2017 (6) TMI 1111 - HC - Service Tax

Validity of SCN - petitioner submits that the SCN on the face of it, is based on incorrect facts - Held that - This Court would be slow to exercise its jurisdiction under Article 226 of the Constitution of India in the matter, assailing the showcause. It is not the case of the petitioner that the Authority does not have jurisdiction to issue the SCN. The grievance of the petitioner is based on the factual matrix. The petitioner has an opportunity to file reply to the showcause notice and raise all possible contentions available to the petitioner. The Authority is bound to consider the reply filed by the petitioner and objections raised by the petitioner - petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to showcause notice based on incorrect facts and taxable liability calculation.

Analysis:
The petitioner challenged a showcause notice, arguing that it was based on incorrect facts and incorrectly calculated taxable liability. The petitioner contended that taxable liability should only be on services provided, not on gross income. The petitioner had already paid Service Tax for the relevant year, as evidenced by a reply under the Right to Information Act. The petitioner claimed that the showcause notice was issued in a prejudiced manner, drawing premature conclusions. The petitioner sought to challenge the notice in the writ jurisdiction of the High Court.

The High Court considered the arguments presented by both the petitioner and the respondent. The Court noted that it would be reluctant to intervene under Article 226 of the Constitution unless there was a clear lack of jurisdiction on the part of the Authority issuing the showcause notice. In this case, the Court found that the petitioner's grievance was primarily related to factual discrepancies rather than jurisdictional issues. The Court emphasized that the petitioner had the opportunity to respond to the showcause notice and raise all relevant contentions, which the Authority was obligated to consider.

Ultimately, the High Court decided not to entertain the writ petition challenging the showcause notice, dismissing it without any costs. However, recognizing the petitioner's right to reply and the pending nature of the petition, the Court granted two weeks for the petitioner to submit a response to the notice. The Court directed the Authority to promptly adjudicate upon the showcause notice upon receiving the petitioner's reply, ensuring that all arguments from both parties remained open for consideration.