2016 (7) TMI 597 - HC - Service Tax

Rejection of rectification application u/s 74 - rectification in the quantification of the Service Tax demanded - it was contended that alternatively they have given their option under Rule 3(3) of Works Contract (Composition scheme for payment of service tax) Rules, 2007 and the said option was rejected without relying on the statutory provisions. - Held that - A bare perusal of the petition for rectification would reveal that the petitioner seeks for re-arguing the matter before the authority or question the interpretation given by the authority for not granting the relief sought for. This would not fall within the scope of the power to be exercised under Section 74 of the Finance Act. Therefore, the authority was justified in refusing to exercise such power. - Writ petition dismissed - Decided against the petitioner.

Summary

Issues:
Challenge to order under Section 74 of the Finance Act for rectification of Service Tax demanded.

Analysis:
The writ petition challenges an order passed by the respondent under Section 74 of the Finance Act, concerning the quantification of Service Tax demanded. The petitioner received a show cause notice, calling for justification on tax assessment under specific sections of the Finance Act. The notice demanded a substantial amount from the petitioner, including Service Tax, Education Cess, and Secondary & Higher Education Cess. The petitioner responded to the notice both factually and legally, leading to the respondent's order dated 31.12.2015. Subsequently, the petitioner sought rectification under Section 74, citing exclusion of goods' value and rejection of their option under relevant rules. The application for rectification was denied by the respondent, prompting the petitioner to file the writ petition.

The petitioner's application for rectification primarily aimed at re-arguing the matter before the authority and questioning the interpretation provided by the authority, seeking relief. However, the court noted that such requests do not align with the scope of power under Section 74 of the Finance Act. Consequently, the authority's decision to refuse exercising such power was deemed justified. The court emphasized that the purpose of Section 74 is not to re-open arguments but to rectify specific mistakes or errors in the order, which was not the case here. Therefore, the writ petition challenging the order under Section 74 was dismissed.

Despite the dismissal of the writ petition, the court highlighted that the petitioner retains the option to appeal before the CESTAT. In case the petitioner chooses to appeal, the CESTAT is instructed to consider excluding the period during which the writ petition was pending while calculating the time limit for filing the appeal. The exclusion period starts from 18.04.2016. The court concluded by closing the connected miscellaneous petition and did not impose any costs on the parties involved.