2022 (8) TMI 1542 - HC - Indian Laws

Challenge to SCN demanding service tax - representation was made to authorized representative, for which the appellant has not received any reply - HELD THAT - The learned writ Court was fully justified in not entertaining the challenge to the show cause notice but observed that for effective adjudication of the matter the service recipient, namely, Executive Engineer, Hooghly Highway Division No.1, Public Works (Roads) Directorate should also be heard in the matter. In the instant case, the authority has issued show cause notice only to the appellant, who is the service provider. Furthermore, the appellant s case is based upon the reply dated 03.06.2022 received from Executive Engineer, Hooghly Highway Division No.1, Public Works (Roads) Directorate. Thus, while declining to interfere with the order passed by the learned writ Court the respondent No.1 is directed to issue notice to the appropriate authority of the Public Works Department, Government of West Bengal and direct them to appear for a personal hearing and on which date the appellant shall also be directed to appear and after considering the submissions of the appellant as well as the authority from the Public Works Department, the show cause notice shall be adjudicated on merits and in accordance with law and a reasoned order be passed thereafter. The instant appeal stands disposed of.

Summary

Issues: Challenge to show cause notice, Representation to Public Works Department, Adjudication process, Entitlement of Public Works Department

The judgment by the High Court of Calcutta involved an intra-Court appeal against an order challenging a show cause notice demanding service tax. The appellant contended that upon receiving the notice, they informed the Public Works Department about the demand and requested fund release for tax remittance. The Executive Engineer of the Public Works Department responded, stating that the services were provided before the GST regime and no claim for reimbursement was raised. Subsequently, the appellant made representations to the Executive Engineer but did not receive a reply, leading to the writ petition. The Court upheld the decision not to entertain the challenge but emphasized the need to involve the service recipient, the Executive Engineer, in the adjudication process. The Court directed the Adjudicating Authority to issue notice to the Executive Engineer, hear their side, and ensure a comprehensive adjudication involving both parties to protect the interests of the appellant and the revenue department.

The Court emphasized the importance of a binding adjudication involving both the appellant and the service recipient to ensure a fair process and protect the interests of all parties. The order passed by the learned Single Judge was affirmed, directing the Adjudicating Authority to involve the Executive Engineer in the proceedings. The Court instructed the respondent to issue a notice to the appropriate authority of the Public Works Department, directing them to participate in a personal hearing along with the appellant. The adjudication process was to be completed within eight weeks from the receipt of the order, during which no coercive action was to be taken against the appellant. Additionally, the Public Works Department was barred from raising the issue of limitation during the proceedings, ensuring a focused and timely resolution of the matter.

In conclusion, the Court disposed of the appeal and related application, emphasizing the need for a comprehensive adjudication process involving both the appellant and the Public Works Department. The judgment aimed to ensure a fair and transparent resolution of the dispute regarding the service tax demand, protecting the interests of all parties involved and upholding the principles of natural justice and procedural fairness.