2019 (8) TMI 493 - HC - Service Tax

Appealable Order or not - recovery of service tax - Sharing of revenue - double levy of tax on freight - Section 129A of the Act - alternative remedy - HELD THAT - The exercise of this writ jurisdiction is discretionary and it is not exercised only because it can be exercised. Therefore, the Courts have refused to exercise discretion under Article 226 of the Constitution of India, where an efficacious alternative remedy to obtain the same relief is available, as a self imposed limitation - Therefore, we now examine the submission on behalf of the Petitioner to decide whether this is a fit case to exercise our discretion, even though an efficacious alternative remedy of appeal under the Act from the impugned order dated 21 December 2016 to the Tribunal is available. The first submission is that in view of the status of the Petitioner, the Writ Court should exercise its discretion and entertain this petition - HELD THAT - The status of a party can never be the basis of exercising discretion to entertain a writ. In fact, the discretion is exercised on the basis of the action of the authority being without jurisdiction and not on the basis of the status of the party moving the Court. To decide on the basis of the status of the party would be the very antithesis of the rule of law, viz. equality before the law, in the absence of any statutory distinction. The fact that the Petitioner is a Limited Company, has shares distributed in their entirety between the Central and State Governments does not warrant a different treatment under the Act. There is no reason, at this stage, to set aside the order of the Commissioner and restore the show cause notice to Commissioner so as to only compel the Revenue to follow the Master Circular and keep the show cause notice in abeyance. Question of tax on the entire freight having been collected - HELD THAT - It is not open to the Revenue to collect again a part of the consideration as service tax. This is an issue, which is best left to the appellate authority to deal with. It is an issue on merits. Therefore, no occasion to entertain this petition can arise. In these circumstances, we are not exercising our extraordinary jurisdiction to entertain this petition. Thus, petition dismissed. However, we make it clear that as stated on instructions by Mr. Nankani for the Petitioner, in case the Petitioner does file an appeal within a period of four weeks from today, then the Tribunal would consider the appeal on merits, without taking up the issue of limitation - petition disposed off.

Summary

Issues Involved:
1. Challenge to the order dated 21st December 2016 by the Commissioner, Service Tax, Mumbai.
2. Availability and appropriateness of alternative remedy under the Finance Act, 1994.
3. Alleged discrimination in the treatment of similarly placed entities.
4. Merits of the impugned order regarding the collection of service tax.

Issue-wise Detailed Analysis:

1. Challenge to the Order Dated 21st December 2016:
The petitioner challenged the order dated 21st December 2016, issued by the Commissioner of Service Tax, Mumbai, under Article 226 of the Constitution of India. The impugned order pertained to the recovery of service tax under the Finance Act, 1994.

2. Availability and Appropriateness of Alternative Remedy:
The court noted that there was an alternative remedy available under the Act to challenge the impugned order before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT). The court expressed a prima facie inclination not to interfere with the impugned order in its writ jurisdiction, emphasizing the availability of an efficacious alternative remedy as a self-imposed limitation on exercising writ jurisdiction.

3. Alleged Discrimination in Treatment:
The petitioner argued that other Railway Corporations, similarly constituted and involved in the same activities, had their notices for recovery of service tax withdrawn. Specifically, the petitioner referred to the order dated 25th January 2016 by the Commissioner of Service Tax, Delhi, in favor of M/s. Bharuch Dahej Railway Co. Ltd. The petitioner contended that they should be treated equally under the fundamental requirement of the Rule of Law. However, the court observed that the Revenue had not accepted the Tribunal's decision in similar cases and was in the process of appealing against them, indicating a consistent stance by the Revenue.

4. Merits of the Impugned Order Regarding Collection of Service Tax:
The petitioner argued that the entire freight amount had already been taxed by the Railways, and the Revenue was now seeking to tax a part of the same amount again. The petitioner urged that the unique status of their shareholding pattern, entirely distributed between the Central and State Governments, and their operation under the Ministry of Railways warranted the court's intervention. However, the court held that the status of the petitioner could not be a basis for exercising discretion to entertain the writ. The court emphasized that the action of the authority being without jurisdiction, rather than the status of the party, should be the basis for exercising discretion.

The court also noted that the issue was still pending consideration before the Supreme Court in the case of Mudra Port & Special Economic Zone Ltd., and the Revenue was contesting the issue uniformly across different cases. Consequently, the court found no justification to interfere with the impugned order dated 21st December 2016.

Conclusion:
The court dismissed the petition, directing the petitioner to approach the appellate authority by filing a statutory appeal under the Act. The court also condoned the delay in filing the appeal if done within four weeks, considering the petitioner was bona fide prosecuting the writ petition. The petition was disposed of with the direction that the Tribunal should consider the appeal on merits without addressing the issue of limitation.