2017 (10) TMI 1061 - HC - Service Tax

Maintainability of petition - Levy of service tax - dwelling houses constructed by the appellant company - residential complex or individual houses? - Held that - The law is well settled that when factual findings are to be assailed where, effective alternative statutory appellate remedy is available, the same cannot be by-passed by invoking the extraordinary jurisdiction of the High Court under Article 226 of the Constitution of India. The reasoning given by the learned Judge, only on the ground of maintainability to dismiss the writ petition with the liberty to the appellant / assessee to approach the CESTAT, is fully justifiable - appeal dismissed being not maintainable.

Summary

Issues:
1. Maintainability of the writ petition challenging the Order-in-Original passed by the Adjudicating Authority.
2. Interpretation of the term "residential complex" under Section 65(91a) of the Finance Act, 1994.

Issue 1: Maintainability of the Writ Petition:
The appellant challenged the Order-in-Original passed by the Adjudicating Authority through a writ petition. The appellant argued that the construction of individual houses should not be considered as a residential complex, thus not attracting service tax under Section 65(91a) of the Finance Act, 1994. The appellant contended that the writ petition was maintainable as the assessment and demand confirmed were against the provisions of the Finance Act. The appellant disagreed with the dismissal of the writ petition by the learned Judge, who suggested approaching the appellate forum instead. The respondent argued that the construction by the appellant constituted a residential complex as per the definition under Section 65(91a) of the Finance Act, 1994.

Issue 2: Interpretation of "Residential Complex":
The term "residential complex" under Section 65(91a) of the Finance Act, 1994 defines it as a complex comprising buildings with more than twelve residential units, common areas, and facilities. The respondent contended that any building or area with more than twelve residential units would be considered a residential complex, attracting service tax. The Adjudicating Authority found that the construction by the appellant constituted a residential complex with 416 individual houses within a common layout approved by the authority. The Authority confirmed the assessment and demand, leading to the writ petition challenging the Order-in-Original. The Court emphasized that factual issues regarding the nature of the construction and tax liability should be adjudicated by the statutory appellate forum, the Tribunal (CESTAT), as it is the final fact-finding authority under the Act. The Court upheld the dismissal of the writ petition on the ground of maintainability, directing the appellant to approach the CESTAT for further adjudication.

In conclusion, the High Court dismissed the appeal, emphasizing that factual issues should be addressed by the statutory appellate forum, the CESTAT, rather than invoking the High Court's extraordinary jurisdiction under Article 226 of the Constitution. The judgment highlighted the importance of approaching the appropriate appellate authority for factual disputes under the Act, maintaining the dismissal of the writ petition challenging the Order-in-Original passed by the Adjudicating Authority.