2024 (7) TMI 1076 - HC - Service Tax

Invocation of extended period of limitation - It is the contention of learned counsel for the petitioner that petitioner is engaged in carrying out drilling of bore wells in agricultural lands pertaining to agriculturists, which falls under the exemption under negative list entry under section 66 (D) (3) of the Finance Act of 1994 - HELD THAT - This Court is of the opinion that to invoke the proviso to Section 73 (1) of the erstwhile Finance Act of 1994, the necessary mandatory requirements are contemplated in the Act of 1994, which is ingrained in the proviso to section 73 (1) of the Act. The same has been stated in the show cause notice with regard to the petitioner being liable to pay the service tax and why penalties should not be imposed except for narrating in detail with regard to the requirements as contemplated under proviso to Section 73 (1) of the Act of 1994. It is not the case of the petitioner that he was not provided an opportunity to reply and so also it is not his case that he was not given a personal hearing or opportunity of hearing. The petitioner was asked to provide details with regard to why he has not registered under the service tax and not paid the service tax. It is apparently clear that once the show cause notice is issued under the proviso to Section 73 (1) of the erstwhile Finance Act, invoking the extended period of limitation beyond the 30 months and once an inquiry is conducted, opportunity is given to file reply when adjudication is held the grounds whatever urged by the petitioner herein would have to be challenged by way of an appeal provided under the Act of 1994, rather than challenging the jurisdiction of the revenue for issuance of the show cause notice - It cannot be said that the revenue does not have the jurisdiction to issue show cause notice under Section 73 (1) of the Act as it is not specified in detail with regard to the requirement under proviso to Section 73 (1) of the Act. As subsequently in the course of the show cause notice and the hearing, the opportunity was provided to the petitioner to substantiate the same by answering the requirement of not registering himself under the service tax registration and payment of service tax. It is apparently clear that the invocation of the writ jurisdiction under Article 226 of the Constitution of India whether could be entertained when there is an alternative efficacious remedy of appeal available under this statute. It is not in dispute, but in the present case, Section 85 of the Act, 1994 provides for appeal against any orders passed by the authorities. If at all the petitioner is aggrieved by the order of the authorities, he would have to approach the appellate authority rather than invoking the writ jurisdiction. There are no good ground made or cogent reasons of the revenue having not provided sufficient cause and reasons to invoke the proviso to section 73 (1) of the Act, 1994, for the extended period of limitation - petition is dismissed.

Summary

Issues Involved:
1. Validity of the show cause notice under Section 73(1) of the Finance Act, 1994.
2. Application of the extended period of limitation for service tax demand.
3. Jurisdiction of the revenue authority to issue the show cause notice.
4. Availability and necessity of exhausting alternative remedies before invoking writ jurisdiction.

Issue-wise Detailed Analysis:

1. Validity of the show cause notice under Section 73(1) of the Finance Act, 1994:

The petitioner contended that the show cause notice issued under Section 73(1) of the Finance Act, 1994, for the extended period is illegal and erroneous. The petitioner argued that the notice failed to specify cogent reasons as required by the proviso to Section 73(1). The petitioner claimed exemption under the negative list entry under Section 66(D)(3) of the Finance Act, 1994, asserting that the services provided were for agricultural purposes.

2. Application of the extended period of limitation for service tax demand:

The petitioner argued that the extended period of limitation, which extends the period from 30 months to five years, was improperly invoked. According to the petitioner, the revenue did not establish the necessary ingredients such as intent to evade duty, which are essential for invoking the extended period. The petitioner relied on the master circular issued by the Ministry of Finance, which outlines the conditions for invoking the extended period.

3. Jurisdiction of the revenue authority to issue the show cause notice:

The petitioner challenged the jurisdiction of the revenue authority to issue the show cause notice, arguing that the notice did not fulfill the mandatory requirements stipulated under the proviso to Section 73(1). The petitioner cited previous judgments, including those from the Excise Tax Appellate Tribunal, to support the claim that merely relying on information from income tax returns (Form 26AS) is insufficient to determine service tax liability.

4. Availability and necessity of exhausting alternative remedies before invoking writ jurisdiction:

The revenue contended that the petition should be dismissed on the grounds of maintainability, as the petitioner had an alternative efficacious remedy available under Section 85 of the Finance Act, 1994. The revenue argued that the petitioner should have approached the appellate authority instead of invoking writ jurisdiction. The revenue also asserted that the petitioner failed to provide documentary evidence to justify non-registration and non-payment of service tax.

Judgment:

The court held that the invocation of the writ jurisdiction under Article 226 of the Constitution is inappropriate when an alternative efficacious remedy is available. The court emphasized that the petitioner should have availed the appellate mechanism provided under Section 85 of the Finance Act, 1994, to challenge the order. The court found no cogent reasons to interfere with the revenue's decision to invoke the extended period of limitation under Section 73(1) of the Act.

Order:

i) The petition is dismissed.
ii) If any appeal is already preferred or filed by the petitioner, the appellate authority shall deal with the matter strictly in accordance with law.