Service tax levy under Finance Act upheld post-repeal despite new GST Act

The court upheld the levy of service tax under the Finance Act, 1994 despite its repeal after the introduction of the Central Goods and Service Tax Act, 2017. The petitioner was granted the opportunity to contest the levy and present arguments before the adjudicating officer. The court directed the authority to address all contentions in a reasoned order according to the law. The writ petition was disposed of, allowing the petitioner a fair chance to present their case for consideration and decision.

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Issues: Impugning show cause notice on grounds of legality of service tax levy under the Finance Act, 1994 post introduction of the Central Goods and Service Tax Act, 2017.

Analysis:

1. The petitioner challenged a show cause notice arguing that the proposed levy of service tax was not legally valid post the introduction of the Central Goods and Service Tax Act, 2017, which repealed the Finance Act, 1994. The petitioner contended that the basis for the notice seemed to be audit comments or objections, which were not a valid premise for tax imposition.

2. Referring to a previous judgment in Udaipur Chambers of Commerce and Industry & Ors. vs. Union of India & Anr., the court upheld the levy of service tax under the Finance Act, 1994, introduced for the first time on minerals from 1.4.2016. Despite the repeal of the Finance Act post introduction of the Central Goods and Service Tax Act, Section 174(2)(c) seemed to preserve the levy for liabilities incurred before 1.7.2017.

3. The court opined that the present writ petition was not maintainable in light of the circumstances. However, the petitioner was granted the opportunity to raise all contentions regarding the levy and extent of service tax, and other submissions before the adjudicating officer. The authority was directed to provide a proper and reasonable opportunity to the petitioner and address each contention in a reasoned order according to the law.

4. Consequently, the court disposed of the writ petition, allowing the petitioner to present their arguments before the adjudicating officer for a fair consideration and decision.

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