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TMI Blog2024 (6) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Officers, vesting them with the powers under Chapter V of the Finance Act, 1994 and the Rules made thereunder. The Supreme Court, while interpreting the provisions of Section 28 (4) held that when the Statute confers the power to perform an act on different officers, especially when they belong to different Departments, a different officer cannot exercise their powers in the same case. Where one officer has exercised his powers of assessment, the power to order re-assessment must also be exercised by the same officer - Thus, the Supreme Court held that the Additional Director General of DRI who issued the recovery notice under Section 28 (4) was not a Proper Officer for re-opening the assessment completed by the Deputy Commissioner of Customs. There is no irregularity or illegal infirmity in the show cause notice issued by the Additional Director General of the Directorate of GST Intelligence. Its final adjudication will be carried out by the jurisdictional Central GST and the Central Excise Commissioner - this Court does not find that the 2nd respondent does not have authority or power under the Finance Act 1994 read with the Notifications and Circulars mentioned above to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Sri N Venkataraman, learned Additional Solicitor General of India and Sri P R Sreejith learned Senior Standing Counsel for the Central Board of Indirect Taxes and Customs (CBIC) on behalf of the respondents. 2. These two writ petitions have been filed by the petitioner/Asianet Digital Network Private Ltd, a Company registered under the provisions of the Companies Act impugning two show cause notices in Ext. P1 in both the writ petitions issued under Section 73 of the Central Goods and Services Tax Act 2017 (for short, CGST Act ) for the period February 2017 to June 2017 in W.P.(C) No. 30147/2022 and from July 2017 to March 2020 in W.P.(C) No. 3611/2024. Facts in brief: 3. In October 2015, Asianet Broadband Private Ltd was formed as a wholly owned subsidiary of Asianet Satellite Communications Ltd (for short, Parent Company ). Asianet Broadband Private Ltd was renamed Asianet Digital Cable TV Private Ltd in March 2017 and again renamed Asianet Digital Network Private Ltd in January 2018. 3.1 During the initial period i.e., 1993-2000, the Parent Company used to provide cable television services directly to the subscribers. The Parent Company receives different channels broadcaste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... net were collecting payments from subscribers. And after retaining part of the amount collected from the subscribers the LCO would remit the remaining amount to the petitioner. The petitioner was not accounting for the amounts retained by its linked LCOs in their financial documents and was thus suppressing taxable value and service tax liability. According to TRAI regulations under the DAS regime, the service provider - service recipient relationship in respect of digital cable TV services is between Asianet, an MSO, and the subscriber-only and the LCO has no direct role in the supply of service to the subscriber. 4.2 The DAS has been implemented from 01.02.2017. The petitioner provided data on the amounts raised on LCOs i.e., the revenue share of MSO for the period from February 2017 to June 2017 and billing data of LCO-linked subscribers were not available for the said period. In the absence of billing data of LCO-linked subscribers of the petitioner, provisions of Section 70 of the Finance Act 1994 have been invoked against the petitioner. 4.3 After synchronising the response to the summons issued to the petitioner and considering the submissions of their representative and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oked in the absence of billing data of LCO-linked subscribers of Asianet for the period from 01.02.2017 to 30.06.2017 and why the taxable value of services rendered in respect of LCO-linked subscribers of Asianet i.e., the amount retained by LCOs from monthly subscription charges which escaped service tax, should not be estimated at Rs. 49,37,94,750/- during the period from 01.02.2017 to 30.03.2017, under Section 72 of the Finance Act 1994. (b) the service tax amounting to Rs. 6,91,31,265/-, Swachh Bharat Cess (SBC) of Rs. 24,68,974/-, and Krishi Kalyan Cess (KKC) of Rs. 24,68,974/- totalling to Rs. 7,40,69,213/- being the service tax including Cesses non-paid/short-paid on the value of taxable services of Rs. 49,37,94,750/- rendered by them in respect of LCO-linked subscribers of Asianet, during the period from 01.02.2017 to 30.06.2017, should not be demanded and recovered under the proviso to Section 73 (1) of the Finance Act 1994, besides imposition of interest and penalty under the provisions of Sections 75, 77(2) and 78 of the Finance Act 1994. Show cause notice dated 29.12.2023 in W.P.(C) No. 3611/2024: 7. The impugned show cause notice in Ext. P1 was issued to the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s out the jurisdiction of the Principal Commissioner/Commissioners etc. As per the notification applicable to the State of Kerala, the Principal Commissioner/ Commissioner of Central Excise and Service Tax, Thiruvananthapuram, would have jurisdiction over Districts of Thiruvananthapuram, Kollam, Pathanamthitta, Alappuzha and Kottayam. 