2014 (5) TMI 104 - HC - Service Tax

Waiver of pre deposit - Demand of service tax - Commercial or Industrial Construction Services - Held that - The principle behind the issuance of the show-cause notice is not only to make aware the person against whom the action is intended to be taken but it must contain the language in precision which on reading thereof, make the person understand, the case which he has to defend. The show-cause notice is the foundation of an action and, therefore, a plea, which is not taken, shall not be permitted, as the person did not have an opportunity to meet the same. In the instant case, the showcause notice was issued on the plea of non-deposit of the service tax for the services rendered under the Commercial or Industrial Construction Services as a Sub-Contractor amounting to the deliberate suppression. There is no whisper in the said show-cause notice that the services rendered by the petitioner under the Manpower Recruitment and Supply Agency Services or under the supply of Tangible Good Services or under the Cleaning Activity . The Cleaning Activity Service was introduced with effect from 16.06.2005 and the demand was confirmed even for a period prior thereto There is no absolute bar in entertaining the writ petition under Article 226 of the Constitution despite existence of an alternative efficacious remedy. This Court finds that there has been a manifest injustice apparent on the face of the record. This Court does not feel that the jurisdiction under Article 226 of the Constitution is completely ousted. Since a strong prima facie case is made out by the petitioner, the deposit of 25% of the demand would certainly cause an undue hardship. Simultaneously, this Court also finds that the petitioner have been found guilty of suppressing the facts and have not paid the service tax under the category in which the registration is obtained. The interest of the revenue would be safeguarded if the petitioner is directed to deposit 10% of the demand confirmed in the impugned order within eight weeks from the date of the order. - observations and/or findings made in this order is prima facie and tentative one, the tribunal shall decide the appeal independently without being swayed by such observations or findings. In the event, the deposit is made within the time indicated herein above, the tribunal shall decide the appeal within six months from the date of the communications of this order - Decided conditionally in favour of assessee.

Issues Involved:
1. Imposition of Service Tax and Penalties.
2. Validity of Show-Cause Notice.
3. Tribunal's Order on Pre-Deposit Condition.
4. Jurisdiction under Article 226 despite Alternative Remedy.

Detailed Analysis:

1. Imposition of Service Tax and Penalties:
By a show-cause notice dated 18.09.2009, the Commissioner of Central Excise, Bolpur intended to impose a service tax of Rs. 3,13,41,209 along with Education Cess and S & HE Cess, interest under Section 75, and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The petitioner was providing taxable services under "Commercial or Industrial Construction Services" as a Sub-Contractor. It was alleged that the petitioner did not pay the proper service tax for Town maintenance services provided to Durgapur Steel Plant. The petitioner registered under "Commercial or Industrial Construction Services" in August 2007 but failed to pay the service tax before and after registration. The demand was confirmed by an order dated 24.08.2010, which the petitioner challenged before the Custom Excise and Service Tax Appellate Tribunal (CESTAT).

2. Validity of Show-Cause Notice:
The petitioner argued that the authorities cannot impose service tax under a new category not mentioned in the show-cause notice. The service tax was demanded under "Commercial or Industrial Construction Services," but the respondent imposed the duty under "Works Contracts Services." The petitioner relied on Supreme Court judgments (Commissioner of Central Excise, Nagpur vs. Ballarpur Industries Ltd., Commissioner of Central Excise, Chandigarh vs. Shital International, and Commissioner of Central Excise, Bhubaneswar-I vs. Champdany Industries Ltd.) to argue that the authorities cannot make out a new case divorced from the show-cause notice.

3. Tribunal's Order on Pre-Deposit Condition:
The CESTAT directed the petitioner to deposit 25% of the Service Tax within eight weeks. The petitioner contended that the Tribunal should have waived the pre-deposit condition due to a strong prima facie case, citing judgments (J.N. Chemical Pvt. Ltd. vs. CEGAT, Bongaigaon Refinery & Petrochem Ltd. vs. Collector of Central Excise, ITC Ltd. vs. Commissioner (Appeals), Custom and Central Excise, Meerut-I, and Sri Krishna vs. Union of India) that emphasize the discretionary power to waive pre-deposit in cases of undue hardship.

4. Jurisdiction under Article 226 despite Alternative Remedy:
The respondents argued that the original order was appellable and the writ petition was not maintainable. The petitioner countered that alternative remedy is not an absolute bar under Article 226, citing Union of India vs. Classic Credit Ltd. and Ruby Rubber Industries vs. Commissioner of Central Excise, Cal-II. The court acknowledged that while the petitioner had an alternative remedy, the jurisdiction under Article 226 was not completely ousted due to manifest injustice.

Conclusion:
The court found that the petitioner made a strong prima facie case that the Commissioner went beyond the show-cause notice. However, the petitioner was also found guilty of not paying service tax under registered categories. The court directed the petitioner to deposit 10% of the demand within eight weeks and ordered the Tribunal to decide the appeal within six months. The writ petition was disposed of with no order as to costs.

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