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2017 (9) TMI 1075 - HC - Service TaxJurisdiction - authority of the DGGSTI (as the DGCEI is now known) to proceed with the impugned SCN - Validity of the SCN issued by the DGCEI (and now continued by the DGGSTI) - classification of servicesHeld that - it appears prima facie that unless the Respondents are able to satisfy the Court that the DGGSTI (earlier DGCEI) is duly authorised in terms of the FA to proceed with the SCN, the continuation of the proceedings would amount to a parallel exercise of determination of service tax liability for a past period in respect of which the Petitioner s returns have already been assessed by the jurisdictional Commissionerate - it is directed that till the next date of hearing further proceedings pursuant to the SCN dated 2nd December, 2016 shall remain stayed.
Issues:
1. Authority of Directorate General of Goods Service Tax Intelligence (DGGSTI) to proceed with the Show Cause Notice (SCN). 2. Validity of the SCN issued by DGGSTI seeking to re-visit completed assessment of service tax returns. Issue 1: Authority of DGGSTI to Proceed with SCN The Petitioner raised concerns regarding the authority of DGGSTI to continue with the impugned SCN. It was argued that under Rule 3 of Service Tax Rules 1994, the Central Board of Excise and Customs (CBEC) could not appoint officers of Central Excise for investigation and adjudication under the Finance Act, 1994 (FA). The contention was that if the Directorate General of Central Excise Intelligence (DGCEI) could not have issued the SCN initially, then DGGSTI, as its successor, lacked the authority to proceed with the proceedings. The Court noted the importance of establishing the legal authorization of DGGSTI under the FA to avoid parallel determinations of service tax liability for a past period already assessed by the jurisdictional Commissionerate. Issue 2: Validity of the SCN Re-visiting Completed Assessment The second issue revolved around the validity of the SCN issued by DGCEI and continued by DGGSTI, which aimed to re-visit the completed assessment of the Petitioner's service tax returns. The Petitioner contended that the services provided should be classified as 'works contract services,' a classification accepted by the jurisdictional Service Tax Commissionerate. However, the impugned SCN sought to classify the services differently, invoking the extended period of limitation of 5 years under the FA. Despite compliance with revised demands and audits, the DGCEI maintained its stance on the service classification, leading to a dispute regarding the re-assessment initiated through the SCN. The history of the dispute included an earlier SCN issued by DGCEI for a different period, resulting in an adjudication order under review by the Supreme Court. Subsequent returns filed by the Petitioner with the Ghaziabad Commissionerate declared the services as works contract services, supported by audits and compliance with revised demands. The impugned SCN demanded differential service tax and penalties, challenging the classification of services. The Court, considering the circumstances and the need to clarify the authority of DGGSTI, stayed further proceedings pursuant to the SCN until the next hearing date, emphasizing the importance of resolving the issues raised by the Petitioner.
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