2022 (2) TMI 619 - HC - Service Tax

Jurisdiction - legality of powers bestowed upon the DGGSTI, vide serial No.4 of the Notification No. 14/2017 - seeking declaration that Section 66E(e) of the Finance Act, 1994 as violative of Articles 14, 19(1)(g) and 265 of the Constitution of India - HELD THAT - Issue notice. Mr.Dhawal Uniyal, Advocate accepts notice on behalf of Respondent No.1 and Mr.Satish Kumar, Senior GSC accepts notice on behalf of Respondents No.2 to 6. They pray for and are permitted to file their counter affidavits within four weeks. Rejoinder affidavits, if any, be filed before the next date of hearing. List on 11th April, 2022 along with connected matters.

Summary

Issues:
Challenge to Show Cause Notice dated 30th December, 2020 | Legality of powers bestowed upon DGGSTI | Validity of Section 66E(e) of the Finance Act, 1994

Challenge to Show Cause Notice:
The petitioner filed a writ petition challenging the Show Cause Notice dated 30th December, 2020, issued by Respondent No. 2. The impugned notice demanded service tax of ?38,01,15,705 from the petitioner under Section 73(1) of the Finance Act, 1994, along with interest and penalties. The notice classified the core banking facilities provided by the petitioner to customers free of cost as a taxable service, seeking tax on alleged notional consideration. The petitioner argued that similar writ petitions by other banks on the same issue were already pending before the court. Referring to a previous case, the petitioner highlighted that the court had directed proceedings to continue but no final order to be passed. The entire batch of writ petitions on this issue was listed for hearing, and the stay order was extended until the specified date.

Legality of Powers Bestowed upon DGGSTI:
The petitioner sought a declaration that the powers granted to the DGGSTI, as per Notification No. 14/2017, were illegal and without lawful authority. The petitioner contended that the said powers were being misused or applied incorrectly. The court issued notice to the respondents, who accepted it and were given time to file their counter affidavits. The proceedings pursuant to the impugned Show Cause Notice were allowed to continue until the next hearing date, with a specific instruction that no adjudication order should be passed during this period.

Validity of Section 66E(e) of the Finance Act, 1994:
Additionally, the petitioner sought a declaration that Section 66E(e) of the Finance Act, 1994, was violative of Articles 14, 19(1)(g), and 265 of the Constitution of India. The petitioner argued that this provision was unconstitutional and infringed upon fundamental rights. The court did not provide a specific ruling on this issue in the summarized text, but it was part of the overall challenge presented by the petitioner in the writ petition.

In conclusion, the judgment addressed multiple issues raised by the petitioner, including the challenge to the Show Cause Notice, the legality of powers granted to the DGGSTI, and the validity of a specific section of the Finance Act, 1994. The court allowed the proceedings to continue, accepted the respondents' notice, and scheduled the next hearing date. The detailed arguments presented by the petitioner regarding tax demands on banking services and constitutional validity were considered within the broader legal framework of the case.