2024 (7) TMI 1405 - HC - Service Tax

Seeking to quash the impugned order passed by respondent No.2 under section 73 (1) of the erstwhile Finance Act, 1994, by invoking the extended period of limitation - jurisdiction of issuing the show cause notice under section 73 (1) of the Act - 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. 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 - 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. 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 dismissed.

Issues Involved:
1. Quashing of the impugned order under Section 73(1) of the Finance Act, 1994.
2. Applicability of the extended period of limitation.
3. Validity of the show cause notice based on income tax returns data.
4. Jurisdiction of the revenue to issue the show cause notice.
5. Availability of alternative remedy under Section 85 of the Finance Act, 1994.

Detailed Analysis:

1. Quashing of the Impugned Order under Section 73(1) of the Finance Act, 1994:
The petitioner sought to quash the impugned order passed by respondent No.2 under Section 73(1) of the Finance Act, 1994, invoking the extended period of limitation for the period from April 2015 to March 2016. The petitioner contended that the services provided, i.e., drilling of bore wells in agricultural lands, fell under the exemption under the negative list entry under Section 66(D)(3) of the Finance Act, 1994.

2. Applicability of the Extended Period of Limitation:
The petitioner argued that the extended period of limitation beyond 30 months was not applicable as no cogent reasons were specified in the show cause notice, as required by the proviso to Section 73(1) of the Finance Act, 1994. The revenue, however, contended that there was clear suppression of facts and willful misstatement by the petitioner, justifying the invocation of the extended period.

3. Validity of the Show Cause Notice Based on Income Tax Returns Data:
The petitioner contended that the demand for service tax based solely on the income tax returns data was not sustainable. The revenue argued that the show cause notice was issued based on the ITR data, and the petitioner was given a fair hearing and an opportunity to provide necessary documents and details.

4. Jurisdiction of the Revenue to Issue the Show Cause Notice:
The petitioner challenged the jurisdiction of the revenue to issue the show cause notice under Section 73(1) of the Finance Act, 1994, arguing that the necessary mandatory requirements were not fulfilled. The court held that the revenue had the jurisdiction to issue the show cause notice and that the petitioner was given an opportunity to reply and participate in the hearing.

5. Availability of Alternative Remedy under Section 85 of the Finance Act, 1994:
The court emphasized that there was an alternative efficacious remedy available under Section 85 of the Finance Act, 1994, for the petitioner to challenge the order. The court cited the judgment of the Hon'ble Apex Court in the case of State of Maharashtra and others vs. Greatship (India) Limited, which held that when an alternative remedy is available, judicial prudence demands that the court refrains from exercising its jurisdiction under Articles 226 and 227 of the Constitution.

Conclusion:
The court concluded that the invocation of the writ jurisdiction under Article 226 of the Constitution of India was not justified when an alternative remedy was available. The petition was dismissed, and the court directed that if any appeal was already preferred or filed by the petitioner, the appellate authority should deal with the matter strictly in accordance with law.

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