2018 (12) TMI 560 - HC - Service Tax

Maintainability of petition - efficacious alternative remedy - Appellate authority rejected the appeal on the grounds of limitation. - interpretation of Sections 66D(k), 66D(e) and 66E(e) - Exemption from service tax / negative list - it is claimed that inspection and testing fee it collects is a part of transmission and distribution of electric energy. - Held that - It is only where statutory remedies are entirely ill-suited to meet the demands of extraordinary situations, should we need recourse to Article 226 of the Constitution. It illustrates two such occasions where the very vires of the statute are in question or where private or public wrongs are so inextricably mixed up that for preventing public injury and for vindicating public justice a suitor may need constitutional remedies - the Court must have good and sufficient reason to bypass the alternative remedy provided by the statute. Surely matters involving the revenue where statutory remedies are available are not such matters. Is the statutory adjudicatory mechanism under the Finance Act 1994 ill-suited to resolve the disputes the writ petitions have raised? - Held that - Section 66D contains the negative list of services . Among them found are a few services by the Government or a local authority. The petitioner claims that the transmission and distribution of electricity by any of its utilities is exempted under Section 66D(k) of the Act. In addition, it claims that its purchasing the materials used for transmission activities is purely sale and purchase stands exempted under Section 66D(e) of the Act. Examined further, the petitioner Board also pleads that the inspection and testing fee it collects is a part of transmission and distribution of electric energy. So it is not based on any special contract. By that reckoning, the inspection and testing fee, the Board asserts, will not fall within the mischief of Section 66E(e) of the Act. Time limitation - Section 73 of FA - Held that - As is well known, the limitation is a mixed question of fact and of law. Summary adjudication under Article 226 of the Constitution is hardly suited to resolve that dispute. Second, let us consider whether a statutory body can resolve, as the Electricity Board puts it, intricate interpretative issues. Indeed, the Board has laid much emphasis on Whirlpool Corporation. But the Electricity Board or even the petitioners in the other two writ petitions have not complained that the Revenue has trampled on their fundamental rights or violated the principles of natural justice. Nor are the proceedings the Revenue initiated are alleged to be ultra vires. It is not a case of the Revenue s lacking the inherent, or subject matter, jurisdiction. Then comes interpretation. Intricate or plain, interpretation is the daily bread and butter of every adjudicatory- judicial, quasi-judicial-body or even an administrative body. To apply the law to a fact, one must first read the law. The reading entails understanding. And the very understanding is an interpretative process. Interpretation is not a judicial ritual; it is a cognitive process. Period. Even otherwise, legislative interpretation is not the sole prerogative of the Constitutional Court, though the legislative invalidation is. Petition dismissed.

Summary

Issues Involved:
1. Whether the High Court should invoke its extraordinary original jurisdiction under Article 226 of the Constitution despite the availability of alternative statutory remedies.
2. Whether the petitioners have made out any exceptional circumstances to bypass the alternative remedy.
3. Whether the assessment orders are barred by limitation.
4. Whether intricate interpretation of statutory provisions justifies invoking the High Court's jurisdiction.
5. Whether the petitioners' fundamental rights are affected, principles of natural justice violated, or proceedings are ultra vires.

Detailed Analysis:

1. Invocation of Extraordinary Original Jurisdiction:
The primary issue is whether the High Court should invoke its extraordinary original jurisdiction under Article 226 of the Constitution, despite the availability of alternative statutory remedies. The petitioners argued that some proceedings are barred by limitation and involve intricate interpretation of statutory provisions, justifying the High Court's intervention. However, the Revenue contended that the petitioners have efficacious alternative remedies.

2. Exceptional Circumstances to Bypass Alternative Remedy:
The petitioners argued that the statutory remedies are inadequate due to the complexity and multiplicity of proceedings, which would be repetitive and expensive. They also claimed that public interest is paramount and that the first appellate authority or Tribunal is illequipped to decide jurisdictional issues and limitation. However, the court did not find these arguments sufficient to bypass the alternative remedy. The court emphasized that the rule of alternative remedy is discretionary and not one of compulsion, and in this case, the petitioners did not establish any exceptional grounds as laid down in Whirlpool Corporation and other precedents.

3. Limitation:
The petitioners contended that the demands are barred by limitation under Section 73 of the Finance Act. The Revenue countered that the assessment is within limitation as per the proviso to Section 73. The court noted that limitation is a mixed question of fact and law, which is better suited for determination by the statutory authorities rather than through summary adjudication under Article 226.

4. Intricate Interpretation of Statutory Provisions:
The petitioners argued that the issues involve intricate interpretation of Sections 66D(k), 66D(e), and 66E(e) of the Finance Act, which justifies invoking the High Court's jurisdiction. However, the court held that interpretation of statutory provisions is a routine function of adjudicatory bodies, including statutory authorities and tribunals, and does not by itself justify bypassing the alternative remedy.

5. Fundamental Rights, Natural Justice, and Ultra Vires Proceedings:
The court examined whether the petitioners' fundamental rights were affected, principles of natural justice violated, or if the proceedings were ultra vires. The court found no such allegations or evidence from the petitioners. Therefore, the exceptions to the rule of alternative remedy, as recognized in Whirlpool Corporation and other cases, were not applicable.

Conclusion:
The court concluded that the petitioners have efficacious alternative remedies and failed to establish any grounds warranting the High Court's interference under Article 226 of the Constitution. Consequently, the writ petitions were dismissed, with no order on costs.