2019 (5) TMI 877 - HC - Service Tax

Validity of Show Cause Notice (SCN) - Levy of service tax - fees collected by them towards internet fee and skill development fee - educational institution - petitioner would submit that the impugned Show Cause Notice has been issued without authority under law - HELD THAT - Being a Show Cause Notice, it is settled law that it can be challenged under Article 226 of the Constitution of India only when it has been issued without authority under law. Even though the petitioner submitted that the impugned Show Cause Notice has been issued without authority under law, it is the case of the respondent that the impugned Show Cause Notice has been issued only in accordance with law. The impugned Show Cause Notice cannot be quashed by this Court. However, the respondent is directed to pass final orders, after considering all the objections raised by the petitioner - petition disposed off.

Summary

Issues:
Challenge to Show Cause Notice under Finance Act, 1994 for service tax on internet and skill development fee by educational institution.

Analysis:
The petitioner, an educational institution, challenged a Show Cause Notice issued by the respondent under the Finance Act, 1994, demanding service tax for fees collected for internet and skill development. The petitioner contended that as an educational institution, they are exempt from the Finance Act, 1994 under Section 66D(l) which includes education up to higher secondary school or equivalent and approved vocational education courses. The petitioner argued that all their courses are recognized, and the fee collected as annual fee covers various components, including internet fee and skill development fee. The petitioner claimed that the impugned notice was issued without authority under law and filed a writ petition under Article 226 of the Constitution of India challenging it.

The respondent, through the Standing Counsel, contended that the petitioner had only challenged the Show Cause Notice and no final orders had been passed. The respondent argued that the objections raised by the petitioner could be raised before the concerned authority. The Court noted the provisions of law cited by the petitioner and the fee fixation order, concluding that the respondent must adjudicate and pass final orders after considering the objections raised in the writ petition.

The objections raised by the petitioner included being outside the purview of the Finance Act, 1994 under Section 66D(l), conducting recognized courses, and the fee fixation order specifying the total annual fee without service tax. The Court emphasized that a Show Cause Notice can be challenged under Article 226 only if issued without authority under law. While the respondent claimed the notice was issued in accordance with the law, the Court directed the respondent to pass final orders within 12 weeks, considering all objections raised by the petitioner. The Court disposed of the Writ Petition with no costs, closing the connected miscellaneous petition.