9.1 The petitioner is registered within the jurisdiction of the 3rd respondent i.e., Commissioner, Central Tax and Central Excise, Thiruvananthapuram where it files its returns and does the self-assessment of tax payable under the Finance Act 1994. The petitioner is not registered and has not filed returns with the 2nd respondent or any other officer of the DGGI/DGCEI. Therefore, the 3rd respondent is the Central Excise Officer under Section 73 of the Finance Act 1994 competent to issue show cause notice to the petitioner and adjudicate the same. As the petitioner has filed the service tax return before the 3rd respondent, the 3rd respondent would only be the Adjudicating Authority having the power to issue a show cause notice and re-open the assessment. The submission is that the show cause notice issued by the 2nd respondent is without jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a question of jurisdiction, and the quasi-judicial authority does not have the jurisdiction to issue a show cause notice which is barred by limitation. 11.1 As per the provisions of Section 73 (1) of the Finance Act 1994, the existence of fraud/ collusion/ wilful misstatement/ suppression of facts/ contravention of the provisions of the Finance Act or Rules made thereunder with an intent to evade payment of service tax are jurisdictional facts on which the extended period of limitation of five years can be invoked. No such jurisdictional facts are in existence to invoke the extended period of limitation for issuing the impugned show cause notice and, therefore, the show cause notice is without jurisdiction, non-est and void ab initio. 12. In the present case, the issue involved is whether the petitioner, i.e., MSO, is liable to pay service tax on the gross amount collected by LCOs or on the amount which the petitioner gets from the LCOs after deduction of the share by the LCOs from the gross amount. 13. Learned Counsel for the petitioner has vehemently submitted that the CESTAT while examining the tax liability in respect of such amounts collected by the LCOs, held in Reetika Cable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular No. 80/10/2004-ST dated 17.09.2004 issued by the CBIC, services from the MSOs to the cable operators were also taxable, in addition to the services rendered to the ultimate customers. Further, the services rendered by the LCOs to the end subscriber were also independently susceptible to service tax. 14.1 The submission is that the petitioner is liable to pay service tax only on the amount received from the LCOs and the LCOs, wherever they cross the threshold limit as prescribed under the Finance Act, be registered under the service tax law, and pay service tax. The LCOs were filing service tax returns under the category of Cable Operator and were availing Cenvat Credit of service tax paid on the invoice raised by MSO. It is also submitted that it was well-settled law that the MSOs are not liable to pay service tax on the amount collected by the LCO from their subscribers, as was reiterated in Reetika Cable (supra). Therefore, the show cause notice is bad in law. GST Department s: 15. Sri N Venkataraman learned Additional Solicitor General of India has raised the preliminary objection regarding the maintainability of the writ petition against the impugned show cause notice. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST and Central Excise Commissioner. 17. Learned Additional Solicitor General of India has further submitted that the impugned show cause notice is issued demanding the differential service tax on the amount of subscription retained by the LCOs during the period from 01.02.2017 to 30.06.2017. It cannot be disputed that the petitioner became liable to pay the service tax on the amount of subscription retained by the LCOs only with effect from 01.02.2017, the date from which the petitioner had provided the cable television signals exclusively through the digital system using set-top boxes in compliance with the Telecommunication (Broadcasting and Cable Services) Interconnection (Digital Addressable Cable Television Systems) Regulations 2012 and the Telecommunication (Broadcasting and Cable) Services Interconnection (Addressable Systems) Regulations 2017. In view of the aforesaid legal position, the question of raising such objections in the audit conducted by the Departmental Auditors during the period prior to 01.02.2017 would not arise at all. 17.1 It is also not in dispute that the amount retained by the LCOs from the subscriptions collected by them from the subscribers has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Circular dated 11.11.2021. Therefore, these show-cause notices would come within the exception as mentioned in paragraph 5 of the said Circular and no pre-show cause notice consultation was mandatory. 20. Chapter V of the Finance Act 1994 is a complete code in itself. It provides for adjudication and appeal machinery for the resolution of disputes under the Act. Hence, it would not be appropriate for this Court to entertain the writ petition at this stage, inasmuch as the show cause notices cannot be said to be without jurisdiction. 