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TMI Blog2021 (1) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed the separate notices for each succeeding year commencing from 1st April 2013. It is common ground that the impugned order concluding these notices, issued under section 73(1A) of Finance Act, 1994 for the respective periods, were consequent to show cause notice issued under section 73(1) of Finance Act, 1994 for the period from 1st April 2008 to 30th September 2012 seeking to tax transactions under section 65(105)(o) of Finance Act, 1994 as 'rent-acab scheme operator' till 30th June 2012 and for the period thereafter under the broadened definition of service, including those hitherto taxed, in section 65B(44) of Finance Act, 1994 and that the Tribunal had set aside the demand, confirmed in adjudication of original show cause notice, along with another for the period from 1st July 2012 to 31st March 2013, in Arval India Pvt Ltd v. Principal Commissioner of Service Tax-IV [2020-TIOL-1316-CESTAT-MUM]. 2. We have heard Learned Senior Counsel appearing for the appellant who contended that the issue was no longer res integra in view of the decision in their own appeal against the demand for the earlier period. Learned Authorised Representative, while conceding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax under Finance Act, 1994 when tax authorities, empowered under legislative sanction authorized by List II of the Seventh Schedule in the Constitution of India, conceded its lack of jurisdiction to tax any part of such value. In that specific context, it was held that erroneous payment under a state levy would not absolve liability to service tax. Such are not the facts in the present dispute. and, drawing upon the judgement of the Hon'ble Supreme Court on the constitutional constraints in taxing that part of 'works contract' transaction deemed to be sale, elaborated that '11. In re Larsen & Toubro Ltd, though the dispute pertains to 'works contracts', certain principles arising from constitutional limitations have been enunciated. It has been held that '15. A reading of this judgment, on which counsel for the assessees heavily relied, would go to show that the separation of the value of goods contained in the execution of a works contract will have to be determined by working from the value of the entire works contract and deducting therefrom charges towards labour and services. Such deductions are stated by the Constitution Bench to be eight in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution, taxation entries are to be found only in lists I and II. This is for the reason that in our Constitutional scheme, taxation powers of the Centre and the States are mutually exclusive. There is no concurrent power of taxation. This being the case, the moment the levy contained in a taxing statute transgresses into a prohibited exclusive field, it is liable to be struck down. In the present case, the dichotomy is between sales tax leviable by the States and service tax leviable by the Centre. When it comes to composite indivisible works contracts, such contracts can be taxed by Parliament as well as State legislatures. Parliament can only tax the service element contained in these contracts, and the States can only tax the transfer of property in goods element contained in these contracts. Thus, it becomes very important to segregate the two elements completely for if some element of transfer of property in goods remains when a service tax is levied, the said levy would be found to be constitutionally infirm. This position is well reflected in Bharat Sanchar Nigam Limited v. Union of India, (2006) 3 SCC 1 = 2006 (2) STR 161 (S.C.), as follows:- "No one denies the legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts have been held by the learned Judges of the Court below to be. The several forms which such kinds of contracts can assume are set out in Hudson on Building Contracts, at p. 165. It is possible that the parties might enter into distinct and separate contracts, one for the transfer of materials for money consideration, and the other for payment of remuneration for services and for work done. In such a case, there are really two agreements, though there is a single instrument embodying them, and the power of the State to separate the agreement to sell, from the agreement to do work and render service and to impose a tax thereon cannot be questioned, and will stand untouched by the present judgment." (at page 427)' before going on to hold that '35. The aforesaid finding is in fact contrary to a long line of decisions which have held that where there is no machinery for assessment, the law being vague, it would [not] be open to the assessing authority to arbitrarily assess to tax the subject. Various judgments of this Court have been referred to in the following passages from Heinz India (P) Ltd. v. State of U.P., (2012) 5 SCC 443. This Court said :- "This Court has in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment of a tax on person or property is at least of a quasi judicial character." (emphasis supplied) In Rai Ramkrishna v. State of Bihar [AIR 1963 SC 1667] this Court was examining the constitutional validity of the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961. Reiterating the view taken in K.T. Moopil Nair [AIR 1961 SC 552] this Court held that a statute is not beyond the pale of limitations prescribed by Articles 14 and 19 of the Constitution and that the test of reasonableness prescribed by Article 304(b) is justiciable. However, in cases where the statute was completely discriminatory or provides no procedural machinery for assessment and levy of tax or where it was confiscatory, the Court would be justified in striking it down as unconstitutional. In such cases the character of the material provisions of the impugned statute may be such as may justify the Court taking the view that in substance the taxing statute is a cloak adopted by the legislature for achieving its confiscatory purpose. In Jagannath Baksh Singh v. State of U.P. [AIR 1962 SC 1563] this Court was examining the constitutional validity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o way for the aggrieved party to get it corrected. This is a typical case where a taxing statute does not provide any machinery of assessment." (emphasis supplied) The appeals filed by the State against the judgment of the High Court striking down the enactment were on the above basis dismissed. Reference may also be made to Vishnu Dayal Mahendra Pal v. State of U.P. [(1974) 2 SCC 306] and D.G. Gose and Co. (Agents) (P) Ltd. v. State of Kerala [(1980) 2 SCC 410] where this Court held that sufficient guidance was available from the Preamble and other provisions of the Act. The members of the committee owe a duty to be conversant with the same and discharge their functions in accordance with the provisions of the Act and the Rules and that in cases where the machinery for determining annual value has been provided in the Act and the rules of the local authority, there is no reason or necessity of providing the same or similar provisions in the other Act or Rules. There is no gainsaying that a total absence of machinery provisions for assessment/recovery of the tax levied under an enactment, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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