframe.