2024 (5) TMI 277 - HC - Service Tax

Exemption from Service Tax - reimbursement expenses - whether the service tax component, which is remitted by them as service provider has to be reimbursed by the recipient KMC? - HELD THAT - An order of adjudication requires the authority to not only consider the respective stand of the parties but also to appreciate the documents and details, which may be placed before the authority for consideration. These essentially involves adjudication into facts, which cannot be done in exercise of jurisdiction under Article 226 of the Constitution of India solely based upon affidavits. Therefore, the matter has to necessarily go back to the adjudicating authority for fresh consideration. The matters are remanded back to the adjudicating authority for a fresh decision - Appeal allowed by way of remand.

Summary

Issues involved: Adjudication process concerning service tax liability and involvement of Kolkata Municipal Corporation (KMC).

Summary:

The High Court of Calcutta addressed the issue of service tax liability in the case involving three assessees and the Kolkata Municipal Corporation (KMC). The Court had previously directed that KMC be made a party to the proceedings for a fresh adjudication. However, the show-cause notice issued by the adjudicating authority did not fully comply with the Court's directions, as it did not clearly address the issue of reimbursement of service tax by KMC to the assessees. Both the assessees and KMC submitted their replies to the notice, but the assessees were not provided with KMC's stand, leading to a violation of principles of natural justice.

The Court noted that for a binding adjudication, each party must be aware of the other party's stand. The adjudicating authority's failure to provide the assessees with KMC's views and submissions resulted in a misinterpretation of the Court's earlier judgment. Therefore, the Court allowed the appeals, set aside the original orders, and remanded the matters back to the adjudicating authority for a fresh decision.

The adjudicating authority was directed to furnish copies of KMC's replies and submissions to the assessees and vice versa within three weeks. Both parties were given the opportunity to file their replies before a personal hearing, ensuring that the adjudication process was fair and comprehensive. The fresh orders were to be passed on merits and in accordance with the law, without being influenced by the previous orders that were set aside.

In conclusion, the Court allowed the appeals, set aside the orders passed in the writ petitions, and provided detailed directions for the adjudication process to be conducted properly and fairly, ensuring all parties are heard and all relevant documents are considered.

No costs were awarded, and an urgent copy of the order was to be provided to the parties upon compliance with legal formalities.