2007 (3) TMI 177 - HC - Service Tax

High Court: Service tax liability not predetermined by notice. Petitioners have right to make representations.

The High Court clarified that a decision on liability for service tax was not predetermined by the show cause notice issued to the Petitioners. The Court ... SCN from various commissionerates across the country to get registration – Registration can be taken only after liability for payment of duty is settled – Held that the proceedings in the SCN will be held at New Delhi (centralized office) and will be decided by the competent authority Issues:1. Validity of show cause notice in service tax matter.2. Jurisdiction for proceedings in show cause notice.3. Centralized billing/accounting system and obligation to register.Analysis:1. The High Court addressed the issue of the validity of a show cause notice issued to the Petitioners in a service tax matter. The Court noted that the language of the notice seemed to suggest that a decision had already been made regarding the Petitioners' liability for service tax. The Respondents clarified that there is no specific procedure under the Finance Act, 1994 mandating a show cause notice before determining liability for service tax. However, the Court emphasized that the Petitioners have the right to make representations on all points, including their liability for service tax. It was confirmed that a speaking order would be passed on this issue before or simultaneously with any demand being confirmed, ensuring due process and the Petitioners' right to be heard.2. Another issue raised was the jurisdiction for proceedings related to the show cause notice. The Petitioners had received notices and summons from multiple Commissionerates across the country, despite their centralized billing and accounting operations being located in Delhi. The Respondent cited Section 69 of the Finance Act, 1994, which requires persons subject to the Service Tax Act to register in a particular city. The Court acknowledged the Petitioners' argument that they may not be liable for service tax at all, thus questioning the necessity of registration in any specific city. The Court directed that proceedings related to the show cause notice should be held in New Delhi and decided by the competent authority there, considering the centralized operations of the Petitioners.3. The Court also considered the issue of the Petitioners' centralized billing and accounting system and their obligation to register in a specific city. It was clarified that if the competent authority determines that the Petitioners are liable for service tax, they would have the option to register in New Delhi due to their centralized operations. Failure to register could lead to the revival of show cause notices or summons from other Commissionerates. The Court's decision ensured that the proceedings would take place in New Delhi, providing clarity on jurisdiction and addressing the concerns raised by the Petitioners regarding multiple notices and the centralized nature of their operations.In conclusion, the High Court's judgment provided clarity on the validity of the show cause notice, jurisdiction for proceedings, and the obligations related to the Petitioners' centralized billing and accounting system in the context of service tax matters.