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TMI Blog2024 (11) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... allenge is to the SCN issued by the respondent under the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act), Integrated Goods and Services Tax Act, 2017 (IGST Act) and Maharashtra Goods and Services Tax Act, 2017 (MGST Act) - Jurisdiction of SCN - HELD THAT:- In most of these petitions, the petitioners have questioned the impugned show cause notices cum tax demands without participating in the adjudication process in pursuance of the impugned show cause notices. In one of the petitions, leave is sought to amend by challenging the order made on the impugned show cause notice during the petition's pendency. In yet another petition, the challenge is to the order made after adjudication of the show cause notice, among other things, on the ground that the show cause notice was itself without jurisdiction. he main contention is that taxes have been demanded for services in relation to functions entrusted to the MCGM under Article 243W of the Constitution, even though the exemption notifications exempt or precisely impose only a nil tax rate on such services. No case is made out to establish that such a contention cannot be considered by the adjudicating authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DRA JAIN, JJ. For the Petitioner in WPL/33260/2023: Mr. V. Sridharan, Senior Advocate a/w Mr. Prakash Shah, Mr. Jas Sanghavi, Mr. Mohit Raval and Mr. Shamik Gupte i/by PDS Legal. For the Petitioner: Mr. Prakash Shah a/w Mr. Jas Sanghavi, Mr. Mohit Raval and Mr. Shamik Gupte i/by PDS Legal in WP/3085/2024, WP/1762/2024, WP/3624/2024 and IAL/23337/2024, WP/3402/2024, WP/3629/2024. For the Respondent No. 4/BMC: Ms. Anuja Tirmali i/by Adv. Komal Punjabi. For the Respondent No. 1 to 5: Mr. Karan Adik in WPL/33260/2023. For the Respondent: Mr. Karan Adik a/w Harshad Shingnapurkar in WP/3085/2024, WP/1762/2024, WP/3402/2024. For the Respondent No. 5: Ms. Maya Majumdar in WP/3085/2024. For the Respondent No. 5: Smt. Jaymala Ostwal a/w Ms. Maya Majumdar in WPL/10851/2024. For Respondent No. 2: Mr. Subir Kumar a/w Harshad Shingnapurkar a/w Abhinav Palsikar a/w Ashita Aggarwal in WP/3402/2024. For the Respondent No. 2 to 4: Mr. Subir Kumar a/w Megha Bajoria a/w Abhinav Palsikar a/w Ashita Aggarwal in WP/3629/2024. for State of Maharashtra: Ms. P. H. Kantharia, G.P. a/w Smt. Jyoti Chavan, Addl. G. P. in WP/3085/2024, WP/3624/2024 WPL/33260/2023 and WP/1762/2024. For State of Maharashtra: Ms. P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned show cause notices were without jurisdiction and there were no disputed questions of fact involved. Therefore, they submitted that these petitions should be entertained instead of relegating the petitioners to the alternate remedies that might be available to them. 8. Mr Sridharan relied on Notification No. 12/2017-Central Tax (Rate) dated 28 June 2017 to submit that this Notification provides for nil rate of tax for services by Central Government, State Government, Union Territories, Local Authorities or Governmental Authority by way of any activity in relation to any function entrusted to the Municipality under Article 243W of the Constitution. He submitted that by the impugned show cause cum demand notices, the petitioners are mainly called upon to pay service tax on services rendered by the Municipal Corporation of Greater Mumbai (MCGM) in relation to the functions entrusted to the MCGM under Article 243W of the Constitution. Accordingly, he submitted that service tax at nil rate of duty was payable on such services, given the Notification dated 28 June 2017 and similar such Notifications covering the fee. 9. Mr Sridharan, in the context of Writ Petition (L) No. 33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be quashed and set aside. 12. The learned Counsel for the other petitioners adopted Mr. Sridharan s contentions. They also submitted that the impugned show cause notices were without jurisdiction, so the petitioners should not be relegated to alternate remedies. They submitted that alternate remedies involved pre-deposit of a certain percentage of the demanded taxes. They submitted that the alternate remedies are not efficacious given the clarity of the exemption notifications and the absence of any seriously disputed questions of fact. 13. The rival contentions now fall for our determination. 14. In most of these petitions, the petitioners have questioned the impugned show cause notices cum tax demands without participating in the adjudication process in pursuance of the impugned show cause notices. In one of the petitions, leave is sought to amend by challenging the order made on the impugned show cause notice during the petition's pendency. In yet another petition, the challenge is to the order made after adjudication of the show cause notice, among other things, on the ground that the show cause notice was itself without jurisdiction. 15. There is no dispute that the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cie arbitrary, unreasonable, illegal, perverse, capricious, without and/or in excess of jurisdiction and in violation of principles of consistency and judicial discipline and issued in complete abuse of process of law. It is reiterated that the proposal in the said show cause notice is contradictory to the binding Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, Notification No. 14/2017-Central Tax (Rate) dt 28.06.2017. It is therefore submitted that the Petitioner is entitled to ad-interim and other reliefs as more particularly prayed for hereinafter. The Petitioner has made out a strong prima facie case. The balance of convenience is in favour of the Petitioner. Unless ad-interim and interim orders as prayed for herein are passed, grave and irreparable harm and prejudice would be caused to the Petitioner. 18. The Petitioner submits that remedy of adjudication of show cause notice and the subsequent Appellate remedy available under the CGST Act is neither efficacious or adequate nor in the alternative. The Respondent No. 2 has issued the impugned show cause notice without and/or in excess of jurisdiction and in violation of principles of consistency and judicial disci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule. 22. The learned Counsel for the respondents submitted that most of the tax demands may not relate to any functions entrusted to the MCGM under Article 243W of the Constitution. They submitted that in respect of services rendered by MCGM in relation to the functions entrusted to the MCGM under Article 243W of the Constitution, no tax demands have been raised. They submitted that even going by the chart tendered by Mr Sridharan, providing services of fungible FSI or collecting premium for additional FSI, etc. can hardly be described as services in relation to any functions entrusted to the MCGM under Article 243W of the Constitution. They submitted that each activity will have to be scrutinized for determining whether such activity has any relation to any functions entrusted to the MCGM under Article 243W of the Constitution. They submitted that such an exercise can be appropriately carried out by the adjudicating authorities and not this Court under Article 226 of the Constitution. 