2013 (9) TMI 792 - HC - Service Tax

Classification - Business auxiliary service and business support service - Provisions of Section 65 - Held that - show cause notice refers to prima facie findings in favour of the petitioner. The said paragraph deals with the reverse charge mechanism and the factum that the petitioner had claimed that R.R. Investors Capital Services Pvt. Ltd. had made certain payments of service tax. Accordingly, opinion formed states that brokerage amounting to ₹ 1,07,51,563/- was not taxable in the hands and at the end of the petitioner - Writ petitions against show cause notice especially in tax matters should not be entertained when alternative remedy under the statute is available. Otherwise it leads to delay and creates innumerable legal complications. Authorities including appellate authorities are persons who are specialists and can dispose of the cases at the earliest. The statute also provides for appeals so that a wrong order if passed can be corrected or rectified - Decided against assessee.

Issues:
1. Classification of services under "business auxiliary service" and "business support service" as per Section 65 of the Finance Act, 1994.
2. Refund of wrongfully collected amount under Section 73(3) of the Finance Act, 1994.
3. Invocation of proviso to Section 73(1) for extended period.
4. Compliance with principles of natural justice in issuing show cause notice.
5. Adequacy of show cause notice in providing specific allegations.
6. Availability of alternative remedies in tax matters.

Analysis:

1. The primary issue in this case revolves around the classification of services provided by the petitioner under "business auxiliary service" and "business support service" as defined in Section 65 of the Finance Act, 1994. The petitioner contests that their services do not fall under these categories, seeking a refund of the amount paid. The court notes the contradiction in the petitioner's argument regarding self-payment under Section 73(3) and the request for a refund, emphasizing the need for a determination on chargeability and assessability before considering a refund.

2. Regarding the refund claim, Section 73(4) of the Finance Act, 1994 restricts the benefit of voluntary tax payment under Section 73(3) in cases involving fraud, collusion, wilful misstatement, or contravention of provisions. The court highlights the need for authorities to decide on the invocation of the proviso to Section 73(1) for the extended period, indicating appellate remedies for erroneous orders.

3. The judgment also addresses the compliance with principles of natural justice in issuing a show cause notice. Citing precedents, the court emphasizes the importance of specific allegations in the notice to allow the party to defend themselves effectively. The court scrutinizes the content of the impugned show cause notice to ensure objectivity and the absence of predetermined decisions.

4. The adequacy of the show cause notice is further underscored through references to previous cases, emphasizing the necessity for clarity and specificity in the allegations presented. The court rejects the petitioner's claim of the adjudicating authority having pre-formed opinions, stressing the distinction between the authority issuing the notice and the one deciding the case.

5. Lastly, the judgment highlights the availability of alternative remedies in tax matters, cautioning against entertaining writ petitions when statutory appeals are an option. The court encourages utilizing the expertise of specialized authorities and appellate bodies for timely resolution of disputes, with the option to challenge adverse orders in accordance with the law.

In conclusion, the court dismisses the writ petition, affirming that the case will be decided by the adjudicating authority impartially. The petitioner is granted the opportunity to respond within a specified timeframe, with a reminder of the right to challenge any adverse decision through appropriate legal channels.

← Previous Next →