2022 (6) TMI 308 - HC - Service Tax

Maintainability of petition - Validity of Show Cause Notice (SCN) - appropriate forum - Recovery of Service tax with interest and penalty - invocation of extended period of limitation - applicability of first proviso to Sub-Section (1) of Section 73 of Finance Act, 1994 read with Section 119 of Chapter VI of the Finance Act, 2015, Section 161 of Chapter VI of the Finance Act, 2016, Section 95 of the Finance Act (2), 2004 and Section 140 of the Finance Act, 2007 - HELD THAT - It is consciously refrained from observing anything on the merits of the contention regarding levy of service tax and exemption from payment of stamp duty claimed by the petitioner in exercise of writ jurisdiction, at this stage where the petitioner has only been asked to appear and submit its response to the show-cause notice. The show-cause notice does not suffer from want of jurisdiction. The plea of the petitioner requires scrutiny and examination of service contracts entered both with the Government of Jharkhand and its subcontractors in the light of the Exemption Notifications. Whether petitioner would be liable to pay service tax on its claim of exemption from payment of stamp duty, is a matter to be decided at the first instance by the Adjudicating Authority. The question does entail adjudication on mixed question of law and facts. The writ petition is not fit to be entertained on the principles well settled by the Hon ble Supreme Court - Apex Court in the case of M/s Magadh Sugar Energy Ltd. versus The State of Bihar Ors 2021 (10) TMI 691 - SUPREME COURT has held that In cases where there are disputed questions of fact, the High Court may decide to decline jurisdiction in a writ petition. However, if the High Court is objectively of the view that the nature of the controversy requires the exercise of its writ jurisdiction, such a view would not readily be interfered with. Present writ petition is dismissed.

Summary

Issues:
1. Show-cause notice issued by respondent no.1 demanding service tax liability, interest, and penalties.
2. Claim of exemption by the petitioner based on Notification No. 25/2012, Notification No. 6/2015, and Notification No. 9/2016.
3. Interpretation of Indian Stamp Act, 1899 in relation to exemption from stamp duty.
4. Jurisdiction of the High Court to entertain the writ petition in the presence of an alternate remedy.

Analysis:

1. The petitioner approached the High Court challenging the show-cause notice demanding service tax liability, interest, and penalties. The notice invoked provisions of the Finance Act, 1994 and other relevant sections. The petitioner argued that their projects were exempted from service tax based on specific notifications. The inspection revealed discrepancies in the petitioner's service tax compliance, leading to the issuance of the notice.

2. The petitioner claimed exemption under Notification No. 25/2012, Notification No. 6/2015, and Notification No. 9/2016 for projects executed with the Government of Jharkhand. The agreements were entered into before 01.03.2015, entitling them to exemption under specific provisions. The petitioner's task was categorized as 'Project Management Consultancy,' and they argued that the works contract services provided were exempt from service tax.

3. The petitioner relied on Section 3 of the Indian Stamp Act, 1899, claiming exemption from stamp duty for agreements executed with the Government. The respondent contended that the petitioner failed to fulfill the conditions for exemption under the relevant notifications, specifically regarding the payment of appropriate stamp duty. The High Court refrained from deciding on the merits of the exemption claim, emphasizing the need for scrutiny by the Adjudicating Authority.

4. The High Court dismissed the writ petition, citing the availability of an alternate remedy for the petitioner to respond to the show-cause notice before the Adjudicating Authority. The court highlighted principles governing the exercise of writ jurisdiction, emphasizing exceptions where fundamental rights, natural justice, jurisdictional issues, or legislative vires are involved. The petitioner was granted the opportunity to present their case before the Adjudicating Authority within a specified timeframe.

This detailed analysis covers the issues raised in the legal judgment, outlining the arguments presented by the parties and the court's decision regarding the show-cause notice, exemption claims, interpretation of the Indian Stamp Act, and the jurisdiction of the High Court in entertaining the writ petition.