2021 (3) TMI 966 - HC - Service Tax

Maintainability of petition - availability of alternative remedy of appeal - doctrine of mutuality - Levy of service tax on incorporated clubs or associations - HELD THAT - The issue is pending before the Court since 2016 onwards and the present writ petition was filed in the year 2018 and it is also informed that the appellant has also filed another writ petition in W.P.No.18838 of 2020, which is also pending and in the two cases, interim orders are still in force. The writ petition could be heard and disposed of on merits leaving it open to the respondent to raise all contentions as was canvassed before this Court both on merits as well on the question of maintainability of the writ petition - the writ petition is restored to the file of this Court to be heard.

Summary

Issues Involved:
1. Maintainability of the writ petition in light of alternative remedy.
2. Violation of principles of natural justice.
3. Applicability of the theory of mutuality and relevant judicial precedents.
4. Interim orders and pending writ petitions.

Issue-wise Detailed Analysis:

1. Maintainability of the writ petition in light of alternative remedy:
The appellant challenged the Order-in-Original dated 15.11.2017, which confirmed the demand of service tax and imposed penalties. The writ petition was dismissed by the Single Bench, citing the Supreme Court's decision in *Assistant Commissioner (CT) LTU, Kakinada Vs. Glaxo Smith Kline Consumer Health Care Limited*. The High Court, however, noted that the Supreme Court did not establish an absolute bar on writ petitions under Article 226 of the Constitution when an alternative remedy is available. The Court highlighted that exceptions exist, such as unfairness, unreasonableness, perversity, lack of jurisdiction, and violation of natural justice, which warrant judicial intervention.

2. Violation of principles of natural justice:
The Court examined whether the appellant's case fell within the exceptions allowing for a writ petition despite the availability of an alternative remedy. The appellant argued that there was a violation of natural justice as no personal hearing was granted before the penalty was levied. The Court found that the Assessing Officer did not provide an opportunity for a personal hearing, despite the appellant submitting objections and the significant time lapse between the proposal and the order. The Court considered this a serious issue affecting the validity of the penalty.

3. Applicability of the theory of mutuality and relevant judicial precedents:
The appellant contended that their case was covered by the Supreme Court's decision in *State of West Bengal Vs. Calcutta Club Limited*, which held that incorporated clubs or associations are not liable to pay service tax. The appellant also referenced decisions in *Ranchi Club Ltd. Vs. Chief Commissioner of Central Excise & Service Tax* and *Sports Club of Gujarat Ltd. Vs. Union of India*. The respondent argued that the Order-in-Original had already addressed these points. The Court noted that these issues needed to be addressed in the writ petition with a counter affidavit from the respondent.

4. Interim orders and pending writ petitions:
The Court acknowledged that the writ petition had been pending since 2018 and related issues were also pending in other writ petitions filed by the appellant. Given the interim orders in force and the appellant's benefit of interim stay from 04.05.2018, the Court decided to restore the writ petition to be heard along with the other pending writ petitions. The Order-in-Original dated 15.11.2017 was stayed until the disposal of these writ petitions.

Conclusion:
The writ appeal was allowed, and the order passed in the writ petition was set aside. The writ petition was restored to the file of the Court to be heard along with other pending writ petitions. The interim stay of the Order-in-Original dated 15.11.2017 was extended until the disposal of the writ petitions. The Court granted liberty to the counsel on either side to move for early listing of all the writ petitions.