2014 (1) TMI 151 - HC - Service Tax

Court emphasizes procedural fairness in disposal of writ petition, highlights distinction between assessment sections

NATIONAL BUILDING CONSTRUCTION CORPORATION LTD Versus COMMISSIONER OF SERVICE TAX

The Court disposed of the writ petition, emphasizing procedural fairness and the right to be heard before passing any final assessment order. It clarified ... Best judgment assessment order - Demand of service tax - Revenue contends that no assessment order was passed - Assessee contends that Best judgment assessment order was passed withopur issue of show cause notice - Held that:- assessment/adjudication is subjudice and no decision has been pronounced. Counsel for the respondents, on instructions, has stated that the show cause notice can be marked to a different Commissioner/officer but learned counsel for the petitioner states that he has no objection in case the show cause notice is examined and considered by the Commissioner who had issued demand-cum-show cause notice dated 19.12.2012 - time granted to petitioner to file reply to the show cause notice and direct that adjudication order-in-original will be passed after hearing in accordance with law - Decided in favour of assessee. Issues involved:1. Challenge to demand-cum-show cause notice invoking writ jurisdiction.2. Allegation of best judgment assessment order under Section 72 of the Finance Act, 1994.3. Lack of notice served before best judgment assessment.4. Maintainability of appeals against orders under Section 73 and Section 72 of the Act.5. Clarification on pending adjudication of show cause notices.6. Interpretation of Section 72 of the Act and its distinction from ex parte assessment procedures.7. Examination of overlapping provisions between Section 72 and Section 73 of the Act.Issue 1: Challenge to demand-cum-show cause notice:The National Building Construction Corporation Limited sought the quashing of a demand-cum-show cause notice dated 19.12.2012 through the writ jurisdiction. The primary contention was that a best judgment assessment order under Section 72 of the Finance Act, 1994 was passed without proper circumstances, notice, or allegation of failure to file service tax returns.Issue 2: Allegation of best judgment assessment under Section 72:The petitioner contested the best judgment assessment order under Section 72, arguing that no circumstances existed for its issuance as there was no failure to file returns or pay taxes as per law. The petitioner emphasized the lack of notice before the assessment and pointed out the availability of appeals to the Tribunal against orders under Section 73 but not Section 72 of the Act.Issue 3: Lack of notice before best judgment assessment:The petitioner highlighted the absence of a notice served before the best judgment assessment was made, raising concerns about procedural fairness and compliance with statutory requirements.Issue 4: Maintainability of appeals under Section 73 and Section 72:The issue of whether appeals could be entertained against orders under Section 73 and Section 72 of the Act was raised, with the petitioner emphasizing the availability of appeals to the Tribunal against Section 73 orders specifically.Issue 5: Clarification on pending adjudication of show cause notices:The respondents clarified that no final order or best judgment assessment under Section 72 had been passed, indicating that the show cause notices were still pending adjudication and no ex parte assessment determining liability had been made.Issue 6: Interpretation of Section 72 and distinction from ex parte assessment:The Court analyzed Section 72 of the Act, noting that it does not strictly follow an ex parte assessment procedure. The section mandates the assessee to provide necessary documents, and the assessing officer must pass an order after considering all relevant material, which may not always lead to an ex parte assessment.Issue 7: Examination of overlapping provisions between Section 72 and Section 73:The Court decided not to delve into the potential overlap between Section 72 and Section 73, leaving the issue open for future consideration as the assessment was still pending and no decision had been made. The Court granted time for the petitioner to reply to the show cause notice, ensuring a fair adjudication process.In conclusion, the Court disposed of the writ petition, emphasizing the importance of procedural fairness, the right to be heard, and the need for a proper adjudication process before any final assessment order is passed.