2024 (6) TMI 773 - HC - Service Tax

Determination of the value of material consumed based on invoices and other documents - Photography services - whether this matter should go back to the authorities for examining the value of material consumed on the basis of invoices and other documents? - HELD THAT - This matter is pending since 2006 and there are substance in the argument of learned counsel for the petitioner that it cannot be expected either from the petitioner or from the Department to lay their hands on the very old documents of the years prior to 2006. Apart from this, the document dated 18.07.2006 (Annexure-P.3) shows that the tax liability is worked out by the Department. Although Sri Dominic Fernandes stated that said exercise of working out is based on petitioner s letter dated 24.05.2006, we are not inclined to deal with this aspect any further because once the exercise of worked out is carried out, it is presumed that said exercise must be based on all relevant documents. In the peculiar facts and circumstances of this case and more particularly, the fact that it is not possible because of afflux of time to trace the invoices etc., it is required to accept the value of material consumed as mentioned in the impugned order dated 18.07.2006. Thus, in the peculiar facts of this case, it is not required to relegate the matter for scrutiny of invoices and other relevant documents. That course may be open to other cases where time gap is not enormous. It is deemed proper to set aside the order dated 18.07.2006. In case the petitioner has already deposited any amount pursuant to interim order passed in this case, if the petitioner prefers an application, the said amount be returned to the petitioner within ninety days from the date of such application. Petition disposed off.

Summary

Issues involved:
The issues involved in the judgment are related to the imposition of Service Tax, the requirement of pre-show cause notice before passing the impugned order, and the determination of the value of material consumed based on invoices and other documents.

Imposition of Service Tax:
The petition was filed challenging a letter requesting payment of Service Tax amounting to Rs. 2,43,386. The petitioner argued that no notice was issued before passing the order and cited a Division Bench judgment of the Madhya Pradesh High Court in a similar case. The respondent contended that no pre-show cause notice was required u/s 73(3) of the Finance Act, 1994 at the stage the letter was issued. The respondent also emphasized the need to scrutinize the value of material consumed based on invoices and documents before applying the judgment from the Madhya Pradesh High Court.

Pre-Show Cause Notice Requirement:
The petitioner claimed that no notice was issued before the impugned order, while the respondent argued that as per Section 73(3) of the Finance Act, 1994, no pre-show cause notice was necessary at that stage. The respondent further stated that the determination of the value of material consumed based on invoices and documents was crucial before applying the judgment from the Madhya Pradesh High Court.

Value of Material Consumed Determination:
The petitioner contended that the value of material consumed was worked out by the respondents in the letter dated 18.07.2006, and due to the passage of time, it was challenging to trace relevant records for further scrutiny. The court acknowledged the difficulty in tracing old documents and accepted the value of material consumed as mentioned in the impugned order. The court decided not to relegate the matter for scrutiny of invoices and other documents due to the time lapse since 2006.

Judgment Summary:
The High Court, after hearing both parties, acknowledged that the question of taxability regarding photography services had been settled by the Madhya Pradesh High Court. The court decided not to send the matter back for examining the value of material consumed based on invoices and documents due to the considerable time gap since 2006. In line with the judgment from the Madhya Pradesh High Court, the court set aside the order dated 18.07.2006. If the petitioner had deposited any amount, it was directed to be returned within ninety days upon application. The Writ Petition was disposed of with no costs, and any pending interlocutory applications were closed.