2009 (5) TMI 519 - HC - Service Tax

Show Cause notice stage - The issue in question is whether the service tax has been paid by the petitioner no.1 or whether on its behalf the respondent nos. 4, 5 and 6 or service recipients have paid the tax or not? Petitioner contending that services rendered as sub contractor and service tax collected on behalf of them, paid. Held that- issue whether service tax paid or not being question of fact, writ jurisdiction not excisable.

Summary

Issues: Challenge to show cause notice on service tax liability.

Analysis:
The petitioners, a private limited company and one of its directors, challenged a show cause notice issued by the Commissioner of Service Tax on various grounds. The petitioners, engaged in cargo handling service, transportation, and hiring, got registered under the Finance Act in 2004. Despite reflecting income in their accounts, a demand for service tax was raised in 2007, leading to a series of events including a search and seizure, summons under the Central Excise Act, and subsequent denial of liability through a letter. The matter was brought before the High Court, where the petitioners argued that they had replied to queries, provided necessary documents, and denied the service tax liability. The respondent authorities contended that since the petitioners were registered under the Service Tax Act, they were obligated to file returns and pay the tax, making the show cause notice valid.

The central issue revolved around whether the service tax had been paid by the petitioners or on their behalf by other entities. The Court deemed this a factual question unsuitable for writ jurisdiction. Consequently, the petitioners were granted the opportunity to respond to the show cause notice by a specified date. The Commissioner of Service Tax was directed to review the reply, pass a reasoned order after hearing both parties, and consider all points raised in the writ petition and related affidavits. The Court emphasized the need to avoid double taxation and made it clear that it had not delved into the case's merits, leaving all points open for the Commissioner's consideration. It was further instructed that proceedings should not be unduly delayed, and both parties were directed to communicate the order to the revenue authorities for action.

In conclusion, the High Court did not award costs, provided for the issuance of a certified copy of the order to the parties upon request, and emphasized the need for prompt action by the revenue authorities based on the order's communication.