2020 (4) TMI 172 - HC - Service Tax

Validity of issuance of SCN - Demand of service tax - Post GST era - Case of petitioner is that the proceedings as per the said show cause notice has been initiated only as late as on 24.9.2018 after the repeal of the Chapter V of the Finance Act 1994 and after it ceased to be in force with effect from 1.07.2017 - omission of provisions of Sections 173 and 174 of the CGST Act 2017 - HELD THAT - The impugned Ext.P4 proceedings dated 28.11.2019 issued by the 2nd respondent is essentially a show cause notice and the petitioner is yet to respond to the same. It is ordered that the petitioner Company may give their detailed written submissions/written objections in the matter and the initial objections may be with regard to maintainability and lack of jurisdiction and may also advert to the merits of the matter. The 2nd respondent will afford reasonable opportunity of being heard to the petitioner through authorised counsel and consider all the contentions of the petitioner both with reference to the maintainability lack of jurisdiction etc. as well as the merits of the matter. Thereafter after affording reasonable opportunity of being heard to the petitioner the 2nd respondent will advert to all the above said contentions and should take a considered decision on the crucial issue as to whether the 2nd respondent has got jurisdiction in the matter more particularly regarding the tenability or otherwise of the above said contention raised by the petitioner that the 2nd respondent lacks jurisdiction in that regard and only if the 2nd respondent takes a considered view that jurisdiction is available he can proceed and deal with the merits of the matter. Petition disposed off.

Summary

Issues:
1. Validity of the show cause notice dated 28.11.2019.
2. Authority of law in proceedings initiated as per the notice.
3. Applicability and validity of notifications relied upon in the show cause notice.
4. Jurisdiction of the 2nd respondent in the matter.

Analysis:
1. The petitioner challenged the show cause notice dated 28.11.2019, contending that it was issued without proper authority of law. The petitioner argued that the proceedings initiated after the repeal of Chapter V of the Finance Act, 1994, lacked legal basis. The petitioner sought a writ to quash the notice, asserting that the notifications referenced in the notice were invalid due to the repeal of the parent statute. The High Court noted that the notice was essentially a show cause notice, and the petitioner had not yet responded to it.

2. The respondents, specifically respondents 2 to 4, filed a statement citing Sections 173 and 174 of the CGST Act, 2017. These sections deal with the amendment and repeal of certain acts, ensuring that the repeal does not affect ongoing legal proceedings, rights, obligations, or liabilities acquired under the amended or repealed acts. The Court acknowledged the legal provisions presented by both sides and emphasized that the petitioner had the opportunity to raise objections and present written submissions regarding the maintainability and lack of jurisdiction of the 2nd respondent.

3. The Court held that the petitioner could challenge the show cause notice through the discretionary jurisdiction conferred under Article 226 of the Constitution of India. It directed the petitioner to submit detailed written objections, focusing on maintainability and lack of jurisdiction, within a specified timeframe. The 2nd respondent was instructed to provide a fair hearing to the petitioner through authorized counsel, considering all contentions raised by the petitioner. The Court emphasized the importance of the 2nd respondent determining the issue of jurisdiction before delving into the merits of the matter. The petitioner was given the opportunity to present objections promptly, following which the 2nd respondent would proceed based on the submissions and conduct a thorough review before making a decision on jurisdiction.

4. In conclusion, the High Court disposed of the Writ Petition (Civil) with the mentioned observations and directions. It emphasized the need for the 2nd respondent to carefully consider the jurisdictional issues raised by the petitioner before proceeding with the merits of the case. The judgment highlighted the importance of affording the petitioner a fair opportunity to present their objections and ensuring a just and thorough review of the matter before any further actions were taken by the 2nd respondent.