2010 (2) TMI 311 - HC - Service Tax

Notice for Inquiry Issuance of Summon - Challenge to the Notice - Notice u/s 14 of Central Excise Act, 1994 as extended to Finance Act, 1994 Held that - . Suspicion is the ground for making an inquiry. As there is suspicion, the petitioner No. 1 has been requested to furnish documents. Since it is a statutory notice, the petitioners are bound to comply as unless documents are produced it cannot be decided whether the petitioner No. 1 falls within the ambit of BAS. This is the pre show-cause notice stage. It is to be borne in mind that the notice does not inflict any civil liability as it cannot be converted into a notice of demand. - Besides, the extent of inquiry is to be judged by the authorities and not by the petitioner. After facts are gathered supported by materials, suspicion or impression is converted into reason to believe. Then the stage is set for issuance of show-cause notice which can be displaced by materials furnished by the petitioner. Notice is just, proper and valid. That apart, the petitioners cannot turn back and challenge the notice as the petitioners had submitted to the jurisdiction as they have understood its purport as evident from the letter dated 20th December, 2006 and had sought extension of time to submit the documents.

Summary

Issues:
Challenge to notice issued by Assistant Commissioner regarding taxability under Business Auxiliary Service (BAS) category.

Analysis:
The petitioners, a leading public house engaged in printing and publishing, challenged a notice from the Assistant Commissioner requesting documents related to taxability under BAS under the Finance Act, 1994. Petitioners argued that their activities did not fall under BAS due to exemptions. The respondent justified the notice under Section 83 of the Finance Act, 1994, and Section 14 of the Central Excise Act, authorizing such inquiries. The notice sought specific documents to ascertain if the petitioners' activities were BAS-related. The court noted that suspicion prompted the inquiry, and the petitioners were required to comply with the notice to determine their BAS status.

The court referred to Section 83 of the Finance Act, 1994, and Section 14 of the Central Excise Act, empowering officers to summon persons and documents for inquiries. The notice was issued based on suspicion, a valid ground for inquiry. The petitioners' challenge was rejected as they had submitted to the jurisdiction by seeking an extension to provide documents. The court distinguished previous judgments not applicable to the case due to the absence of "reason to believe" in Section 14 of the Central Excise Act. The notice was deemed valid, not inflicting civil liability, and necessary for the pre-show-cause stage to gather facts for a potential show-cause notice.

The writ petition was dismissed, and the interim order was vacated, with no costs imposed. After the judgment, a stay of operation was granted upon the petitioner's request until a specified date. All parties were instructed to act on the signed copy of the order. The court upheld the validity of the notice, emphasizing the statutory duty to comply with inquiries based on suspicion to determine tax liability under the BAS category.