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2018 (7) TMI 666 - HC - Service TaxService Tax Audit - Vires of sub-rule (2) of Rule 5A of the Service Tax Rules, 1994 as substituted by notification no. 23/24/ST dated December 25, 2014 - case of petitioner is that the said sub-rule is in conflict with provisions of Section 72A of the Finance Act, 1994 - Held that - It would be appropriate to follow Mega Cabs Pvt. Ltd. 2016 (6) TMI 163 - DELHI HIGH COURT . - Such provisions were struck down. - Such provisions were also struck down - Appeals are pending against the judgment and order - Therefore, it would be iniquitous to allow the respondents to proceed on the basis of provisions struck down by a High Court, against the petitioner. The respondents have chosen not to bring to the notice of the Court, by their nonappearance, any relevant fact or law which may have weighed in the Court in taking a contrary view. In absence of such assistance, Mega Cabs Pvt. Ltd. (supra) is followed. Decided in favor of the petitioner.
Issues:
1. Declaration sought regarding the validity of sub-rule (2) of Rule 5A of the Service Tax Rules, 1994. 2. Declaration sought regarding the provisions of clause (k) of sub-section (2) of Section 94 of the Finance Act, 1994. 3. Challenge against a notice dated February 16, 2015. Analysis: 1. The petitioner sought a declaration regarding the validity of sub-rule (2) of Rule 5A of the Service Tax Rules, 1994, substituted by notification no. 23/24/ST dated December 25, 2014, alleging it to be arbitrary and conflicting with Section 72A of the Finance Act, 1994. The court noted that similar provisions had been challenged before the Delhi High Court in previous cases, such as Travelite (India) and Mega Cabs Pvt. Ltd., where they were held to be ultra vires and struck down. As the provisions in question were already struck down by the Delhi High Court pending appeal, the court found it unjust to allow the respondents to act upon such provisions. Consequently, the impugned notice dated February 16, 2015, was quashed. 2. The petitioner also sought a declaration regarding the provisions of clause (k) of sub-section (2) of Section 94 of the Finance Act, 1994, arguing that it provided unguided and uncontrolled power of delegation. The court, in the absence of any representation from the respondents, relied on the precedent set in Mega Cabs Pvt. Ltd. case, where similar provisions were declared ultra vires. Since no contrary view was presented due to the non-appearance of the respondents, the court followed the decision in Mega Cabs Pvt. Ltd. and disposed of the case accordingly. 3. The court highlighted that Rule 5A, which was introduced by a notification in 2007, had been challenged before the Delhi High Court in the Travelite (India) case and subsequently struck down. The same provisions were challenged in the Mega Cabs Pvt. Ltd. case and were also struck down. With pending appeals against these judgments, the court emphasized that the provisions remained struck down until a decision in the appeals. Therefore, considering the provisions were invalidated by the Delhi High Court, the court deemed it unfair to allow the respondents to act based on such provisions against the petitioner. Consequently, the court quashed the impugned notice dated February 16, 2015. In conclusion, the court disposed of the case without any order as to costs and directed urgent certified website copies of the order to be made available to the parties upon compliance with formalities.
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