2019 (7) TMI 919 - HC - Service Tax

Levy of Service tax - collection of toll - SCN is challenged on the ground that the respondent No.3 has no authority to collect the service tax which has already been abolished/repealed with effect from 1-7-2017 - HELD THAT - The learned counsel for the petitioner has invited our attention to the communications from the Ministry of Finance dated 22-2-2012 and 21-5-2019 clarifying that the service by way of access to a road or a bridge on payment of toll charges is included in the Negative List, which means that no service tax can be levied on the service. The petitioner shall be at liberty to file the reply to the show cause notice. The proceedings may go on; however, no coercive steps shall be taken for recovery of the amount, if any order is passed.

Summary

Issues:
Challenge to show cause notice for recovery of service tax dues.

Analysis:
The petition challenges a show cause notice issued by the respondent No.3 Additional Director General under the Directorate General of GST Intelligence, Nagpur, seeking recovery of service tax dues amounting to ?22,45,85,750 for the period from October 2013 to June 2017 related to toll collection. The challenge is based on the argument that the respondent No.3 lacks the authority to collect service tax that was abolished/repealed from 1-7-2017 onwards.

The petitioner's counsel referred to communications from the Ministry of Finance dated 22-2-2012 and 21-5-2019, which clarified that the service of providing access to a road or a bridge against toll charges falls under the Negative List, exempting it from service tax. This clarification supports the petitioner's contention that no service tax can be levied on such services.

The court directed the petitioner to file a reply to the show cause notice and allowed the proceedings to continue. However, the court ordered that no coercive measures should be taken for recovery of the amount mentioned in the notice until a final order is passed. This interim relief aims to protect the petitioner from any immediate adverse consequences while the legal process unfolds.

Overall, the judgment reflects a careful consideration of the legal arguments presented by both parties regarding the authority to collect service tax and the applicability of tax exemptions to toll collection services. The court's decision to allow the proceedings to proceed while providing interim protection to the petitioner demonstrates a balanced approach to resolving the dispute.