2018 (5) TMI 413 - HC - Service Tax

Short payment of service tax - Section 73(4A) of the Finance Act, 1994 - Petitioner had accepted short payment of service tax of ₹ 20,92,42,010/-, which was voluntarily deposited along with appropriate interest and penalty - Held that - the petitioner is entitled to raise all these contentions and issues in response to the summons/notices, which are in the form of letters calling upon the petitioner to give and file their response - Issue of summons and notices does not mean that the authorities have formed any opinion or decided that show cause notice has to be issued. The queries raised have to be answered and depending upon the explanation given, the authorities would decide whether or not to proceed. The petitioner is entitled to raise the legal contention relying on their interpretation to sub-sections (4) and (4A) of Section 73 of the Finance Act, 1994. The authority would examine factual aspects and legal contention including the question whether conditions of sub-section (4) of Section 73 of the Finance Act, 1994 are satisfied - Presently, no show cause has been issued to the petitioner. Proceedings under sub-section (4) of 73 of the Finance Act have not been initiated. Counsel for the respondents states that authority would not normally have any objection to appearance by an authorized representative. However, in case any distinct issue and query is required to be answered by a specific person then notices/summons would be issued to the concerned person.

Summary

Issues Involved:
Challenge to jurisdiction and arbitrariness of notices issued by Directorate General of Central Excise Intelligence; Interpretation of Section 73(4A) and (4) of the Finance Act, 1994; Validity of queries raised in notices; Judicial intervention at the summons stage.

Detailed Analysis:

Challenge to Jurisdiction and Arbitrariness of Notices:
The petitioner, M/s Punj Lloyd Limited, challenged the jurisdiction and arbitrariness of notices dated 11th July, 2016, 5th August, 2016, 29th September, 2016, and 17th October, 2016, issued by the Directorate General of Central Excise Intelligence, Rajkot Regional Unit, Gujarat. The petitioner contended that these notices were without jurisdiction and arbitrary. The petitioner had previously accepted short payment of service tax, which was voluntarily deposited along with interest and penalty. The petitioner argued that the notices issued were in violation of the Global Settlement Agreement dated 18th April, 2014, and relied on the judgment of the Supreme Court in Nizam Sugar Factory versus Collector of Central Excise, A.P., 2006.

Interpretation of Section 73(4A) and (4) of the Finance Act, 1994:
The petitioner relied on Section 73(4A) of the Finance Act, 1994, which states that on conclusion of proceedings under this section, an intimation would be sent to the assessee in writing, and no adjudication order would be necessary. The petitioner argued that the authorities cannot issue further notices after the conclusion of proceedings under this section. The respondent, however, contended that the issues raised in the notices were new and distinct from the previous investigation, resulting in payments made by the petitioner.

Validity of Queries Raised in Notices:
The High Court emphasized that the petitioner is entitled to raise contentions and issues in response to the notices, which were in the form of letters calling for a response. The Court clarified that the issuance of queries and notices does not imply that the authorities have formed any opinion or decided to issue a show cause notice. The authorities would consider the explanations provided by the petitioner before deciding on further proceedings.

Judicial Intervention at the Summons Stage:
The Court declined to interfere with the notices and summons issued by the authorities, stating that it would not act as an inquiry officer or investigator. The Court highlighted that the petitioner could raise legal contentions regarding the interpretation of the relevant sections of the Finance Act, 1994, but the factual aspects would be examined by the authorities. The Court cited precedents emphasizing that judicial interference at the summons stage should be limited, except in cases of clear abuse of process of law.

In conclusion, the High Court refrained from expressing any opinion on the merits of the case and left all issues and contentions raised by the petitioner open for further consideration.