23. On perusing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a situation. In any event, the issue as to whether the demanded tax is covered by the exemption notification or the nil tax rate notification is an issue that will require adjudication in the facts and circumstances of the present cases. Such adjudication cannot be conveniently undertaken by this Court exercising summary though extraordinary jurisdiction under Article 226 of the Constitution. 27. The contention that these petitions involve no disputed questions of fact cannot be accepted. The factual element regarding each of the demands will have to be examined and evaluated against the backdrop of the exemption or the nil tax rate notifications relied upon by the petitioners. The adjudicating authority will also have to determine whether the activities or services regarding which tax is demanded relate to any functions entrusted to the MCGM under Article 243W of the Constitution. It was fairly conceded that not all the demands in the show cause notice would relate to the exemption notification. This exercise of determining which demands are covered and which are not also cannot be conveniently undertaken by this Court in the first instance. Thus, if entertained, these matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , more so, when against the final orders, appeal lies to the Supreme Court. Further, the Court held that when there is a serious dispute concerning the classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand. Accordingly, the appeals against the quashing of the show cause notices were allowed. 32. In Mahanagar Telephone Nigam Ltd. Vs. Chairman Central Board, Direct Taxes and another (2004) 6 SCC 431, the Hon'ble Supreme Court held that it was settled law that the litigation against show cause notices should not be encouraged. The Court approved the decision of the High-Powered Committee, which was eminently fair and aimed at preventing frivolous litigation. The Court held that the appellant's right was not affected. It was clarified that the appellant could move a court of law against an appealable order. By not maintaining discipline and abiding by the decision, the appellant had wasted the public money and time of the courts. 33. In Malladi Drugs and Pharma Limited vs. Union of India and another (2020) 12 SCC 808, the Hon'ble Supreme Court held that the High Court was absolutely correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1964 SC 1419, the Constitution Bench of the Hon ble Supreme Court, disapproved the petitioner s invoking the jurisdiction of the High Court under Article 226, bypassing alternate statutory remedies that were clearly available. The Constitution Bench observed that the jurisdiction of the High Court under Article 226 of the Constitution is couched in wide terms and the exercise thereof is not subject to any restrictions except the territorial restrictions which are expressly provided in the Article. But the exercise of the jurisdiction is discretionary; it is not exercised merely because it is lawful to do so. The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations. 37. The Constitution Bench held that resorting to this jurisdiction is not intended as an alternative remedy for relief, which may be obtained in a suit or other mode prescribed by statute. Ordinarily, the Court will not entertain a petition for a writ under Art. 226, where the petitioner has an alternative remedy that provides an equally efficacious remedy without being unduly onerous. Again, the High Court does not generally enter upon a determinati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding questions of fact finally. 40. In East India Commercial Co. Ltd., Calcutta (supra), relied upon by Mr Sridharan, the show cause notice for launching proceedings was contrary to the law laid down by the High Court of the same State. In these circumstances, the Hon ble Supreme Court held that such a show cause notice would be wholly without jurisdiction, and further proceedings based upon such a show cause notice which was wholly without jurisdiction could not be allowed. The position in the present Writ Petitions is not even remotely comparable to the position in the decision cited. 41. Similarly, in State of UP and Others V/s. Indian Hume Pipe Co. Ltd. (supra), on facts, the Hon ble Supreme Court found that there was absolutely no material before the Sales Tax Officer to show that any of the hume pipes manufactured and sold by the respondent were meant for use in lavatories, urinals or bath-rooms and, in fact, the material was used entirely the other way, the Sales Tax Officer was not at all justified in holding that they were sanitary fittings. In these peculiar facts about which there was no dispute whatsoever, the Hon ble Supreme Court did interfere after making it clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Viswaat Chemicals Ltd. and Anr. V/s. Union of India and Ors. WP (L) No. 27725/2024 decided on 14.10.2024, we were constrained to observe that several petitions are instituted to question show cause notices even though most of such petitions do not satisfy the parameters the Hon ble Supreme Court has laid down in Whirlpool Corporation Ltd. (supra). The entire objective of instituting such petitions was to wriggle out some orders by taking undue advantage of the pressure on the Court s dockets or to otherwise keep such matters pending and delay the adjudication proceedings by staying the adjudication process. In some cases, the objective was to avoid the provisions requiring pre-deposit of some of the portion of the demanded amounts as a pre-condition for institution or hearing of the statutory appeals. This Court's extraordinary and equitable jurisdiction under Article 226 of the Constitution cannot be allowed to be used for such purposes. 46. In Dow Chemical International Pvt. Ltd. V/s. Commissioner of Customs NS-II Special Investigation and Intelligence Branch (X) and Anr. WP No. 11178/2024 decided on 21.10.2024, we were again constrained to observe that of late, almost as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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