2020 (1) TMI 944 - HC - Service Tax

Jurisdiction - appointment and jurisdiction of Central Excise Officers post GST - Validity of SCN issued demanding service tax post GST - power to inquiry / investigate / audit - Repealing of Chapter V of Finance Act of 1994 - Vires of Notification dated 09.06.2017 - Rule 3 of the Central Excise Rules, 2002 - recovery of short paid money alongwith interest and penalty - HELD THAT - Perusal of Rule 3 in general and Sub Rule (2) of the said Rule in particular makes it clear that the Board in its discretion can specify the jurisdictional limits of the Excise Officers, for the purpose of the Act and the Rules promulgated thereunder; this apart, Sub Rule (3) is structured in such a way that any Central Excise Officer may exercise the powers vested in his sub-ordinate officer; the impugned Notification thus needs to be interpreted in the light of sec.2(b) of the Act r/w Rule 3 of the 2002 Rules; in terms of the impugned Notification, the territorial jurisdiction of Bengaluru South Commissionerate is vested in the Commissioner of Central Excise and Service Tax, Audit-I, Commissionerate, Bengaluru, as rightly contended by the Panel Counsel for the Revenue. The reliance by the counsel for the petitioner on the decision in AIR INDIA VERSUS UNION OF INDIA AND ORS. 1995 (7) TMI 425 - SUPREME COURT , does not come to his aid; the Apex Court banking upon Benian on Statutory Interpretation, 2nd Edition, held that if a subordinate legislation is to survive the repeal of its parent statue, the repealing statute must say it in so many words and by mentioning the title of the subordinate legislation; there is no quarrel with this proposition at all; the question is with its invocability when the Central GST Act, 2017 which repeals the Acts in question makes a saving provision that too by naming them, in so many words; it has been a settled principle of law of precedent that a decision is an authority for what it actually lays down, and not for what all logically follows from what is laid down therefore, much milk cannot be derived by placing reliance on the said ruling. Having held the impugned Notification as being valid and applicable to the petitioner, this court declines to quash the impugned notice which only calls upon him to submit a reply for showing cause against the proposed action namely, the recovery of 'short payment' with interest/penalty Once a decision is taken by the authority after considering the cause shown by the noticee, writ jurisdiction may become invocable, subject to all just exceptions; therefore, this court declines to examine the validity and sustainability of the impugned Show Cause Notice. This Writ Petition being devoid of merits, fails - decided against petitioner.

Summary

Issues:
Challenge to Notification dated 09.06.2017 and Show Cause Notice dated 11.04.2018 under Central GST Act, 2017.

Detailed Analysis:

1. Challenge to Notification and Show Cause Notice:
The petitioner, a registered Service Tax Assessee, challenged a Notification and a Show Cause Notice issued by the 4th respondent under the Central GST Act, 2017. The petitioner sought to quash the Notification and argued that it was not applicable to them. The respondents contended that the Writ Petition was premature as the petitioner had not exhausted the remedy of replying to the Show Cause Notice. The court declined to grant indulgence based on the arguments presented.

2. Legal Validity of the Impugned Notification:
The court analyzed the legal validity of the impugned Notification issued under the Central Excise Act, 1944, and its applicability post the enactment of the CGST Act, 2017. The court emphasized that the power to initiate proceedings was retained even after the repeal of certain Acts, as contended by the Revenue's counsel. The court also delved into the jurisdictional aspects and the applicability of the impugned Notification to the proceedings.

3. Interpretation of Central Excise Rules and Jurisdiction:
The court examined Rule 3 of the Central Excise Rules, 2002, which specifies the appointment and jurisdiction of Central Excise Officers. The court highlighted that the impugned Notification needed to be interpreted in light of this rule. The territorial jurisdiction of the Bengaluru South Commissionerate was a key aspect of the analysis, with the court upholding the contentions put forth by the Revenue's Panel Counsel.

4. Territorial Jurisdiction and Legal Precedents:
The court referred to legal precedents to address the issue of territorial jurisdiction. It cited a Supreme Court observation regarding the objection to local jurisdiction not being on the same footing as incompetence of the court. The court emphasized that the objection to the impugned Notification's incompetence and inapplicability was not sustainable based on the legal principles discussed.

5. Validity of Show Cause Notice and Writ Jurisdiction:
The court declined to quash the Show Cause Notice, emphasizing that the petitioner should first show cause to the authority issuing the notice. The court highlighted that the writ jurisdiction might be invoked after the authority considered the cause shown by the noticee. The petitioner was granted time to submit a reply to the Show Cause Notice.

6. Conclusion and Relief Granted:
The court dismissed the Writ Petition for lack of merits but granted the petitioner eight weeks to respond to the Show Cause Notice. The court directed that no precipitatory action should be taken against the petitioner until after their reply was considered and the decision conveyed. The court kept all other contentions of the parties open and awarded no costs in the matter.