2023 (5) TMI 977 - HC - Service Tax

Maintainability of writ petition - Alternative remedy of appeal - Erroneous order of the First Appellate Authority - Validity of SCN - Recovery of service tax - health care services - suppression of facts and non-filing of return - invocation of extended period of limitation - petitioner contends that the show-cause notice did not put the petitioner no. 1 to clear notice of the intention of the respondent no. 2 and that the impugned order was passed on different considerations which were not disclosed in the show-cause notice - HELD THAT - On a perusal of the impugned order-in-original it cannot be said that the points urged by the petitioners in their reply were not considered. The respondent no. 2 inter alia had dealt with the issue of limitation; discussed the effect of non-disclosure of correct taxable value of return and that in return the petitioners had declared values pertaining to their service tax liability on reverse charge basis only; gave its justification why the petitioners were liable to pay service tax despite the two exemption notifications referred to by the petitioners. Moreover although the respondent no. 2 took note of the copies of audited financial statement for financial year 2016-17 and ST-3 return filed for the period of April 2016 to September 2016 and October 2016 to March 2017 it was also observed to the effect that the petitioners had not responded to the communications made before issuing the show-cause notice to ascertain their tax liability. Accordingly it was held that failure to disclose position in conformity with the position in balance sheet amounted to suppression of correct taxable value and accordingly the tax liability was confirmed. Thus in the opinion of the Court all the points urged by the learned counsel for the petitioners before us has been dealt with by the respondent no. 2 in the impugned order. Therefore in the considered opinion of the Court the impugned order-in-appeal may be erroneous but it cannot be said that the order was wholly without jurisdiction. It is not in dispute that opportunity of personal hearing was given by the respondent no. 2. The writ petition is not for enforcement of fundamental rights or to challenge the vires of any statute. The Court is inclined to restrain itself from entertaining this writ petition in view of alternative and efficacious remedy available to the petitioners under the Goods and Services Tax Act 2017 before the Customs Central Excise and Service Tax Appellate Tribunal East Regional Bench Kolkata. It has not been disputed that the said appellate tribunal is not functional - this writ petition is dismissed at the motion stage without issuing notice to the respondents.

Summary

Issues:
The issues involved in the judgment are the quashing of an order-in-original dated 13.12.2022, passed by the Principal Commissioner, GST and Central Excise Commissionerate, Guwahati, regarding the demand of service tax, interest, and penalties on a company providing healthcare services.

Details of the Judgment:

Issue 1: Exemption from Service Tax
The petitioners, a clinical establishment providing healthcare services, challenged the demand of service tax amounting to Rs. 23,82,02,812/- for the financial year 2016-17. They claimed exemption from service tax under relevant notifications. The respondent rejected the contention and confirmed the demand, citing suppression of facts and non-filing of returns. The respondent imposed penalties and directed payment within a specified period.

Issue 2: Compliance with Legal Procedures
The petitioners argued that the show-cause notice did not adequately inform them of the respondent's intentions and that the impugned order did not address the exemption from service tax in a lawful manner. The respondent, however, contended that all issues were addressed in the impugned order, which extensively referred to statutory provisions. The petitioners sought interim relief, while the respondent suggested availing the remedy under the Goods and Services Tax Act, 2017 before the appellate authority.

Judicial Analysis:
The Court noted that the impugned order had considered the petitioners' submissions, including the issue of limitation, non-disclosure of correct taxable value, and failure to respond to communications regarding tax liability. While acknowledging potential errors in the order, the Court concluded that it was not wholly without jurisdiction. The Court highlighted the availability of an alternative and efficacious remedy under the Goods and Services Tax Act, 2017, and dismissed the writ petition without issuing notice to the respondents.

Conclusion:
The Court dismissed the writ petition, emphasizing the availability of an alternative remedy before the appellate authority. The petitioners were granted the period from the filing date till the order date as a bona fide pursuit of remedy. No costs were awarded in the matter.