2024 (4) TMI 401 - HC - Service Tax

Rejection of appellants challenge to Summons, summoning the appellants to appear before the Second respondent - principles of natural justice - Whether impugned order of the learned Single Judge as well as Summons at this stage requires interference? - HELD THAT - The answer to the above point would be in the Negative. Normally, show cause notice would not give raise to any cause of action to challenge the same, unless it is shown that such show cause notice is a nullity and such show cause notice is issued without jurisdiction. Show cause notice would not infringe any of the rights of the party. Even if it is alleged that the Authority which issues show cause notice has no jurisdiction, objection regarding jurisdiction also could be raised before the Authority. In the event of an adverse decision, it would certainly be open to challenge the same either in appeal or as the case may be in appropriate cases by invoking jurisdiction under Article 226 of the Constitution of India. Thus, it is settled law that writ petition normally not be entertained against mere issuance of show cause notice. In the instant case, though summons was issued by second respondent, show cause notice makes it abundantly clear that petitioner is required to show cause to the Commissioner of Central Excise and Service Tax 1, Commissionerate, Bengaluru which is the Competent Authority to determine the service tax liability of the appellants/petitioners. Therefore, in the facts and circumstances of the present case, there is no reason to interfere with the learned Single Judge s order insofar as jurisdiction is concerned. Thus, no ground is made out to interfere with the order of learned Single Judge and accordingly writ petition stands rejected - petition dismissed.

Summary

Issues involved:
Challenge to Summons No. 44/2016 dated 28.07.2016
Jurisdiction of the second respondent to issue summons
Validity of Annexure-B notification dated 16.09.2014
Competence of the second respondent to issue summons
Validity of Rule 3 of the Central Excise Rules, 2002
Validity of Rule 3 of the Service Tax Rules, 1994
Jurisdictional question regarding the Central Excise Officer
Validity of Rule 5 of Service Tax (Determination of Value) Rules, 2005
Failure to consider additional grounds raised in I.A. No. 2/2017

The judgment pertains to an intra-Court appeal challenging the order dated 30.09.2021 in W.P. No. 59487/2016 where the challenge to Summons No. 44/2016 summoning the appellants was rejected. The main contention was the jurisdiction of the second respondent to issue the summons and the validity of Annexure-B notification dated 16.09.2014 investing powers under Chapter V of the Finance Act, 1994. The appellants argued that the second respondent lacked jurisdiction and that the summons and proceedings by the fifth respondent would lead to duplication of jurisdiction over the service tax issue. The appellants also raised issues regarding the validity of certain rules and notifications. The learned Single Judge dismissed the writ petition, prompting the appeal.

The appellants contended that the learned Single Judge failed to consider their grounds properly and overlooked the application for additional documents and grounds. They argued that the jurisdictional Central Excise Officer for the appellants should be the fifth respondent, not the second respondent. The appellants cited a decision of the Hon'ble Apex Court to support their claim that only the proper Officer can determine the assessment and service tax. Additionally, they raised concerns about the validity of certain rules and the lack of provision for collecting service tax on expenses during a specific period.

In response, the respondents argued that the show cause notice was issued by the competent authority and that determination or assessment had not yet taken place. They emphasized that the appellants should reply to the show cause notice and avail remedies under the Act and Rules if needed. The respondents urged for the dismissal of the writ appeal.

The Court deliberated on the jurisdictional issues and ruled that the second respondent had the authority to issue the summons. The Court highlighted the relevant rules and notifications governing the appointment of Central Excise Officers and the jurisdiction of the second respondent. The Court concluded that there was no reason to interfere with the learned Single Judge's order regarding jurisdiction. The Court also addressed the appellants' contentions regarding additional grounds raised in I.A. No. 2/2017, emphasizing that such objections should be raised before the Authority for consideration.

Ultimately, the Court found no grounds to interfere with the learned Single Judge's order and rejected the writ petition. The appellants were granted permission to file their objections to the show cause notice and were directed to appear before the fifth respondent on a specified date to file their statement of objections.