2023 (9) TMI 1195 - HC - Service Tax

Non-payment of service tax - Transport of Goods by Road (GTA) Service under RCM - Manpower Recruitment and Supply Service (MRA) - service of Erection, Commissioning and Installation Service - Rent 2 A-Cab Services under RCM - Director s Sitting Fee - short payment of service tax due to wrong classification of service under Works Contract Service (WCS) instead of Erection, Commissioning and Installation Service - Commercial or Industrial Construction Services - Legal Consultancy Service under RCM. HELD THAT - As seen from the sanction order, there is no sanction which is granted in favour of the petitioner for which reason the proceedings against the petitioners are void ab initio. Sanction is sine qua non for prosecution in the present case. Special counsel also conceded to the fact. The proceedings against petitioner/A2 on the file of Special Judge for Economic Offences, City Criminal Courts, Hyderabad are hereby quashed - Petition allowed.

Summary

Issues involved:
The judgment deals with the issue of prosecution for evasion of service tax against the petitioner, who was arrayed as A2 in a complaint filed by the Assistant Commissioner (Legal & Prosecution) of the Central Tax, GST Commissioner at Hyderabad. The key issue revolves around the absence of sanction for prosecuting the petitioner, as the sanction order was specifically granted only against another company, M/s.BS Limited (A1).

Details of the Judgment:
The complaint lodged against the petitioner was for the evasion of service tax in various categories, including Transport of Goods by Road service, Manpower Recruitment and Supply service, Erection, Commissioning and Installation service, Works Contract service, Commercial or Industrial Construction services, Rent A-Cab services, Legal Consultancy service, and Director's Sitting Fee under Other Taxable Service. The total service tax liability amounted to Rs. 2,41,83,878, which the company had paid in full even before receiving a show-cause notice.

The prosecution was initiated based on a sanction order dated 17.07.2019, which granted sanction to prosecute M/s.BS Limited (A1) but did not include any sanction against the petitioner. The order specifically mentioned launching prosecution against M/s.BS Limited and did not extend the sanction to the petitioner, who was identified as the Director. The absence of sanction against the petitioner rendered the proceedings void ab initio, as highlighted by the court and acknowledged by the Special Counsel representing the case.

Therefore, the court quashed the proceedings against the petitioner (A2) in the case pending before the Special Judge for Economic Offences at the City Criminal Courts in Hyderabad. The judgment allowed the Criminal Petition filed by the petitioner, resulting in the closure of any related miscellaneous applications.

This judgment emphasizes the critical requirement of sanction for prosecuting individuals in cases of alleged tax evasion, highlighting the procedural necessity to ensure the validity of legal proceedings and protect the rights of the accused.