2017 (4) TMI 230 - HC - Service Tax

Challenge to the show cause notice - Cash discount - quantity discount - whether would come within ambit of service - Held that - the SCN, though referring to the earlier adjudication, its acceptance, has further alleged that after the law was amended, it was necessary to probe and investigate the matter. The investigation and the statements, which were recorded during the course thereof, revealed, as provided in para 7 of the SCN and in great details (question answer-wise), that the various incentives were received on account of satisfactory services in various fields, namely, puchase/delivery of goods, namely, vehicles/spare parts, sale of the goods, the servicing of the vehicle parts and customer satisfaction etc. - this matter does not come within the exceptions carved out and noticed above. The show cause notice will have to be adjudicated independent of the version the Revenue projects and places before this court. There is a distinct obligation in the adjudication officer. In these circumstances, by clarifying that the adjudication shall proceed without in any manner being influenced by the stand of the Revenue reflected in the affidavit in reply so also on its own merits and in accordance with law, that all contentions, including those in this writ petition can be raised, we dispose of the writ petition - petition disposed off.

Summary

Issues:
Challenge to communication from Directorate General of Central Excise Intelligence dated 24th June, 2015; Maintainability of the show cause notice issued during the pendency of the writ petition; Interpretation of the term "taxable service" under the Finance Act, 1994; Evolution of law regarding taxable activities; Jurisdiction of the court in interfering with show cause notices.

Analysis:
1. The writ petition challenged a communication from the Directorate General of Central Excise Intelligence dated 24th June, 2015, seeking information on incentives received from a company. The petitioner argued that the incentives did not constitute a service as defined by the Finance Act, 1994, based on a previous order-in-original that supported their position.

2. The petitioner contended that a fresh show cause notice issued during the pendency of the writ petition was not maintainable. The petitioner's counsel argued that the fundamental nature of the activities remained unchanged despite amendments to the law, and thus, the show cause notice should not be allowed to proceed.

3. The respondents argued that the investigation revealed the petitioner's activities involved taxable services, including incentives received for various services related to the sale of goods. The court noted that the law had evolved, and the investigation post-amendment required further adjudication independent of the petitioner's arguments.

4. The court held that the show cause notice should be adjudicated without being influenced by the parties' contentions. It emphasized the need for a thorough examination of the facts and legal provisions, indicating that the matter required detailed scrutiny beyond the scope of writ jurisdiction.

5. In a related petition by an association of automobile dealers, the court declined to entertain a wider challenge due to the absence of show cause notices to individual dealers. It kept the contentions open for future consideration by the association or its members, clarifying that no opinion was expressed on the merits of the contentions.

This detailed analysis highlights the legal arguments, interpretations of the law, and the court's decision on the issues raised in the judgment before the Bombay High Court.