2021 (11) TMI 900 - HC - Service Tax

Jurisdiction to issue SCN - validity of summons issued to the officers of the petitioner - validity of appointment of officers of DGCEI as Central Excise Officers having all India jurisdiction - premeditated mind and lacking in judicial discipline - whether proceedings instituted are without jurisdiction? - HELD THAT - The jurisdiction of the Chief Commissioner of Central Excise, Bangalore has come to the Principal Commissioner of Tax-1, Bangalore and Chief Commissioner of Tax-II, Bangalore. Likewise, territorial jurisdiction of Principal Commissioners of Service Tax is conferred on the Principal Commissioner of Service Tax- I depicting several zones in Bangalore and Principal Commissioner of Service Tax-II depicting several zones in Bangalore. This notification comes into effect from 15-10-2014. After the 2nd respondent issuing summons and recording statements, the matter is referred to the Principal Additional Director General, Central Excise Intelligence of Service Tax. This is in terms of Notification issued on 15.10.2014 pursuant to which, the Principal Additional General, Central Excise Intelligence, Principal Additional Director General, Service Tax or Principal Additional Director General, Audit shall exercise the power of the Principal Commissioner. The five officers who are indicated are empowered to exercise the powers of the Principal Commissioner. Likewise, Senior Intelligence Officer, Central Excise Intelligence, Superintendent, Service Tax or Superintendent Audit could exercise the power of the Superintendent. The justification of the revenue is in terms of the said notification, the summons that were issued by the Intelligence Officer is now transferred to Principal Commissioner who has also issued a detailed show cause notice which is impugned in the writ petition to answer the notice - a Central Excise Officer would mean the Principal Chief Commissioner of Central Excise, Principal Commissioner of Central Excise, Additional Commissioner of Central Excise and other officers as defined under the Act. If the definition of Central Excise Officer under the Act is read in tandem with the impugned notification, it becomes unmistakably clear that a Principal Commissioner of Central Excise is also a Central Excise Officer and the power of the Principal Commissioner can be exercised by the aforesaid 5 officers one of whom is the Principal Additional Director General, Central Excise Intelligence. In taxing parlance, an Assessing Officer before whom a particular assessee goes, Authority cannot transfer the proceedings even to the next assessing officer as it becomes without jurisdiction. It is not a case of the kind at hand as the second respondent has not exercised the jurisdiction of the competent authority. Though the summons emanate from the office of the Deputy Director of Directorate General of Central Intelligence, the file is transferred to the competent authority. The show cause notice is issued by the proper officer. Therefore, I decline to accept that the show cause notice issued is without jurisdiction. The show cause notice is within the jurisdiction and not without, as contended. Therefore, the petitioner has to answer to the show cause notice and further proceedings to take place in accordance with law. Petition dismissed.

Issues Involved:
1. Legality and constitutionality of the summons issued by the respondent.
2. Jurisdiction of the officers of DGCEI as 'Central Excise Officers' with all-India jurisdiction.
3. Validity of the show cause notices issued by the respondent.
4. Allegation of coercion to pay service tax on reimbursement of expenses.
5. Duplication of jurisdiction between different Commissionerates.

Detailed Analysis:

1. Legality and Constitutionality of the Summons Issued by the Respondent:
The petitioners challenged the summons issued on 28-07-2016, claiming they were unconstitutional, illegal, and violative of the Finance Act, 1994. The court examined the summons, which required the petitioner to provide various financial documents and appear before the Senior Intelligence Officer. The court found that the summons were issued under Section 14 of the Central Excise Act, 1944, as applicable via Section 83 of the Finance Act, 1994. The court concluded that the summons were legally issued and within the jurisdiction of the issuing officer.

2. Jurisdiction of the Officers of DGCEI as 'Central Excise Officers' with All-India Jurisdiction:
The petitioners contested the notification dated 16-09-2014, which appointed officers of DGCEI as 'Central Excise Officers' with all-India jurisdiction. The court analyzed Rule 3 of the Central Excise Rules, 2002, and Rule 3 of the Service Tax Rules, 1994, which empower the Central Board of Excise and Customs to appoint officers with specified jurisdiction. The court found that the notification was consistent with the Act and Rules, and the officers mentioned were duly authorized to exercise their powers across India.

3. Validity of the Show Cause Notices Issued by the Respondent:
The show cause notice dated 13-12-2016 was also challenged by the petitioners. The court noted that the notice was issued by the Principal Additional Director General of the Directorate General of Central Excise Intelligence, who is authorized to act as a Principal Commissioner. The court determined that the show cause notice was issued by a competent authority and within the jurisdiction, thus rejecting the petitioners' claim of invalidity.

4. Allegation of Coercion to Pay Service Tax on Reimbursement of Expenses:
The petitioners argued that they were being coerced to pay service tax on reimbursement of expenses without a proper assessment. The court examined the proceedings and found that the petitioners were given an opportunity to present their case and respond to the show cause notice. The court held that the process followed was in accordance with the law and did not constitute coercion.

5. Duplication of Jurisdiction Between Different Commissionerates:
The petitioners claimed that there was a duplication of jurisdiction, as they were registered under the Service Tax Commissionerate in Bangalore, while the proceedings were initiated by officers in Belagavi. The court clarified that the notification dated 16-09-2014 allowed for PAN India operations by the officers of DGCEI, thus justifying the jurisdiction assumed by the officers in Belagavi. The court concluded that there was no duplication of jurisdiction and the proceedings were valid.

Conclusion:
The court dismissed the writ petition, holding that the summons and show cause notices were legally and validly issued, and the officers had the jurisdiction to conduct the proceedings. The court directed the petitioners to respond to the show cause notice and participate in the proceedings as per the law.

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