2018 (11) TMI 422 - HC - Service Tax

Non-discharge of Service Tax liability - Manpower Recruitment Services - Supply Agency Services - case of petitioner also that no opportunity of hearing provided - Jurisdiction - Held that - The disputed question of fact whether the adjudicating authority recorded a finding that personal hearing was conducted on 28-11-2016, is true or not, cannot be adjudicated by this court under writ jurisdiction. Further the statement of the petitioner-assessee made before the Superintendent of Service Tax also makes it clear that the petitioner-assessee has not paid the service tax due to financial constraints and ST-3 returns were not filed due to acute shortage of clerical staff. It is only on the inspection conducted by the Department, non-deposit of service tax collected by the petitioner has come to light. In the circumstances, the petitioner cannot make any allegations against the adjudicating authority that no opportunity of hearing was provided before passing of the order. Petition dismissed with an opportunity to the petitioner to approach the appellate authority of redressal of his grievance.

Summary

Issues:
Challenge to legality and correctness of the original order; Denial of natural justice; Maintainability of writ petition without exhausting alternative remedy.

Analysis:
The petitioner, a service provider registered with the Service Tax Department, was investigated for allegedly not discharging service tax liability for "Security Agency Services" and "Manpower Recruitment Services." The authorities issued show cause notices for two different periods, demanding service tax, interest, and penalty. The petitioner challenged the order-in-original dated 9-12-2016, alleging denial of natural justice as the proprietor's signature was taken forcibly, and no proper hearing was provided. The petitioner argued that the extraordinary writ jurisdiction could be invoked due to the denial of natural justice.

The respondent contended that the petitioner had admitted to not paying the collected service tax due to financial constraints. The respondent argued that the petitioner cannot now claim lack of opportunity for hearing as the petitioner had appeared before the adjudicating authority, and statements were recorded. The respondent emphasized that challenging the order without exhausting alternative remedies available under the Act was not maintainable.

The court observed that factual disputes regarding the conduct of the adjudicating authority could not be resolved under writ jurisdiction. The court noted that the petitioner's admission of non-payment of service tax and failure to file ST-3 returns due to staffing issues were factors considered. The court held that if the findings of the adjudicating authority were disputed, the proper recourse was through review or appeal, not a writ petition. The court dismissed the writ petition, allowing the petitioner to approach the appellate authority within four weeks without objection to the limitation aspect.

In conclusion, the High Court dismissed the writ petition challenging the order-in-original related to service tax liability. The court emphasized that issues of fact and procedural fairness were more suitable for review or appeal processes rather than writ jurisdiction. The petitioner was granted an opportunity to seek redress through the appellate authority within a specified timeframe.