2016 (10) TMI 462 - SC - Service Tax

Levy of service tax - security services - sovereign functions - providing/deploying additional police force at various Banks/Institutions/Organisations or at various events - work of character verification and providing security as per the provisions of Sections 11 and 46 of the Rajasthan Police Act, 2007 for the purpose of maintaining law and order situation - Held that - Against the order passed by the Assessing Officer, the plaintiff had even preferred an appeal before the Commissioner, Central Excise, Jaipur, which appeal was dismissed by the Commissioner. Not only this, against the order of the Commissioner, the plaintiff has filed statutory appeal before the Customs Excise & Service Tax Appellate Tribunal (CESTAT), which is pending consideration by the CESTAT. Even if we presume that the suit was maintainable, at the same time the plaintiff also had remedy of filing the statutory appeals etc. by agitating the matter under the Finance Act. It chose to avail the remedy under the Finance Act. The Doctrine of Election would, therefore, become applicable in a case like this. After choosing one particular remedy the plaintiff cannot avail the other remedy as well, in respect of the same relief founded on same cause of action. The plaint is, therefore, rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908. - Decided against the petitioner.

Summary

Issues:
1. Whether the activity of providing additional police force is exempt from service tax.
2. Whether the plaintiff is outside the scope of the Finance Act.
3. Whether the levy of service tax violates Article 289 of the Constitution of India.
4. Jurisdiction of adjudication orders and collection of service tax.
5. Permanent injunction against further show cause notices.
6. Maintainability of the suit due to availing statutory remedies under the Finance Act.

Analysis:
1. The plaintiff sought a declaration that providing police force is a sovereign function exempt from service tax. The Union of India contested, citing the plaintiff's appeal and pending case at CESTAT under the Finance Act. The court held that the plaintiff cannot invoke two remedies for the same cause of action, applying the Doctrine of Election. The plaint was rejected under Order VII Rule 11.

2. The plaintiff argued being outside the scope of the Finance Act. However, the court emphasized the plaintiff's statutory remedies under the Act, leading to the rejection of the suit. The court allowed the plaintiff to raise objections before CESTAT as per the law.

3. The plaintiff claimed the levy of service tax violated Article 289 of the Constitution. The court's decision on the maintainability of the suit rendered this issue inconsequential, as the plaintiff's statutory remedies were deemed sufficient.

4. The jurisdiction of adjudication orders and service tax collection was questioned. The court's rejection of the suit under Order VII Rule 11 implied that these issues would be addressed through the statutory remedies available to the plaintiff under the Finance Act.

5. The plaintiff requested a permanent injunction against further show cause notices. The court's decision to reject the suit meant that the plaintiff could address this issue through the pending case at CESTAT, ensuring all objections are considered in accordance with the law.

6. The court found the suit not maintainable due to the plaintiff availing statutory remedies under the Finance Act. The Doctrine of Election was applied, emphasizing that choosing one remedy precludes seeking another for the same cause of action. The plaintiff was directed to address objections before CESTAT as per the law.