2020 (11) TMI 398 - HC - Service Tax

Legal services to foreign parties - export of services - Vires of Section 94(2)(f) of the Finance Act, 1994 and Rule 6A of the Service Tax Rules, 1994 regarding Export of services as well as Rule 9 of the Place of Provision of Services Rules, 2012 - petitioner prays for a declaration that officers of the respondents No.2 to 3 appointed under the Goods and Services Tax Act, 2017 read with notification dated 01st July, 2017 are not empowered under the law to proceed under the provisions of the Finance Act, 1994 on the basis of Section 174 of the Central Goods and Services Tax Act, 2017 - HELD THAT - It is directed that till further orders, no coercive steps shall be taken against the petitioner pursuant to the notice dated 30th September, 2020. List the matter on 27th January, 2021.

Summary

Issues:
Challenge to show cause notice for service tax demand, validity of specific sections and rules under Finance Act, 1994, jurisdiction of officers under Goods and Services Tax Act, 2017, breach of mandatory pre-consultation, excessive delegation of legislative power, ultra vires rules, stay of coercive steps.

Analysis:
The petitioner filed a writ petition challenging a show cause notice issued by respondent No.2 for a substantial service tax demand covering a specific period. The petitioner sought the quashing of certain provisions under the Finance Act, 1994, related to 'Export of services,' as well as a declaration regarding the jurisdiction of officers appointed under the Goods and Services Tax Act, 2017. The petitioner argued that the impugned notice lacked jurisdiction, was time-barred, and failed to consider previous audit records, citing relevant case law to support these contentions.

The petitioner contended that the show cause notice violated the mandatory pre-consultation requirement with the assessee, seeking its quashing based on a previous judgment. Additionally, the petitioner challenged the constitutionality of Section 94(2)(f) of the Finance Act, 1994, alleging excessive delegation of legislative power and argued that certain rules exceeded the rule-making authority, relying on precedent to support these claims. The petitioner highlighted a prior writ petition where a stay had been granted against coercive actions, indicating a history of legal challenges in this matter.

The Court issued notices to the respondents, who accepted the same, and directed that no coercive steps be taken against the petitioner until further orders, considering the circumstances and a previous order granting a stay. Respondents were given time to file their counter affidavits, with provision for a rejoinder affidavit if necessary, and the matter was scheduled for a hearing in January 2021. The order was to be uploaded on the website and shared with the counsels via email, ensuring transparency and communication in the legal proceedings.