21. Sri V Lakshmikumaran learned Counsel for the petitioner has submitted that the availability of the alternate remedy of appeal is not a bar to entertaining a writ petition against the show cause notice if the jurisdictional fact or point of law is involved. He further submits that the High Court, in the exercise of its powers under Article 226 of the Constitution of India, can examine the merit of the matter where a writ petition has been filed impugning an order against which a statutory remedy of appeal is provided or against a show cause notice as the show cause notice is without jurisdiction or against the law. In support of his submission, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamental rights; (ii) where there is violation of principles of natural justice; (iii) where the order or the proceedings are wholly without jurisdiction; or (iv) where the vires of an Act is challenged. Union of India v. Kunisetty Satyanarayana (2006) 12 SCC 28 22.3 The Supreme Court, however, in a series of judgments has held that the writ petition against show cause notice or charge sheet ordinarily would not be maintainable, except in rare and exceptional cases where the High Court can quash a charge sheet or show-cause notice if it is found to be wholly without jurisdiction or otherwise wholly illegal. 22.3.1 It is also well-settled that the High Court should not quash the show cause notice in the exercise of its discretionary jurisdiction under Article 226 of the Constitution of India where there is no lack of jurisdiction, nor violation of principles of natural justice. If there is the existence of a disputed question of fact, the High Court ought not to interfere with the show cause notice if it is otherwise not without jurisdiction. Union of India v. Coastal Container Transporters Association (2019) 20 SCC 446 22.4 The Supreme Court, in the facts of the said case, held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and encrypted form. The Department s stand is that only users authorized by the MSO can receive channels using a STB, which decrypts the transmitted signal. The MSO is required to maintain a Subscriber Management System (SMS) and details regarding each customer and his/her channel preferences are stored in the Subscriber Management System. The consumers can choose channels/ services of their choice and pay only for the same. 26.1 The stand of the Department is that with effect from 01.02.2017 the control of access to channels by the ultimate consumer/subscriber has been with the petitioner. In view of the definition of Cable Service and as per Section 65 (105 )(zs) of the Finance Act 1994, any services provided by the petitioner to subscribers through cable operator would be taxable service . 27. The judgment in Reetika Cable [Final Order No. 60870/2021 dated 07.07.2021 in Appeal No.ST/61668/2018] (supra) by the CESTAT is in respect of the exemption Notification No. 6/2005-S.T. dated 01.03.2005 where the Department denied the benefit of the said notification to M/s. Fastway Transmission Private Ltd., an MSO on the ground that the M/s.Fastway Transmission Pvt Ltd was providing brand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empowered to issue show cause notice to the petitioner, or it would be the 3rd respondent who would be empowered to issue notice under Section 73 (1) of the Finance Act 1994, under whose jurisdiction the petitioner has obtained registration, paid taxes and filed return. 28.2 The judgment in the case of Canon India Pvt. Ltd (supra) is in respect of the Customs Act and Rules made thereunder. It is not the judgment in the context of Section 73 (1) of the Finance Act 1994. The Notification No. 22/2014-ST dated 16.09.2014 has specifically appointed the Officers of the Directorate General of Central Excise Intelligence [Now Directorate General of GST Intelligence] as Central Excise Officers, vesting them with the powers under Chapter V of the Finance Act, 1994 and the Rules made thereunder. It may further be noted that in Canon India Pvt. Ltd the show cause notice was issued under Section 28 (4) of the Customs Act 1962 for recovery of duties allegedly not levied or paid when the goods have been cleared for import by the Deputy Commissioner of Customs, who decided that the goods were exempted. The goods imported were subjected to an assessment by the Deputy Commissioner of Customs, the Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it must, therefore, follow that the extended period of limitation of five years was not available to any authority to re-open under Section 28 (4). 28.4 The Supreme Court, while interpreting the provisions of Section 28 (4) held that when the Statute confers the power to perform an act on different officers, especially when they belong to different Departments, a different officer cannot exercise their powers in the same case. Where one officer has exercised his powers of assessment, the power to order re-assessment must also be exercised by the same officer. Paragraphs 10 to 16 of the said judgment are extracted hereunder: 10. There are only two articles a (or an)' and 'the'. 