1997 (7) TMI 1 - HC - Service Tax

Service Tax Courier Agency/Courier Company Constitutional validity of tax Single assessment to be made by Central Excise Officer

Summary

Issues: Challenge to imposition of Service Tax on courier agencies, Legislative competence of Parliament, Stay of recovery of tax, Grant of stay in tax matters, Interim relief

In the judgment delivered by the High Court of Judicature (Bombay), the petitioners challenged the imposition of Service Tax on courier agencies, specifically questioning the legislative competence of the Parliament regarding certain provisions of the Finance Act, 1994 as amended by Finance (2) Act of 1996. The challenge was based on the argument that the tax was on services provided by courier agencies and not on the actual documents or goods transported. The Deputy Commissioner of Central Excise contended that the tax fell within the legislative competence of the Parliament under Article 248 read with entry 97 of list 1 of the 7th Schedule to the Constitution of India. The court noted that when considering a plea for stay of tax recovery, the presumption should be that the enactment is constitutionally valid. Referring to the Supreme Court's guidance, the court emphasized that stay of tax recovery should be granted only in exceptional circumstances, as it should be an exception rather than the rule.

The court, after a prima facie assessment, found no exceptional circumstances warranting a stay of tax recovery in this case and therefore rejected the plea for a stay. However, the court did grant some interim relief by issuing specific orders to the petitioners/courier agencies. These orders included directing all regional offices/branches/billing and non-billing stations of each petitioner to be offered for registration within a month, requiring the filing of single quarterly returns and monthly forms for service tax collection, specifying the jurisdiction for filing these returns, and mandating a single assessment for each petitioner/courier company, even if they have multiple branches/offices.

In conclusion, the court denied the plea for a stay of tax recovery but provided interim relief by issuing specific orders to streamline the registration, filing, and assessment processes for the petitioners/courier agencies. The court also granted liberty to move for a fixed date of hearing, allowing for further legal proceedings on the matter.