2021 (6) TMI 796 - HC - Service Tax

Maintainability of SCN - instead of replying to the SCN, petitioner has rushed to this Court by invoking the extra ordinary remedy under Article 226 of the constitution of India - recovery of Service Tax - electricity charges collected from the petitioner's lessees - demand of interest and penalty as well - HELD THAT - This Court is unable to appreciate as to how the present writ petition is maintainable for the simple reason that the impugned proceedings is only a show cause notice calling upon the petitioner to show cause as to why the Service Tax is not recoverable from them. Instead of responding to the notice, the petitioner has rushed to this Court by invoking the extra ordinary remedy under Article 226 of the constitution of India. It is trite in law to hold that when a show cause notice is issued, the petitioner is legally bound to answer to the show cause notice and only when the explanation of the petitioner is not considered favourably and any adverse order is passed, then it is open to the petitioner to work out their remedies in a manner known to law. It is certainly not open to the petitioner to challenge the show cause notice itself before this Court and make an attempt to convince this Court on the factual submissions as to the maintainability of the show cause notice. Petition dismissed.

Summary

Issues:
1. Maintainability of the writ petition challenging a show cause notice for Service Tax on electricity charges collected from lessees.

Analysis:
The petitioner, the owner of a Shopping Complex, entered into lease agreements with retailers who pay maintenance charges and electricity charges based on actual consumption. A show cause notice was issued demanding Service Tax on the electricity charges collected from lessees. The petitioner contended that the separate metering system for electricity consumption by lessees justified not paying Service Tax on that amount. However, the court found the writ petition challenging the show cause notice premature. The court emphasized that the petitioner must respond to the notice and exhaust legal remedies only if an adverse order is passed. Challenging the notice directly in court before exhausting administrative remedies is not permissible. The court dismissed the writ petition as premature, highlighting that challenging a show cause notice directly is legally unacceptable.

This judgment primarily deals with the maintainability of a writ petition challenging a show cause notice for Service Tax. The court emphasized the legal principle that a petitioner must respond to a show cause notice and exhaust administrative remedies before approaching the court. The court found the petitioner's attempt to challenge the notice directly in court premature and legally impermissible. The judgment underscores the importance of following due process and exhausting administrative remedies before seeking judicial intervention. The court's decision to dismiss the writ petition highlights the significance of procedural compliance and adherence to legal principles in matters involving tax disputes.