2021 (4) TMI 699 - HC - Service Tax

Recovery of service tax not paid - time limitation for issuance of notice for recovery - validity of SCN - HELD THAT - The notice is a show cause notice served upon the Appellant under Section 73(1) of the Act of 1994 to explain as to why service tax specified therein should not be charged from the Appellant - Court should not interfere at the stage of show cause notice except where there is jurisdictional error or there is apparent absence of process of law. No such exceptional ground is made out. It is for the authority to consider the reply submitted by the Appellant and decide the same at the earliest by speaking order in accordance with law - appeal dismissed.

Summary

Issues:
Challenge to order dismissing writ petition against show cause notice issued under Section 73 of the Finance Act, 1994.

Analysis:
The appeal challenged the order dismissing a writ petition against a show cause notice issued by the 3rd Respondent under Section 73 of the Finance Act, 1994. The Appellant argued that the notice was vague as it did not clearly specify the taxable service against which the Appellant had received amounts to evade service tax. Additionally, it was contended that the notice was issued after the expiry of the 18-month recovery period provided under the Act of 1994. The Appellant claimed that the notice was predetermined, rendering any reply submission futile. The Appellant asserted that the Single Judge did not consider all points raised, seeking the interdiction of the impugned order.

The Respondents argued that under Section 73 of the Act of 1994, the recovery period is extended to 5 years under a specific proviso. They suggested that the Appellant could address the issues raised in the notice by submitting a reply to the authorities, who would duly consider the grounds presented. The Respondents clarified that the notice was a show cause notice, allowing the Appellant to seek clarification from the department if needed. The Respondents highlighted that the notice explicitly required the Appellant to explain why a certain amount should not be demanded under the Act of 1994.

Upon hearing both parties, the Court examined the provisions of the Act of 1994 and the content of the notice. It determined that the notice served on the Appellant was a show cause notice under Section 73(1) of the Act of 1994, requiring the Appellant to justify why the specified service tax should not be levied. The Court addressed the Appellant's contention regarding vagueness in identifying the taxable services, suggesting that the Appellant could seek clarification from the department and submit a comprehensive reply to the notice with all available grounds.

The Court emphasized that interference at the show cause notice stage was unwarranted unless there was a jurisdictional error or a clear absence of due process. Finding no exceptional grounds for intervention, the Court concluded that it was the authority's prerogative to review the Appellant's response and issue a decision promptly in accordance with the law. Consequently, the Court upheld the order of the Single Judge, dismissing the appeal due to the lack of merit.