2010 (3) TMI 187 - HC - Service Tax

Jurisdiction - Issuance of Show Cause Notice - Petitioner contended that since the services are being provided outside the state notice is beyond the competence and jurisdiction of the issuing authority - Held that The petitioner is very much at liberty to submit the objection/ explanation both on the question of facts as well as on law in response to the show cause notice - if interference should be made by this Court exercising the discretionary jurisdiction under Article 226 will arise only on passing appropriate orders by the concerned authority who issued show cause notice (Ext.P4) after considering the version to be presented from the part of the petitioner.

Summary

Issues involved:
1. Challenge to show cause notice for liability to pay Service Tax outside Kerala jurisdiction.

Detailed Analysis:
The petitioner challenged a show cause notice, Ext.P4, regarding the liability to pay Service Tax outside Kerala jurisdiction. The petitioner argued that the notice exceeded the issuing authority's competence as the transaction in question pertained to business conducted outside Kerala. The notice highlighted violations of statutory provisions under Sections 67, 68, and 70 of the Finance Act 1994, proposing penalties under Sections 76, 77, and 78, along with interest under Section 75 for belated Service Tax payment. The petitioner was asked to explain why a specific amount should not be demanded and recovered, along with interest and penalties, for non-payment of Service Tax during a defined period.

The petitioner was given 30 days to respond. The petitioner contended that the proceedings were illegal as the authority lacked jurisdiction over transactions outside Kerala. The respondent argued that the petitioner utilized Kerala infrastructure for business conducted outside the state. The petitioner's claim of having Service Tax registration for branches outside Kerala was challenged for lack of evidence of Service Tax payment by those branches.

The petitioner's counsel argued that the proposed course of action by the respondents was flawed due to inherent defects, asserting that the petitioner was not obligated to undergo such proceedings. Ext.P4 was deemed a notice allowing the petitioner to provide objections or explanations on factual and legal grounds. The decision on whether the petitioner should approach the statutory authority or seek court intervention under Article 226 would depend on the authority's subsequent actions post the petitioner's response to Ext.P4.

The Court emphasized that Ext.P4 was merely a show cause notice, granting the petitioner the opportunity to be heard without warranting interference at that stage. The Court dismissed the writ petition while allowing the petitioner to submit objections to Ext.P4 and pursue legal remedies. The petitioner was granted an additional three weeks to file an explanation in response to Ext.P4, considering the expiration of the initial deadline set by the authority.