2024 (12) TMI 1094 - HC - Service Tax

Recovery of service tax with interest and penalt - fraud or suppression of facts or not - extended period of limitation - HELD THAT - This Court would be loath in exercising the power under Article 226 of the Constitution of India in the wake of availability of a statutory remedy. However, pointed out herein after there apparently exist such extraordinary circumstances which makes the present case exceptional. True it is that the petitioner was remiss in promptly replying to the show cause notice and had replied belatedly on 07.06.2022, after about 17 months of receipt of the show cause notice. However, the fact remains that if it was a matter of surrender of the premises specific registrations and a centralized service tax registration, the impugned order should have considered this aspect meticulously when prima faice, the petitioner had filed a return under the centralized service tax registration. As can be noticed from the impugned order though opportunity of hearing was extended to the petitioner it did not produce documentary evidence regarding the different premises/branches so as to enable respondent no. 2 to examine if the taxable amount mentioned in the show cause notice was included in the amount of taxable value of Rs. 39,12,65,336/-, for financial year 2014-2015, in respect of which the petitioner had filed the return and paid the tax under the centralized service tax registration. In absence of such particulars/documents that the decision was taken and the impugned order was passed confirming the show cause notice. It would be appropriate and in the interest of justice to quash and set aside the impugned order and relegate the matter to respondent no. 2 for taking a fresh decision by extending the petitioner an opportunity to produce documents/accounts to substantiate its stand in the reply dated 07.06.2022. Petition allowed in part.

Summary

Issues: Challenge to tax order, statutory remedy of appeal, maintainability of petition, extraordinary circumstances, separate registrations, delayed response to show cause notice, lack of documentary evidence, opportunity for justification, payment of service tax, extension of time period, fraud or suppression of facts.

Analysis:

The petitioner challenged the Principal Commissioner's tax order dated 13.06.2024, demanding a service tax of Rs. 2,88,39,550 for services provided during the financial year 2014-2015. The petitioner, a company offering various services, had surrendered separate registrations for a single premises and obtained a centralized registration. The respondent argued that the petition was not maintainable due to the availability of a statutory remedy of appeal, emphasizing the need for pre-deposit under the Finance Act, 1994.

The Court considered both parties' submissions and noted the extraordinary circumstances present in the case. The petitioner had shifted from separate registrations to a centralized one, with communication to the authorities. Despite a delayed response to the show cause notice, the impugned order failed to consider the surrender of specific registrations and the centralized registration adequately, as evidenced by the petitioner's return under the centralized service tax registration.

The Court highlighted the lack of documentary evidence provided by the petitioner regarding different premises/branches, which led to the passing of the impugned order confirming the show cause notice. Given the nature of the case involving service tax payment and the unique circumstances, the Court deemed it appropriate to allow the petitioner an opportunity to justify their position by producing relevant records before the authorities.

Moreover, this opportunity would enable the authorities to assess the legitimacy of invoking the extended period for tax recovery beyond the prescribed timeline. The Court observed a lack of explicit demonstration of fraud or suppression of facts in the impugned order, leading to the decision to quash the order and remand the matter to the authorities for a fresh decision based on the petitioner's justifications.

Consequently, the writ petition was partly allowed, the impugned order was set aside, and the petitioner was directed to appear before the authorities with relevant records on a specified date for a fresh decision based on the Court's observations. All issues were kept open for further consideration.