2020 (7) TMI 451 - HC - Service Tax

Maintainability of petition - alternative remedy of appeal - Levy of Service Tax - construction undertaken in TNCSC Thanjavur Division - time limitation - HELD THAT - There is nothing on record to indicate that the appellant himself was very much vigilant in getting his writ petition disposed of. Merely delay in taking up of the writ petition does not impell to entertain the aforesaid arguments for the reason that even if the contention is that the appellant was not liable to service tax, it was a question of fact, which had to be determined on the strength of the contract agreement and the documents which have been relied on by the parties - there are no error in the approach of the learned Single Judge in allowing the appellant to seek the remedy of appeal, which has been extended to the appellant even after a lapse of such a long time by giving the benefit of limitation. The Tamil Nadu Civil Supplies Corporation, admittedly, is a Corporation registered under the Companies Act and is basically a Corporation for transacting food and civil supplies through various projects, where certain subsidies are also extended. Merely because the Corporation is working on the principle of No profit No loss basis, the same cannot enure to the benefit of the appellant, who is a Contractor, extending his service as Contractor for the purpose of raising construction for the Corporation. The activity of the Corporation will have no impact on the claim of any such benefit under the provision aforesaid that has been pressed into service by the learned counsel for the appellant. The service rendered by the appellant and the activity of construction by the appellant is not an activity of charity and is rather a contract for profit. The appellant is doing construction work not for any loss by raising constructions for the Corporation. There are no merit in the appeal - appeal dismissed.

Issues:
1. Dismissal of writ petition after long pendency.
2. Challenge to orders passed by Assistant Commissioner of Central Excise.
3. Applicability of service tax on the appellant.
4. Availability of alternative remedy of appeal.
5. Jurisdictional issue of levy of service tax.
6. Justification for filing the writ petition.
7. Entitlement to appeal despite delay.
8. Nature of activities of Tamil Nadu Civil Supplies Corporation.
9. Benefit of 'No profit No loss' basis to the appellant.

Analysis:
1. The appellant contended that the writ petition was dismissed after a long pendency, raising a legal issue regarding the liability for service tax. The orders passed by the Assistant Commissioner of Central Excise were challenged, emphasizing statutory provisions under the Finance Act and the nature of the appellant's activities under an agreement with the Tamil Nadu Civil Supplies Corporation.

2. The learned Single Judge dismissed the writ petition citing the availability of an alternative remedy through an appeal. The appellant argued that since the issue was jurisdictional, challenging the very levy of service tax, the writ petition was rightly filed. The delay in hearing the petition should not bar it, especially considering exceptions to the alternative remedy principle as per Supreme Court decisions.

3. The High Court acknowledged the availability of the appeal remedy but noted the appellant's argument that the delay in disposal was not solely their fault. The court emphasized that the determination of liability for service tax was a factual matter based on the contract agreement and supporting documents.

4. The court found no error in allowing the appellant to pursue the appeal, even after a significant delay, with the benefit of extended limitation. While not commenting on the extension of the limitation period, the court was not convinced about the nature of activities forming the basis of the challenge to the orders.

5. Regarding the activities of the Tamil Nadu Civil Supplies Corporation, the court observed that operating on a 'No profit No loss' basis did not automatically benefit the appellant, a contractor engaged in construction work for the corporation. The court emphasized that the appellant's construction activities were not charitable but contractual for profit, distinct from the corporation's operational principles.

6. Ultimately, the court rejected the appeal, finding no merit in the challenge to the service tax liability. The appellant's construction work for the corporation was deemed a profit-oriented contract, not qualifying for exemption based on the corporation's operational model. The appeal was dismissed without costs, and the connected application was closed.

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