2019 (8) TMI 1237 - HC - Service Tax

Whether activity of garbage disposal is liable to service tax - Dispute between service provider and recipient - Return of Fixed Deposit Receipts (FDRs) retained - Pending adjudication of the said issue before the Service Tax Department, the respondents withheld the security deposits in the form of FDRs offered by the appellant/petitioner - invocation of arbitration clause - HELD THAT - the contention of the learned counsel for the appellant that the judgment in the case of Airport Retail Pvt. Ltd. 2014 (8) TMI 102 - DELHI HIGH COURT has for all effects and purposes, settled the issue of leviability of Service Tax on services rendered by the appellant/petitioner to the respondents in both the appeals, in terms of the License Agreement, is not borne out. Nor is learned counsel correct in asserting that since the said decision has been affirmed by the Supreme Court, nothing further survives for adjudication by the Appellate Authority under the Act and consequently, the security offered by the appellant in the form of FDRs ought to be released by the respondents forthwith. We are in complete agreement with the view expressed by the learned Single Judge that the dispute raised in the writ petitions cannot be a subject matter of judicial review under Article 226 of the Constitution of India. It is for the appellant to invoke the arbitration clause, if she so desires - Moreover, despite an opportunity afforded to the appellant/petitioner to participate in the appeal filed by the respondent No.1/AAI before the CESTAT against the order passed by the Commissioner, Service Tax in terms of the judgment dated 12.04.2012, for reasons best known to her, she has elected to stay away from the said proceedings that culminated in the order dated 02.01.2015, whereunder a particular aspect relating to quantification of Service Tax demanded by the Revenue Department has been remanded to the Commissioner, Service Tax for consideration. Writ proceedings are not an appropriate forum to decide as to whether Service Tax would be leviable on garbage collection charges and if the answer is in the affirmative, who would be liable to pay Service Tax more so, when the appellant/petitioner has not even impleaded the Service Tax Authorities as a party in the writ petitions. Impugned order upheld - appeal dismissed.

Summary

Issues Involved:
1. Return of Fixed Deposit Receipts (FDRs) retained by authorities against Service Tax liabilities.
2. Applicability and adjudication of Service Tax on garbage disposal charges.
3. Invocation of arbitration clause for resolving disputes.

Issue-wise Detailed Analysis:

1. Return of Fixed Deposit Receipts (FDRs) retained by authorities against Service Tax liabilities:
The appellant sought a writ of mandamus for the return of FDRs retained by the Airports Authority of India (AAI) and Delhi International Airport Limited (DIAL) against potential Service Tax liabilities. The High Court dismissed this plea, directing the appellant to resolve the dispute through arbitration as per the contract's arbitration clause. The court noted that the security deposits were withheld pending adjudication by the Service Tax Department, and the appellant had remedies available through arbitration.

2. Applicability and adjudication of Service Tax on garbage disposal charges:
The appellant had agreements with AAI and DIAL for garbage disposal services, and a dispute arose regarding the applicability of Service Tax on these services. The Service Tax Department issued show cause notices to the respondents. The High Court previously allowed the appellant to participate in appeal proceedings before the Central Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT upheld the Service Tax on several revenue streams but remanded the quantification issue to the Commissioner. The High Court noted that the appellant did not participate in these proceedings and instead filed another writ petition, which was rightly dismissed.

3. Invocation of arbitration clause for resolving disputes:
The High Court emphasized that the arbitration clause in the License Agreement should be invoked to resolve disputes regarding Service Tax liabilities. The court reiterated that writ proceedings were not appropriate for deciding the Service Tax applicability on garbage collection charges, especially when the Service Tax Authorities were not impleaded. The court upheld the view that the appellant should seek resolution through arbitration, as previously directed in the earlier round of litigation.

Conclusion:
The High Court dismissed the appeals, affirming that the appellant's remedy lies in invoking the arbitration clause for resolving disputes related to Service Tax liabilities. The court found no error in the impugned order and emphasized that the writ petitions were not the proper forum for such disputes. The parties were left to bear their own expenses.