2018 (11) TMI 182 - HC - Service Tax

Jurisdiction to issue SCN - two SCN on the same issue for overlapping period - SCN invoking extended period of limitation - CBEC Circular dated August 12, 2016 - Rule 10 of the Place of Provision of Service Rules, 2012. Is any of the two impugned show-cause notices without jurisdiction? - Held that - Both the impugned notices give adequate reasons for invoking the provisions for extended period of limitation. In light of the evidence coming to the authorities, on the basis of the statement of the petitioner and otherwise, the petitioner is obliged to face the proceedings emanating on the basis of the two show-cause notices. The reasons are a plausible view on the subject matter. A Writ Court need not interfere when the view taken is plausible - There is no lack of jurisdiction in issuing any of the two show-cause notices - issue is answered in the negative and against the petitioner. Is the impugned circular dated August 12, 2016 of CBEC bad in law? - Held that - The impugned circular puts the authorities on notice that, there can be two kinds of freight forwarders as noted therein and for the reasons given, the tax incidence for each of them would be different. By the impugned circular, an authority is required, after considering the individual case on merits, to identify the category in which the freight forwarder falls and then calculate the tax incidence accordingly - The impugned circular cannot be read to have imposed any restrictions or any authority or to be contrary to the provisions of any statute or to have whittled down any provision of any Rule or being contrary to any Rule or to determine any show-cause notice in any particular way. The impugned circular requires the authorities to look into the accounts of a freight forwarder in the light of the two nature of businesses noted therein and arrive at the tax incidence - the impugned circular dated August 12, 2016 cannot be held to be bad in law - issue is answered in the negative and against the petitioner. To what relief or reliefs are the parties entitled to? - Held that - In view of the first two issues being answered against the petitioner, no relief can be granted to the petitioner. Petition dismissed - decided against petitioner.

Summary

Issues Involved:
1. Jurisdiction of the authorities in issuing the two impugned show-cause notices.
2. Validity of the CBEC circular dated August 12, 2016.
3. Reliefs entitled to the parties.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Authorities in Issuing the Two Impugned Show-Cause Notices:

The petitioner argued that the authorities lacked jurisdiction to issue the two show-cause notices, contending that two notices by different wings of the Service Tax Authority for the same issue and overlapping period are impermissible. The petitioner cited precedents such as Simplex Infrastructures Ltd. v. Commissioner of Service Tax, Kolkata and Avery India Ltd. v. Union of India to support this contention. The petitioner also argued that the invocation of the extended period of limitation was incorrect, as there was no suppression of facts or tax evasion.

The court found that the two impugned show-cause notices were for a period different from the earlier show-cause notice dated April 17, 2013, and thus did not overlap. The court also noted that the adjudicating authority for both impugned notices was the same, and no final order of assessment had been passed yet. Therefore, there was no risk of double assessment. The court concluded that there was no lack of jurisdiction in issuing the two show-cause notices.

2. Validity of the CBEC Circular Dated August 12, 2016:

The petitioner challenged the CBEC circular, arguing it provided clarifications beyond the scope of Rule 10 of the Place of Provision of Service Rules, 2012, and that it should be applied prospectively if correct. The petitioner relied on cases such as Union of India & Ors. v. Inter Continental (India) and Suchitra Components Ltd. v. Commissioner of Central Excise, Guntur to support these arguments.

The court examined the Place of Provision of Services Rules, 2012, and the definitions and provisions therein. The court found that the impugned circular was clarificatory in nature, requiring authorities to consider the facts of each case, the terms of the contract, and applicable laws. The court held that the circular did not impose any new restrictions or whittle down any provisions of the law. It merely guided authorities to distinguish between different types of freight forwarders and their tax liabilities. Therefore, the circular was not bad in law and could be applied retrospectively if beneficial.

3. Reliefs Entitled to the Parties:

Given that the first two issues were answered against the petitioner, the court concluded that no relief could be granted to the petitioner. The writ petition was dismissed, and all interim orders were vacated.

Conclusion:

The High Court dismissed the writ petition, holding that the authorities had jurisdiction to issue the two impugned show-cause notices and that the CBEC circular dated August 12, 2016, was valid and clarificatory in nature. No relief was granted to the petitioner, and all interim orders were vacated.