2018 (5) TMI 213 - HC - Central Excise

Adjudication of Show cause notice - Input tax credit on 40 services - Matter is pending before SC in relation to 3 services out of 40 services in question - Adjudicating authority put the entire matter in the call book in view the circular dated 14.12.1995 - Held that - the respondents shall adjudicate the impugned show cause notice dated 08.02.2012 in respect of the said 37 services. We record Mr. Bansal s statement that the petitioner will not contend that the appeal, if any, against the decision with respect to the remaining three services is not maintainable on account of the tax effect thereof being less than what is prescribed by any circulars - petition adjourned.

Summary

Issues:
1. Validity of circular dated 14.12.1995 entitling authorities to place matters in a "call book" when challenged judgments of various High Courts before the Supreme Court.
2. Adjudication of a show cause notice dated 08.02.2012 in relation to 40 services for which input tax credit was taken.
3. The necessity of separate adjudication for each of the 40 services mentioned in the show cause notice.
4. Decision on the validity of the circular and its impact on the entitlement to input tax credit for the services in question.
5. Adjourning the petition regarding three specific services - authorised service station, freight outward, and outdoor catering service.

Analysis:
1. The petitioner sought a writ of mandamus directing the Commissioner of Central Excise to adjudicate a show cause notice dated 08.02.2012. The respondents claimed they were not bound to adjudicate the notice due to a circular dated 14.12.1995, allowing matters to be placed in a "call book" when challenging High Court judgments before the Supreme Court.

2. The High Court acknowledged the validity of the circular for the time being. However, it emphasized that the show cause notice covered 40 services for which input tax credit was claimed. Notably, only three services were linked to judgments challenged by the respondents, leading to the matter being placed in the call book. The remaining 37 services did not depend on these judgments for input tax credit eligibility.

3. The Court highlighted the need for separate consideration of each service mentioned in the notice. It clarified that the decision on the three services under dispute should not influence the entitlement to input tax credit for the other 37 services. Therefore, the respondents were directed to adjudicate the notice for the 37 services not directly impacted by the challenged judgments.

4. While refraining from deciding the circular's validity due to the Supreme Court notice, the Court emphasized that there was no justification for the authorities to delay adjudicating the show cause notice concerning the 37 unaffected services. The decision on the three disputed services and the circular's validity should not affect the petitioner's entitlement to input tax credit for the remaining services.

5. The petition concerning the three specific services - authorised service station, freight outward, and outdoor catering service - was adjourned to a later date, indicating a separate consideration for these services apart from the 37 others. The petitioner agreed not to contest any appeal related to these three services based on tax effect considerations.