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2023 (2) TMI 733 - HC - Service TaxService or not - agreement between the Petitioner and the NHAI for collection of toll charges - activity performed by the Petitioner under the agreement with NHAI - status of the Petitioner qua NHAI - whether the Petitioner would be an agency on behalf of NHAI? - HELD THAT - The Tribunal in Petitioner s own case COMMISSIONER OF SERVICE TAX MUMBAI VERSUS M/S. IDEAL ROAD BUILDERS PVT. LTD. M/S. MEP TOLL ROAD PVT. LTD. 2017 (10) TMI 401 - CESTAT MUMBAI had rendered a finding that the Petitioner cannot be considered as an agent of the NHAI. In the impugned decision the Respondent has not dealt with the implications of this finding of the Tribunal. The Respondent- Commissioner had posed this question to himself in the order; however thereafter we do not find any declaration as to what is the implication of the earlier decision of the Tribunal and as to whether the finding of the status of the Petitioner would lose its meaning after the introduction of the new regime. The Commissioner has only referred to different periods under which the demands have been made however without any discussion about whether it would rule out the earlier finding of the Tribunal. According to us this specific finding on the status of the Petitioner given in the Petitioner s own case by the Tribunal could not have been overlooked. By stating so we should not be deemed to have meant that the Commissioner was bound by the decision of the Tribunal or otherwise. The Commissioner could conclude that the declaration was not applicable even after the new regime or that after the new regime despite the such declaration the Petitioner would be liable but the same could not have been ignored. We agree with the learned counsel for the Petitioner that there is a fundamental flaw in the approach adopted by the Respondent which needs to be corrected. Impugned order set aside - the proceeding before the Respondent-Commissioner is restored to decide the same - petition disposed off.
Issues:
Challenge to order confirming demand under Finance Act, 1994; Invocation of writ jurisdiction despite alternate remedy; Consideration of binding Tribunal decision by Respondent; Liability of toll agency to pay service tax; Interpretation of agreement between Petitioner and NHAI; Definition of "service" under Finance Act, 1994; Implications of Tribunal's finding on Petitioner's status as NHAI's agent. The High Court of Bombay heard a case where the Petitioner challenged an order confirming a demand under the Finance Act, 1994, issued by the Respondent. The Petitioner invoked writ jurisdiction despite the availability of an appeal, arguing that the Respondent failed to consider a binding Tribunal decision in the Petitioner's favor. The Court found merit in this contention and granted the prayer for remand. The Petitioner, a company acquiring toll road user fee collection rights, had an agreement with NHAI. The dispute arose when the Petitioner received a show cause notice for service tax, which was later dropped. However, a subsequent investigation led to a new show cause notice and an order confirming the demand, prompting the Petitioner's challenge. The central issue revolved around the interpretation of the agreement between the Petitioner and NHAI regarding toll collection and whether the Petitioner acted as an agency for NHAI. The Respondent considered the activity as a taxable service under the Finance Act, 1994, disregarding the Tribunal's previous finding that the Petitioner was not NHAI's agent. The Court noted that the Respondent failed to address the implications of the Tribunal's finding on the Petitioner's status, leading to a fundamental flaw in the decision-making process. Consequently, the Court set aside the impugned order and remanded the case to the Respondent for a fresh decision considering the Court's observations. Given the pending issue before the Supreme Court, the Court emphasized that any future legal developments would be binding on the parties. Ultimately, the writ petition was disposed of, quashing the order and reinstating the proceeding before the Respondent for a reevaluation based on the Court's analysis.
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