2023 (12) TMI 955 - HC - Service Tax

Levy of service tax - rental income, compensation amounts received and the legal expenditure displayed on the official Website of Telangana Waqf Board - petitioner-Waqf Board claimed that it has no property nor given any property for lease/rent for commercial purpose - jurisdiction of respondent No. 3 to pass impugned order - time barred by the period prescribed in Section 73(1) of the Act or not - HELD THAT - The relevant assessment years in the impugned proceedings are between 2014-15 to 2017-18. Indisputably, from April, 2014 to 02.06.2014 as the State was united the jurisdiction was with the Principal Commissioner, Visakhapatnam. The petitioner is not disputing that after 02.06.2014 the respondent No. 3 is having jurisdiction to conduct proceedings over the disputed issue. It is not the case of the petitioner that the properties referred to in the impugned proceedings and the order are not within the territorial limits of the State of Telangana and within jurisdiction of the respondent No. 3 - the location of the tax payer is crucial to determine the jurisdiction. As the petitioner and the related properties are situated within the jurisdiction of the respondent No. 3 by the date of institution of proceedings we find no discrepancy of jurisdiction of the respondent No. 3 in the proceedings. The other essential contention put-forth is that, as part of cause of action is time barred, the entire proceedings shall fail is also not found acceptable, since the tax liability and its effect is distinct for every assessment period and each lapse would give rise to separate cause of action - Further as the limitation is a mixed question of fact and law, to arrive at just conclusion fact finding is essential, therefore appropriate jurisdiction for scrutinizing the relevant material, would be the appeal. In addition, though the petitioner has asserted that a part of time barred cause of action would effect rest of the period has remained unsubstantiated with any legal position. The petitioner is statutory body. As per the Wakf Act, 1955 the petitioner has to maintain the finances of the wakf institutions by exercising superintendence over the manager of the wakf/mutawalli and even in audit of the accounts of wakf properties. Further, Section 58 of the Wakf Act contemplates that the petitioner is liable in case of default by mutawalli who refuses or fails to pay any revenue, cess, or tax due to the Government or any local authority. In this statutory prescription, the petitioner s claim that it has no concern is found untenable. That apart though the petitioner asserted that the services are exempted from the tax no such material has been placed for consideration. Be that as it may, it is open for the petitioner to place the relevant material before the appellate authority and claim. The contention of the petitioner as to the jurisdiction has no merit and in absence of tenable grounds for judicial review under Writ Jurisdiction, the extraordinary jurisdiction cannot be exercised - petition dismissed.

Summary

Issues:
The issues involved in this case are jurisdiction of the respondent, applicability of limitation period, exemption from service tax, and validity of the impugned order.

Jurisdiction:
The petitioner challenged the jurisdiction of the respondent due to the reorganization of states. The court found that the respondent had jurisdiction over the properties in question within the territorial limits of Telangana, and the technicality raised by the petitioner was unsubstantiated. The location of the taxpayer is crucial in determining jurisdiction, and as the properties were within the jurisdiction of the respondent when the proceedings were initiated, the court upheld the jurisdiction.

Limitation Period:
The petitioner argued that the proceedings were time-barred for part of the period. The court held that each assessment period gives rise to a separate cause of action, and the entire period should be examined distinctly. Since limitation is a mixed question of fact and law, the appropriate forum for scrutiny is through an appeal. The court emphasized the need for fact-finding to arrive at a just conclusion.

Exemption from Service Tax:
The petitioner claimed exemption from service tax as a statutory body managing waqf properties. The court noted that the petitioner's obligations under the Wakf Act make it liable for certain financial matters related to the properties. The petitioner's assertion of exemption was found unsupported by material evidence, and the court suggested presenting relevant material before the appellate authority.

Validity of Impugned Order:
The court concluded that the petitioner's jurisdictional contention lacked merit, and no grounds for judicial review under Writ Jurisdiction were found. The court dismissed the writ petition, reserving the petitioner's right to appeal. The appellate authority was directed to independently examine the contested aspects. All contentions of the parties were left open, and no costs were awarded.

Separate Judgement:
The judgment was delivered by Honourable Sri Justice P. Sam Koshy and Honourable Sri Justice N. Tukaramji of the Telangana High Court.