2019 (11) TMI 441 - HC - Service Tax

Recovery order - alleged non-payment of service tax dues under the Finance Act, 1994 - proceedings of recovery of third party from the petitioners - HELD THAT - It is an agreed position between the parties that given the above facts and the nature of the dispute between the parties, it would be best adjudicated upon by the Commissioner of CGST and CE, Mumbai Central Commissionerate. This adjudication by the Commissioner of CGST and CE, Mumbai Central would be on the basis that the impugned communications dated 6th February, 2018, 13th March, 2018, 10th April, 2019, 17th July, 2018 and 4th January, 2019 issued by respondent no.1 Deputy Commissioner of Service Tax would be construed as show-cause notices to the petitioners - The Commissioner of CGST and CE would pass an appropriate order on the representation by following due process of law including the principles of natural justice. Petition disposed off.

Summary

Issues involved:
Challenge to recovery notices for non-payment of service tax dues under the Finance Act, 1994; Jurisdiction of recovery proceedings against petitioners; Dispute regarding liability for tax dues of another entity; Determination of facts and application of appropriate law; Adjudication by the Commissioner of CGST and CE, Mumbai Central Commissionerate; Continuation of ad-interim relief granted.

Analysis:
The petition challenged recovery notices issued to the petitioners for alleged non-payment of service tax dues under the Finance Act, 1994, related to M/s. Photolibrary India Pvt. Ltd. The petitioners also contested a Garnishee Notice issued to HSBC Bank for the alleged dues of M/s. Photolibrary India Pvt. Ltd. The petitioners claimed no association with M/s. Photolibrary India Pvt. Ltd., questioning the jurisdiction of the recovery proceedings against them.

The respondents argued that a Board Resolution by M/s. Photolibrary India Pvt. Ltd. held the petitioners liable for tax liabilities, based on a belief that the petitioners, through a takeover of companies in Australia, were responsible for the dues of M/s. Photolibrary India Pvt. Ltd. The dispute required a determination of facts and the application of the appropriate law to establish liability.

Both parties agreed to refer the dispute to the Commissioner of CGST and CE, Mumbai Central Commissionerate for adjudication. The impugned communications were to be treated as show-cause notices, with the petitioners given 15 days to respond. The Commissioner would then pass an order following due process of law and principles of natural justice, aiming for an expeditious resolution.

In case the Commissioner's order was adverse to the petitioners, the respondents were restrained from acting upon it for two weeks from communication to the petitioners. The ad-interim relief granted earlier would continue until the Commissioner's order and for an additional two weeks thereafter. The petition was disposed of in accordance with the above terms, ensuring a fair adjudication process and protection of the petitioners' rights during the proceedings.