'A (or an)' is known as the Indefinite Article because it does not specifically refer to a particular person or thing. On the other hand, 'the' is called the Definite Article because it points out and refers to a particular person or thing. There is no doubt that, if Parliament intended that any proper officer could have exercised power under Section 28 (4), it could have used the word 'any . 11. Parliament has employed the article the not accidently but with the intention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, who has not passed the original order of assessment, to re-open the assessment on the grounds that the duty was not paid/not levied, by the original officer who had decided to clear the goods and who was competent and authorised to make the assessment. The nature of the power conferred by Section 28 (4) to recover duties which have escaped assessment is in the nature of an administrative review of an act. The section must therefore be construed as conferring the power of such review on the same officer or his successor or any other officer who has been assigned the function of assessment. In other words, an officer who did the assessment, could only undertake reassessment which is involved in Section 28 (4). 15. It is obvious that the reassessment and recovery of duties i.e. contemplated by Section 28 (4) is by the same authority and not by any superior authority such as Appellate or Revisional Authority. It is, therefore, clear to us that the Additional Director General of DRI was not the proper officer to exercise the power under COURT Section 28 (4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside. 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e self-assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, re-assess the duty leviable on such goods. (5) Where any re-assessment done under sub-section (4) is contrary to the self-assessment done by the importer or exporter regarding the valuation of goods, classification, exemption or concessions of duty availed consequent to any notification issued therefor under this Act and in cases other than those where the importer or exporter, as the case may be, confirms his acceptance of the said re-assessment in writing, the proper officer shall pass a speaking order on the re-assessment, within fifteen days from the date of re-assessment of the bill of entry or the shipping bill, as the case may be. The provisions regarding assessment under the Customs Act 1962 and the Finance Act 1994 are not pari materia. This Court is of the view that the judgment in Canon India Pvt. Ltd (supra) regarding the definition of Proper Officer may not be applicable while interpreting the term the Central Excise Officer under Section 73 of the Finance Act 1994. 28.6 The Notification No. 30/2005-ST dated 10.08.2005 as amended by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Commissioners of Central Excise have been created in DGCEI, for various purposes including for adjudication of cases. Additional Director General (Adjudication) in DGCEI shall adjudicate cases where the show cause notices are issued by the officers of DGCEI. The practice of adjudication of DGCEI cases by field Commissioners shall also continue. Circular No. 1000/7/2015 CX dated 03.03.2015: Attention is invited to Circular No. 994/01/2015 dated 10.02.2015 on the above subject. Reference has since been received from DGCEI regarding the difficulties in implementing the instructions. The issue has been examined and it has been decided to substitute paragraph 5 of the said Circular dated 10.02.2015 with the following paragraph 5. To assign cases for adjudication amongst the Additional Director General (Adjudication) and the field Commissioners, following general guidelines may be followed:- (i) Cases including cases pertaining to the jurisdiction of multiple Commissionerates, where the duty involved is more than Rs 5 crore shall be adjudicated by the ADG (Adjudication). However in case of large pendency of cases or there being a vacancy in the rank of ADG (Adjudication), Director Ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the detailed enquiry on factual aspects inasmuch as the challenge before this Court is the impugned show cause notices. 30. It is well settled that the High Court in the exercise of its jurisdiction under Article 226 of the Constitution of India, should not interdict the initial stage of enquiry in the show cause notice unless the show cause notice is without jurisdiction or in violation of the law or vires of an Act is challenged. If there is the existence of the disputed question of fact, the High Court should not interfere with the show cause notice in the exercise of its jurisdiction under Article 226 of the Constitution of India. Conclusion : 31. In view of the aforesaid, this Court is of the considered view that the petitioner has been issued only two show cause notices impugned in these two writ petitions, which involve separate factual and legal aspects. The enquiry is at the threshold. Therefore, this Court is not inclined to interfere with the ongoing proceedings in pursuance of the impugned show cause notices. The petitioner should file a reply to the show cause notices if already not filed and would be free to make all the submissions available to them under the law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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