2023 (12) TMI 912 - HC - Service Tax

Jurisdiction which the petitioners allege against the respondents - Suppression of facts or not - invocation of extended period of limitation - HELD THAT - It is a matter of how the agreement is to be construed as such and whether the State was contributing in any manner in the running of the hospital. This is a matter of fact which has to be analyzed by the statutory authorities in appeal and to be summarized. The right of the petitioner thereafter to challenge the order in case the same is decided against it would always be available. The issue of extended period of limitation whether it has been rightly invoked or not, is a matter which the Appellate Authority can go into and since the impugned order records the fact that the consideration was being received at 5% of the gross revenue and as per the provisions of the concessionaire agreement. Apparently from the show cause notice, it would be clear that it was only when the revenue had started investigation against Max Super Speciality Hospital, Mohali regarding non-payment of service tax, it had come to their notice about the arrangement which has been made with the petitioner and thereafter the proceedings had been initiated and, therefore, the issue of jurisdiction is also based on a factual matrix. It would also be a matter of fact which would be within the jurisdiction of the Appellate Authority as to whether the notices as such issued were within the prescribed period and whether the action of the Revenue in extending the period of limitation is justified or not in the facts and circumstances. The writ petition is disposed of and the petitioners are relegated to the remedy of appeal. Needless to say that since the petitioners had approached this Court on 29.08.2023, if the appeal is filed within a period of 4 weeks from today.

Summary

Issues Involved:
1. Imposition of service tax and penalties.
2. Nature of the concessionaire agreement and its tax implications.
3. Allegations of concealment, fraud, or misrepresentation.
4. Jurisdiction and the availability of an alternate remedy.
5. Extended period of limitation for tax demand.

Summary:

1. Imposition of Service Tax and Penalties:
The present writ petition challenges the order dated 31.10.2022, where authorities imposed a service tax of Rs. 4,82,14,665/- with interest against the Department of Health and Family Welfare, Government of Punjab. This was done by invoking the extended period under Section 75 of the Finance Act, 1994 read with Section 174(2) of the CGST Act. Additionally, penalties were imposed, including Rs. 10,000/- under Section 77 of the Finance Act.

2. Nature of the Concessionaire Agreement:
The issue revolves around two hospitals operated by MAX Super Speciality Hospital on land provided by the petitioner. Authorities concluded that 5% of the gross revenue received as concessionaire fees for hospital operations amounted to renting of immovable property to M/s. Hometrail Buildtech Pvt. Ltd. and M/s. Max Healthcare Institute Ltd. Consequently, it was considered a declared service under Section 66(E)(a), leading to the assessed service tax liability.

3. Allegations of Concealment, Fraud, or Misrepresentation:
The petitioner argued that there was no concealment, fraud, or misrepresentation, and the demand was beyond the limitation period since the amount claimed was prior to 30.06.2017. The respondents contended that an alternate remedy under Section 86 of the Finance Act was available, which the petitioner should pursue.

4. Jurisdiction and Availability of Alternate Remedy:
The court referenced the principles laid down by the Apex Court in M/s. Radhe Krishan Industries vs. State of Himachal Pradesh, emphasizing that the High Court should not entertain a writ petition when an effective alternate remedy is available unless specific exceptions apply. The court noted that the statutory remedy under Section 86 of the Finance Act should be exhausted first.

5. Extended Period of Limitation for Tax Demand:
The court acknowledged that the issue of whether the extended period of limitation was rightly invoked is a matter for the Appellate Authority to analyze. The show cause notice and subsequent proceedings were initiated based on revenue investigations into Max Super Speciality Hospital, Mohali, revealing the arrangement with the petitioner.

Conclusion:
The court concluded that the matter should be addressed by the statutory authorities in appeal, particularly the interpretation of the concessionaire agreement and the jurisdictional issues. The writ petition was disposed of, and the petitioners were directed to file an appeal within four weeks, which the Tribunal should decide on merits. The court declined to exercise its extraordinary writ jurisdiction, emphasizing the need to follow the statutory remedy process.