2016 (9) TMI 1027 - HC - Service Tax

Maintainability - other remedies available to the petitioner - petitioner seeking permission to bypass the appellate remedy available to the petitioner under the provisions of the Act by approaching the CESTAT - petitioner submitted that the impugned order is a result of grave inconsistencies - disregard of voluminous evidence furnished by the petitioner - Held that - it is beyond dispute that to test the correctness of the impugned order, a thorough probe into the factual matrix is required and the question would be can such an exercise be done in a Writ Petition especially when the provisions of the Act provide for a hierarchy of remedies. Thus, considering the complicated nature of the facts involved in the instant case and to adjudicate the correctness of the impugned order, it would be necessary to re-examine the factual position, this Court is of the view that the petitioner should not be permitted to bypass the statutory appellate authority which is not only an effective remedy, but is the efficacious remedy. Hence, without going into the merits of the matter regarding the validity of the impugned order, the Writ Petition stands rejected as not maintainable. - Decided against the petitioner

Summary

Issues:
1. Interpretation of works contracts under the Tamil Nadu Value Added Tax Act and Service Tax Rules.
2. Show cause notices issued under Section 73(1)/73(1A) of the Finance Act.
3. Determination of service tax on the service portion of gross amount in connection with execution of projects.
4. Correctness of the value adopted by the assessee as per Rule 2A(i) of Service Tax (Determination of Value) Rules, 2006.
5. Bypassing the appellate remedy available to the petitioner under the Act.

Analysis:
1. The petitioner, a private limited company, engaged in supplying various equipments for Water/Sewerage Treatment plants, claimed that the activities constitute works contracts under the Tamil Nadu Value Added Tax Act and Service Tax Rules. They argued that they have paid appropriate VAT/CST and service tax on the supply and service portions. The issue was whether the agreements with clients are composite in nature and if service tax should be paid on the service portion of the gross amount.

2. The petitioner received seven show cause notices under the Finance Act, to which they provided a detailed reply citing legal provisions and precedents. The respondent passed a common order after personal hearings, raising questions on the nature of agreements and the determination of service tax. The petitioner sought to challenge the order through a Writ Petition, bypassing the appellate remedy available at CESTAT.

3. The High Court questioned the petitioner's decision to bypass the statutory appellate authority, emphasizing the hierarchy of remedies provided by the Act. Referring to legal precedents, the Court highlighted that factual issues should be addressed through the statutory appellate authority rather than a Writ Petition. The Court concluded that the petitioner should not bypass the appellate remedy and rejected the Writ Petition without delving into the merits of the case.

4. The judgment dismissed the Writ Petition, advising the petitioner to pursue remedies as per the provisions of the Act. The Court emphasized the importance of following the statutory appellate process for challenging assessment orders, reiterating that factual issues should be addressed through the prescribed statutory remedies rather than Writ Petitions.