2023 (6) TMI 1248 - HC - Service Tax

Maintainability of petition - availability of alternative and efficacious remedy - Validity of the demand -cum- show cause notice - service tax on service component of contractual receipts, which are otherwise exempt from the incidence of service tax - HELD THAT - It would be relevant to refer to the decision of the Supreme Court of India in the case of The State of Maharashtra Ors. v. Greatship (India) Ltd., 2022 (9) TMI 896 - SUPREME COURT , wherein it has been observed and held that No valid reasons have been shown by the assessee to by-pass the statutory remedy of appeal. This Court has consistently taken the view that when there is an alternate remedy available, judicial prudence demands that the court refrains from exercising its jurisdiction under constitutional provisions. Therefore, in the light of the observations made by the Supreme Court of India in the herein before referred case of Greatship (India) Ltd., the existence of an alternative relief would dissuade the Court from entertaining the writ petition. The Court is of the considered opinion that as the writ petition does not disclose any documents by which prima facie satisfaction can be recorded that all receipts for which TDS was deducted which is reflected in Form 26AS are entitled for exemption, hence, the decisions cited by the petitioner cannot be applied under the facts unique to this case - The direction to relegate a tax payer to avail statutory remedy, which is more efficacious is the principle of self-restrain adopted by the Constitutional Courts. Therefore, as alternative and efficacious remedy is available to the petitioner, this Court is not inclined to entertain this writ petition and therefore, this writ petition challenging the legality of the impugned order-in- original stands dismissed at the motion stage without issuance of notice upon the respondents. It is provided that if the petitioner is advised to seek alternative and efficacious remedy by filing a statutory appeal, the period spent from 21.03.2022 till the date of delivery of order i.e. 22.06.2023, would be entitled to be excluded from computation of limitation. Petition dismissed.

Summary

Issues Involved:
1. Validity of the demand-cum-show cause notice dated 07.11.2019.
2. Validity of the order-in-original dated 28.12.2021.
3. Maintainability of the writ petition in light of alternative and efficacious remedy.

Summary:

Issue 1: Validity of the demand-cum-show cause notice dated 07.11.2019

The petitioner challenged the demand-cum-show cause notice dated 07.11.2019, which detailed the computation of service tax liability, contraventions of the Finance Act, 1994, and invoked the extended period of limitation. The petitioner provided a brief reply admitting gross receipts but claimed the contract receipts were non-taxable. The respondents argued that the petitioner failed to respond to earlier letters requesting details and did not deny receiving these letters. The court noted that the petitioner did not provide sufficient proof that the receipts were exempt from service tax.

Issue 2: Validity of the order-in-original dated 28.12.2021

The order-in-original confirmed a service tax demand of Rs. 2,95,33,148/- and imposed penalties under various sections of the Finance Act, 1994. The petitioner argued that the contract works were exempt under the Mega Exemption notification no. 25/2012-ST dated 20.06.2012. However, the court found that the petitioner had not registered under the Central Goods and Service Tax Act, 2017, nor filed service tax returns, and did not provide adequate documentation to support the claim of exemption.

Issue 3: Maintainability of the writ petition in light of alternative and efficacious remedy

The respondents contended that the writ petition was not maintainable due to the availability of an alternative remedy through an appeal. The court referred to the Supreme Court's decision in The State of Maharashtra & Ors. v. Greatship (India) Ltd., emphasizing that statutory remedies should not be bypassed. The court concluded that the petitioner failed to provide sufficient evidence to justify the exemption claims and highlighted the principle of judicial restraint in entertaining writ petitions when alternative remedies are available.

Conclusion:

The court dismissed the writ petition, directing the petitioner to seek alternative and efficacious remedy through a statutory appeal. The period from 21.03.2022 to 22.06.2023 was excluded from the computation of limitation for filing the appeal. No order as to costs was made.