2025 (3) TMI 334 - HC - Service Tax

Seeking quashing of the impugned Order in Original on the ground of double taxation - HELD THAT - Considering the factual nature of the issue and the fact that the impugned OIO is an appealable order this Court is of the opinion that the same ought to be relegated to CESTAT for the purpose of adjudication after proper appreciation of facts. Considering the facts and circumstances of the present case the Petitioner is permitted to present its appeal before CESTAT within four weeks subject to the Petitioner depositing a sum of Rs. 1 crore within four weeks. Subject to the said deposit being made the appeal would not be dismissed on the ground of limitation and shall be heard by CESTAT on merits. Petition disposed off.

Summary

The present petition before the Delhi High Court was filed by Tata Teleservices Limited seeking the quashing of an Order in Original dated 16th October, 2024, on the grounds of double taxation. The case revolved around prepaid vouchers/packages provided by Tata Teleservices for cellular mobile services, SMS, data/internet services, and Value-Added Services ("VAS"). The petitioner argued that they paid service tax on the first occasion when the prepaid package was purchased, and no tax should be levied on the second occasion when consumers availed VAS using the credit balance from the prepaid package.The Department contended that service tax should be paid on the second occasion when consumers availed services, even if the credit balance had been taxed previously. The impugned Order in Original confirmed a demand for service tax amounting to approximately Rs. 31 crores and imposed an equal amount of penalty on the petitioner.The petitioner challenged the order on four grounds:i) Lack of pre-consultation before issuing the show cause notice.ii) Adjudication of the show cause notice with substantial delay.iii) Imposition of tax on the second occasion amounted to double taxation.iv) Justification of the time-barred show cause notice on the ground of fraud, which the petitioner disputed.The Department argued that the petitioner's official admitted to paying taxes only on the first occasion and not on the second occasion. They also highlighted that the impugned order was appealable, citing relevant judgments.The Court considered the factual issue of whether service tax should be paid on the second occasion when consumers availed VAS using the credit balance. Given the factual nature of the issue and the appealability of the order, the Court decided to relegate the matter to CESTAT for adjudication after a proper examination of the facts.However, considering the petitioner's claim of being a loss-making company and the substantial pre-deposit amount required, the Court permitted the petitioner to appeal before CESTAT within four weeks upon depositing a sum of Rs. 1 crore. The appeal would not be dismissed on the ground of limitation and would be heard by CESTAT on merits if the deposit was made.In conclusion, the petition was disposed of with the petitioner allowed to appeal before CESTAT upon making the specified deposit. The Court's decision aimed to address the issue of double taxation and ensure a fair adjudication process for both parties.