2017 (3) TMI 376 - HC - Service Tax

Business Auxiliary Services - receipt of commission - deposit of service tax by the recipient of services i.e. MUL - authorized dealer selling cars on behalf of MUL - Held that - The service tax liabilities discharged by MUL/MSIL would refer to the amounts constituting the proportion of the commission it retains and discloses as the consideration/service received, for which tax is to be paid. There is no positive assertion that the amount or the portion of the commission, which is apparently of a substantial percentage-to the petitioner are also deducted in service tax - the service tax returns of MUL/MSIL would reflect the amounts received and retained by it and not necessarily include within the turnover the amounts received in aggregate - the petitioner s contention that MUL/MSIL had paid for the transaction so as to absolve it of its liability to satisfy the demands is clearly unfounded. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Quashing of summons for service tax demands.
2. Non-payment of service tax by the petitioner.
3. Dismissal of the petitioner’s appeal by CESTAT due to delay.
4. Allegation of double taxation and unjust enrichment.
5. Procedural history and alternative remedies.

Detailed Analysis:

1. Quashing of Summons for Service Tax Demands:
The petitioner sought an order for quashing of summons requiring it to appear and produce documents related to outstanding service tax demands. The petitioner, an authorized dealer of Maruti Suzuki India Limited (MSIL), received commissions from Maruti Finance, which fell under "business auxiliary service" as per Section 65(105) of the Finance Act, 1994, making it liable for service tax. A Show Cause Notice was issued on 21.12.2006, and the Commissioner of Service Tax determined the demand at ?1,56,48,080.91/- with interest, appropriating ?1,24,65,694.27/- already deposited.

2. Non-payment of Service Tax by the Petitioner:
The Commissioner enforced the order-in-original dated 25.09.2007 through a letter on 25.09.2012, requiring the petitioner to deposit ?31,82,386.64/-. The petitioner filed W.P.(C) 8089/2012, which was withdrawn on 08.12.2012 with liberty to appeal against the order-in-original. The petitioner’s appeal to CESTAT was dismissed due to an inordinate delay of 1916 days, which the tribunal refused to condone. The petitioner challenged this order, but the Court found no ground to interfere and rejected the writ petition.

3. Dismissal of the Petitioner’s Appeal by CESTAT Due to Delay:
The petitioner filed a rectification application on 04.09.2014, claiming that the service tax of ?31,82,356.64 had already been deposited by Maruti Udyog Ltd. (MUL), confirmed by a certificate dated 27.05.2009. The petitioner argued that collecting service tax again would violate Article 265 of the Constitution and result in unjust enrichment for the department. Despite reminders, the respondents did not act, leading the petitioner to approach the Court for quashing the summons.

4. Allegation of Double Taxation and Unjust Enrichment:
The petitioner contended that the respondents' refusal to verify its claims of service tax payment by MUL/MSIL was arbitrary. Certificates from MUL/MSIL and T.R. Challans were provided as evidence. The petitioner argued that the service tax liability had been discharged by MUL/MSIL, and demanding the same amount again would result in double taxation. However, the respondents argued that the petitioner’s previous writ petitions were not entertained due to the availability of alternative remedies and the dismissal of its appeal. The respondents contended that the petitioner’s claims should be addressed through a refund mechanism, which was time-barred.

5. Procedural History and Alternative Remedies:
The Court noted that this was the third writ petition for the same relief. The petitioner’s initial writ petition against the order-in-original was withdrawn, and the subsequent appeal to CESTAT was dismissed due to delay. The Court upheld the dismissal of the appeal. The petitioner’s claim that MUL had deposited the relevant amount was first asserted in response to a demand in 2011, supported by a certificate dated 27.05.2009. The Court found that the petitioner’s argument of double taxation was unfounded, as the service tax liabilities discharged by MUL/MSIL referred to the amounts constituting the commission it retained, not the amounts shared with the petitioner. The Court concluded that the petitioner had several statutory remedies, including an appeal and an application for refund, which it failed to avail. The present writ petition was deemed misconceived and an abuse of the process of court, leading to its dismissal.