2016 (9) TMI 328 - HC - Service Tax

Court dismisses challenges to service tax liability on road works, directs pursuit of appeals within 30 days

The court dismissed the writ petitions challenging liability for service tax on road construction/renovation works, emphasizing the availability of the ... Liability of service tax – writ jurisdiction - alternative remedy of appeal - Section 35 of the Excise Act, 1944 - road construction/renovation works - Commercial and Industrial Construction Service – section 65(105)(zzq) of the Finance Act, 1994 - Works Contract Service – section 65(105)(zzzza) of the Finance Act, 1994 - Notification No.24/2009-Service Tax dated 27.07.2009 – Held that: - the contentions of the petitioners that the authorities concerned have taken a wrong decision or have reached to a wrong conclusion with incorrect determination of any question do not make out a case of want of jurisdiction. It remains trite that a Judicial Authority, when having jurisdiction to decide the matter, would not be considered having acted without jurisdiction by merely coming to a wrong conclusion, whether on law or on facts. Thus, the suggestion that the orders impugned suffer from want of jurisdiction, being wholly baseless, is required to be rejected - if the petitioners file the respective appeals within thirty days with the requisite pre-deposit, the Appellate Authority may examine the matter on merits while ignoring the question of limitation. Pre-deposit – section 35 F of the Central Excise Act, 1944 - the submissions of the petitioners are unacceptable that making of pre-deposit is of such a hardship that may result in depriving them access to the appellate forum – requirement of payment of pre-deposit upheld. Issues Involved:1. Liability for service tax on road construction/renovation works.2. Availability of alternative remedy of appeal.3. Jurisdiction of the authority passing the impugned orders.4. Hardship due to mandatory pre-deposit for appeal.5. Efficacy of the appellate remedy.Issue-wise Detailed Analysis:1. Liability for Service Tax on Road Construction/Renovation Works:The petitioners, engaged in works contracts, challenged the orders holding them liable for service tax under the Central Excise Act, 1944. They argued that their work was exempt under Sections 65(105)(zzq) and 65(105)(zzzza) of the Finance Act, 1994, and Notification No.24/2009-Service Tax dated 27.07.2009. The competent authorities rejected these contentions, leading to the present writ petitions.2. Availability of Alternative Remedy of Appeal:The court noted that the petitioners had an alternative remedy of appeal under Section 35 of the Central Excise Act, 1944. The petitioners contended that the mandatory pre-deposit for appeal caused severe hardship and justified bypassing the regular appellate remedy. However, the court emphasized that the availability of an alternative remedy is not an absolute bar but a self-imposed restriction, and the petitioners failed to make a clear case for bypassing this remedy.3. Jurisdiction of the Authority Passing the Impugned Orders:The petitioners argued that the authorities acted without jurisdiction by not properly applying the relevant legal provisions and notifications. The court, however, found that the authorities had jurisdiction to issue the show cause notices and pass the orders. Errors in law or fact do not equate to a lack of jurisdiction. The court cited Ujjam Bai vs. State of Uttar Pradesh, emphasizing that incorrect determinations within jurisdiction do not render the authority's actions void.4. Hardship Due to Mandatory Pre-deposit for Appeal:The petitioners claimed that the mandatory pre-deposit under the amended Section 35-F of the Act caused severe hardship. The court noted that the petitioners did not demonstrate an inability to make the pre-deposit, only discomfort. Given the substantial value of the contracts executed by the petitioners, the court did not consider the pre-deposit requirement as causing extreme hardship that would justify bypassing the appellate remedy.5. Efficacy of the Appellate Remedy:The petitioners argued that the appellate authority had previously taken an adverse view in a similar case, suggesting futility in pursuing an appeal. The court rejected this argument, stating that a particular view in another case does not justify bypassing the appellate remedy. The court emphasized that the statutory appeal process should be followed, and the petitioners cannot avoid it based on anticipated outcomes.Conclusion:The court concluded that the petitioners did not make a case for bypassing the statutory appeal remedy. The writ petitions were dismissed, but the petitioners were allowed to file appeals within thirty days, with the appellate authority directed to consider the appeals on merits, ignoring the question of limitation. The court did not pronounce on the merits of the case.