2017 (11) TMI 1018 - HC - Service Tax

Vires of Rule 5A (1) of the Service Tax Rules 1994 - abuse of powers and patent illegality in carrying out the survey/seizure operation in the premises of the Petitioner - Held that - It is surprising that despite these serious allegations, till date, the Respondents have chosen not to file reply. The failure of the Respondents to do so would have legal consequences. At the same time, the Court cannot be denied the assistance required in matters involving such serious allegations - The Commissioner, Services Tax Delhi III will produce before this Court in a sealed cover, the entire records pertaining to the case on the next date of hearing - petition is part heard - matter on remand.

Summary

Issues:
Challenge to Rule 5A (1) of the Service Tax Rules 1994, Allegations of unauthorized visit and seizure of records, Failure to file reply by Respondents, Request for production of records and inquiry into allegations.

Analysis:
The writ petition challenges the validity of Rule 5A (1) of the Service Tax Rules 1994, alleging it is ultra vires the Finance Act, 1994. The petitioner claims unauthorized visits and seizure of records by the audit team without proper procedure. Serious allegations of abuse of power and illegality are made against the Commissioner of Service Tax and officers. Despite repeated requests, the respondents have failed to file a reply, prompting the Court to issue directions for production of records and inquiry into the allegations.

The petition details the issuance of Show Cause Notices (SCNs) for various periods, with significant sums demanded. The petitioner's requests for inspection of records were ignored, leading to the filing of the writ petition. The Court noted the lack of response from the respondents and the seriousness of the allegations, leading to the issuance of specific directions for further action.

The Court highlighted that despite the serious nature of the allegations, the respondents have not filed a reply, which could have legal consequences. To address this, the Court directed the Commissioner of Service Tax to produce all records, an inquiry by the Directorate General of Vigilance, and submission of an affidavit by the Director General of Audit. Failure to produce records would require a proper explanation from the respondents.

The judgment emphasizes the need for cooperation and transparency in matters involving allegations of misconduct and abuse of power. The Court's directions aim to ensure a thorough investigation into the actions of the respondents and to uphold the principles of justice and legality in the proceedings. The case is scheduled for further proceedings, with strict compliance expected from the concerned parties.