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2025 (2) TMI 955 - HC - Service TaxRecovery of service tax with penalties - order issued without examining the relevant charging section of the Finance Act 1994 particularly Section 66B - violation of principles of natural justice - HELD THAT - In the present case the adjudicating authority has held that the petitioner contravened the provisions of the Act and the Rules made thereunder with an intent to evade payment of service tax. So far as the case of Amadeus India Pvt. Ltd. 2019 (5) TMI 669 - DELHI HIGH COURT is concerned in the said case the Hon ble Delhi High Court was dealing with a case in which the SCN issued on 4th September 2018 to the petitioner-company was challenged. The fact of the matter was that on 3rd October 2018 the petitioner drew attention of respondent to the master circular dated 10th March 2017 read with an instruction dated 21st December 2015 issued by the CBEC in terms of which a pre-show-cause notice consultation was mandatory in cases involving demand of duty above Rs. 50 lakhs. A reminder was again sent by the petitioner on 13th November 2018. When no response was received the writ petition was filed in the High Court of Delhi on 13th December 2018. It appears that Hon ble Delhi High Court not only entertained the writ application but also rejected the contention of the respondent that since the SCN was preceded by a search that was conducted in the business premises of the petitioner and the petitioner also rendered itself liable for penal action for suppression of facts and contravention of various statutory provisions with intent to evade payment of due service tax and other incidental levies the SCN partakes of the character of an offence related SCN and therefore falls within the exceptions carved out under para 5.0 of the master circular. In the case of Cosmic Dye Chemical 1994 (9) TMI 86 - SUPREME COURT the matter reached to the Hon ble Supreme Court only after final adjudication by the Tribunal failed. The Tribunal in the said case had taken a view that regardless of intent a mere suppression of facts or misstatement in the information statutorily required to be supplied to the Excise authorities attract the larger period of limitation. Conclusion - All the issues which have been raised by learned counsel for the petitioner in the present writ application would essentially involve appreciation of facts emerging from the records which may be duly gone into by the appellate authority. It is not the case of the petitioner that he has no equally efficacious remedy we would therefore refrain from exercising our extra-ordinary writ jurisdiction at this stage. Application disposed off.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Examination of Charging Section and Impugned Order The petitioner argued that the impugned order was passed without proper examination of Section 66B of the Finance Act, 1994, which is the charging section for service tax. The Court noted that the adjudicating authority had confirmed the demand for service tax and imposed penalties based on the provisions of the Finance Act, 1994, and the Central Goods and Services Tax Act, 2017. The authority's decision was based on the interpretation that the services provided by the Indian Railways constituted "support services" and were taxable under the reverse charge mechanism. 2. Limitation Period for Issuance of SCN The petitioner contended that the SCN was issued beyond the statutory limitation period of 30 months. However, the adjudicating authority applied the extended limitation period of five years, as provided under Section 73(1) of the Finance Act, 1994, due to alleged willful suppression of facts by the petitioner. The Court found that the adjudicating authority had justifiably invoked the extended period, given the findings of suppression and intent to evade tax. 3. Taxability of Licensing Fee as Support Services The adjudicating authority determined that the licensing fee paid by the petitioner to the Indian Railways constituted "support services" and was taxable. The Court examined the definition of "support services" under Section 65(104c) of the Finance Act, 1994, which includes services related to business or commerce, and found that the adjudicating authority's interpretation was consistent with the statutory framework and relevant circulars. 4. Pre-Show Cause Consultation The petitioner argued that the absence of a pre-show cause consultation, as required by the CBEC Master Circular, rendered the SCN void. The Court, however, distinguished this case from precedents where pre-show cause consultation was deemed mandatory, noting that the SCN in this case involved allegations of willful suppression and tax evasion, which justified bypassing the pre-consultation requirement. 5. Availability of Alternative Remedy The respondent argued that the petitioner should have pursued the statutory remedy of appeal provided under the Finance Act, 1994, before approaching the High Court. The Court agreed, emphasizing that the issues raised required factual examination best suited for the appellate authority. The Court advised the petitioner to file an appeal, allowing for consideration of the limitation period due to the writ petition's pendency. SIGNIFICANT HOLDINGS The Court held that:
The writ application was disposed of with directions for the petitioner to file an appeal within eight weeks, with the appellate authority considering the issue of limitation in light of the writ petition's pendency.
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