2018 (8) TMI 1231 - HC - Service Tax

Commercial training or coaching service - educational institution - It is the specific case of the petitioner that he is running an educational institution and is not liable to pay any Service Tax - inordinate gap between the show cause notice and the impugned order - opportunity of personal hearing - Held that - From the date of issue of show cause notice in the year 2008 till the date of impugned order, there is an inordinate delay of 8 years. The same is not explained in the impugned order. Though the same is sought to be justified in the objection statement at paragraph-1 8, but when the impugned order does not reflect the reasons for the delay, the same cannot be taken into consideration merely because it is mentioned in the objection. The fact remains that from the date of issue show cause notice and impugned order, there is a gap of 8 years. Same is un- explained and there is no reasons assigned in the impugned order. In view of the inordinate gap between the show cause notice and the impugned order, the Commissioner was not justified in passing the impugned order without providing proper opportunity of personal hearing. Matter is remanded to the to the Principal Commissioner of Service Tax, Bengaluru for fresh adjudication in accordance with law - petition allowed by way of remand.

Summary

Issues:
Petitioner challenging impugned order for service tax on educational programs.

Analysis:
The petitioner filed a writ petition seeking to quash the order demanding service tax on educational programs. The petitioner argued that the delay of 8 years in passing the order violated principles of natural justice, and they were not liable for service tax as they were an educational institution. The respondent contended that the petitioner, offering management education programs, was liable for service tax as per the show cause notice issued in 2008. The court noted the unexplained delay in adjudicating the matter and the lack of reasons for the delay in the impugned order. The court emphasized the need for a proper opportunity of personal hearing and remanded the case to the Principal Commissioner of Service Tax for fresh adjudication within 3 months.

The petitioner contended that they were not engaged in commercial training or coaching services but in imparting educational standards. The respondent argued that the petitioner was offering management education programs and was liable for service tax as per the show cause notice. The court observed the significant delay of 8 years between the show cause notice and the impugned order, emphasizing the lack of proper opportunity for personal hearing. The court directed the Principal Commissioner of Service Tax to provide a fair hearing to the petitioner and decide the matter on merits.

The court noted the petitioner's argument regarding the retrospective liability for service tax due to the Finance Act of 2010 and the respondent's contention that the petitioner was offering management education programs subject to service tax. The court highlighted the prolonged delay of 8 years in the adjudication process, emphasizing the need for a reasonable opportunity for the petitioner to present their case. The court ordered the remand of the case for fresh adjudication, stressing the importance of following due process and providing a fair hearing to both parties.

In conclusion, the court allowed the writ petition, quashed the impugned order, and remanded the case for fresh adjudication by the Principal Commissioner of Service Tax within 3 months. The court kept all contentions open except for the delay issue raised in the show cause notice. The judgment focused on the procedural fairness and the necessity of providing a proper opportunity for the petitioner to present their case in the context of the significant delay in the adjudication process.