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2023 (10) TMI 63 - HC - Service TaxJurisdiction to issue SCN - SCN issued on the basis of the provisions declared ultra vires - Time-barred - HELD THAT - The argument with respect to limitation is based on Section 73(1) of the Finance Act, 1994. Section 73(1), which came into effect from 28.05.2012, enables a notice to be served on the person chargeable with the service tax, which has not been levied or paid or which has been short-levied or short-paid within a period of 18 months from the relevant date. The relevant date discernible from Section 73(6) is the date on which the return is filed or the date prescribed under the Rules, if no return is filed. It has also to be noticed that when there is an allegation of short levy or short payment or erroneous refund on the grounds of (a) fraud, (b) collusion, (c) willful mis-statement, (d) suppression of facts; or (d) contravention of any of the provisions of this Chapter or the rules made thereunder with intent to evade payment of service tax, then the period of limitation is five years which period stands substituted for eighteen months as seen from the proviso to sub-section (1) of Section 73. When there is a delayed filing of the return under Rule 7C of the Service Tax Rules, 1994, it has to be presumed that the amount specified in Rule 7C has been paid and so has the tax liability been satisfied. In that circumstance, the relevant date is the date on which the tax has been paid. As is evident from Annexure-17, for the period between April, 2015 and September, 2015 the assessee has filed an ST-3 Return on 25.07.2016 while returns for the remaining relevant period were filed thereafter. The limitation, hence, commences on 25.07.20216 and as on 25.07.2021, the date of demand-cumshow cause notice; the five year period, has not expired. The ground of limitation raised fails and is rejected. Jurisdiction to issue SCN - HELD THAT - The Central Services and Goods Act, 2017 came within one year, i.e. on 12.04.2017. The C.G.S.T. Act contained Section 173 by which Chapter V of the Finance Act stood omitted. However, Section 174 of the CGST Act dealing with Repeal and Saving, by sub-section (2) saved the operation of the Amended and Repealed Acts and orders issued thereunder or anything duly done or suffered thereunder; without any right, privilege or law accrued under the Amended Act being affected by reason of the amendment in Section 173. Hence, despite the CGST Act having come into force on 01.08.2017, the proceedings under Chapter V of the Finance Act, 1994 stands validated. Another contention raised by the learned counsel for the petitioner that earlier a notice was issued which was replied, but no action was taken thereunder - HELD THAT - It is seen from Annexure-9 that a pre-notice consultation was scheduled on 09.07.2021 at 12 00 P.M. through virtual mode. The e-mail produced at Annexure-9 is said to have enclosed a demand-cum-show cause notice which was almost on the same lines of the demand-cum-show cause notice; but without a date. The petitioner has replied to the same by Annexure-13, but however, raising many contentions on jurisdiction, limitation and so on, as also citing various decisions, but, however, not focusing on the factual allegations raised of mis-representation and suppression of the actual taxable value of services provided during the assessment years. There are absolutely no reason to interfere with the show cause notices - petition dismissed.
Issues Involved:
1. Jurisdiction and validity of the demand-cum-show cause notice. 2. Limitation period for issuing the notice. 3. Validity of Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006. 4. Jurisdiction of the officer post-CGST Act, 2017. 5. Previous notice and pre-notice consultation. Summary: 1. Jurisdiction and Validity of the Demand-cum-Show Cause Notice: The writ petition challenges the demand-cum-show cause notice dated 20.07.2021 issued under Section 73(1) of the Finance Act, 1994, for the financial years 2015-16, 2016-17, and up to June 2017. The petitioner argues that the notice lacks jurisdiction, is time-barred, and is based on provisions declared ultra vires in "International Consultants and Technocrats Pvt. Ltd. vs. Union of India" and upheld by the Supreme Court in "Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd." 2. Limitation Period for Issuing the Notice: The court considered the contention of the notice being barred by limitation. Section 73(1) of the Finance Act, 1994, allows a notice within 18 months from the relevant date, extendable to five years in cases of fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade service tax. The relevant date for the earliest period in question is 25.07.2016, making the notice issued on 20.07.2021 within the five-year period. The court rejected the limitation argument, stating that limitation is a mixed question of fact and law. 3. Validity of Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006: The petitioner argued that the notice is without jurisdiction as it is based on Rule 5(1), which was declared ultra vires. Rule 5(1) included expenditures incurred by the service provider as consideration for taxable service. The court noted that the demand-cum-show cause notice did not indicate inclusion of such reimbursed expenses as taxable value but was based on discrepancies between gross value of services declared in ST-3 Returns and ITR/TDS returns. The court emphasized that deductions claimed as reimbursable expenses must be proved by the assessee. 4. Jurisdiction of the Officer Post-CGST Act, 2017: The petitioner contended that the officer lacked jurisdiction post-CGST Act, 2017. The court referred to Section 19 of the Constitution 101st Amendment Act 2016 and Section 174 of the CGST Act, which saved the operation of the repealed Acts and validated proceedings under Chapter V of the Finance Act, 1994, despite the CGST Act coming into force. 5. Previous Notice and Pre-Notice Consultation: The petitioner argued that an earlier notice was issued but no action was taken. The court observed that a pre-notice consultation was scheduled, and the petitioner had replied, raising jurisdiction and limitation issues but not addressing the factual allegations of misrepresentation and suppression of taxable value. Conclusion: The court found no reason to interfere with the show cause notices and dismissed the writ petition, leaving the petitioner to pursue appropriate remedies. The petition was dismissed without any observation on the merits of the allegations, with parties bearing their respective costs.
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