2022 (6) TMI 713 - HC - Service Tax

Validity of recovery notices - impugned show cause notices issued without taking recourse to Section 73 of the Finance Act, 1994 - HELD THAT - We would like the counsel for the parties to file written submissions not exceeding three pages each, at least three days before the next date of hearing. List the matter on 26.08.2022.

Summary

Issues:
Challenge to recovery notices dated 13.01.2022 and 12.07.2019; Failure to issue show cause notice before recovery; Validity of show cause notice dated 04.10.2019; Revised return for FY 2014-2015 not considered; Timeliness of filing revised return; Interpretation of Rule 7B of Service Tax Rules, 1994; Applicability of Section 73(1) and Section 73(1B) of the Finance Act, 1994; Self-assessment and recovery of admitted tax.

Analysis:

The petitioner challenged two recovery notices, dated 13.01.2022 and 12.07.2019, concerning a cumulative amount of Rs.79,77,206 for FYs 2014-2015 and 2016-2017. The petitioner contended that a show cause notice should have been issued before recovery steps were taken. Additionally, a show cause notice dated 04.10.2019 covering FY 2016-2017 was highlighted, indicating the need for adjudication regarding the recovery sought for that period.

Regarding the tax for FY 2014-2015, the petitioner claimed that a revised return was filed but not considered by the respondents. The respondents argued that the revised return was invalid as it was not filed electronically, was beyond the 90-day period specified in Rule 7B, and was submitted after the stipulated deadline of 28.07.2015. The petitioner argued that the delay in filing the revised return should be allowed under Rule 7C, treating the filing deadline as directory rather than mandatory.

The respondents contended that Section 73(1) of the Act, requiring a show cause notice, did not apply in this case, citing Section 73(1B) read with Section 87, which allows for the direct recovery of admitted tax in cases of self-assessment. The respondents maintained that the case fell under self-assessment, justifying the recovery without a show cause notice.

The court directed both parties to submit written submissions before the next hearing and scheduled the matter for further consideration on 26.08.2022, with a stay on the operation of the impugned notices in the meantime. The judgment highlighted the need for a thorough examination of the legal arguments and factual circumstances presented by both parties before reaching a decision on the validity of the recovery notices and the applicability of the relevant provisions of the Finance Act, 1994.