2019 (10) TMI 221 - HC - Service Tax

Court Ruling on Service Tax Notice Post-Retirement from Cricket: Validity, Jurisdiction, and Appeal Process

The court addressed the validity of a show-cause notice for service tax, interest, and penalty on activities post-retirement from international cricket. ... Challenge to the Show Cause Notice (SCN) - Maintainability of writ petition - Single member bench of HC allowing the petition, quashed the SCN - whether the department was justified in issuing the show-cause notice in the extended period of limitation is a mixed question of facts and law? - HELD THAT:- The learned single judge made a mistake by entertaining the writ application. The writ ought not to have been entertained when the respondent-writ petitioner had participated in the assessment proceedings. Secondly, the appellate authority under the service tax law was the appropriate authority to adjudicate upon the above mixed question of facts and law relating to the extended period of limitation and the issue whether the respondent was assessable to service tax or not. Thus, we are minded to refer this dispute to the statutory appellate forum. The tribunal shall hear out the appeal upon notice to the parties and hearing them by a reasoned order, within four months of communication of this order, subject to the respondent complying with the usual formalities in relation to an appeal before the tribunal - impugned order dated 30th June 2016 is set aside. Issues:1. Validity of show-cause notice for service tax, interest, and penalty.2. Invocation of extended period of limitation.3. Assessability of the respondent to service tax.4. Separation of activities for service tax assessment.5. Applicability of circular on apportioning consideration for service tax.6. Jurisdiction of writ application when respondent participated in assessment proceedings.7. Appropriate authority for adjudication on mixed question of facts and law.8. Referral of dispute to statutory appellate forum.9. Conditions for appeal before CESTAT and pre-deposit requirements.10. Timeline for appeal hearing and compliance formalities.11. Issuance of certified copy of order.12. Prima facie observations and non-binding nature for the tribunal.1. Validity of Show-Cause Notice:The case involved a show-cause notice served on the respondent-writ petitioner for service tax, interest, and penalty on activities post-retirement from international cricket. The respondent disputed the demand on grounds of limitation and assessability to service tax.2. Invocation of Extended Limitation:The respondent challenged the show-cause notice beyond the period of limitation, questioning the validity of invoking the extended period. The court noted the importance of this issue as a mixed question of facts and law.3. Assessability to Service Tax:The respondent's activities were categorized into playing cricket and participating in advertisements. While playing cricket was not assessable to service tax, the assessability of other activities was disputed, especially regarding the agreement's provision for service tax payment.4. Separation of Activities for Assessment:The court deliberated on whether the respondent's activities could be segregated for service tax assessment, particularly focusing on the distinction between playing cricket and engaging in advertisements.5. Circular on Consideration Apportionment:Arguments arose regarding a departmental circular suggesting payment of service tax on the entire consideration if activities were indistinguishable. The respondent's counsel contended that activities could be separated for tax purposes.6. Jurisdiction of Writ Application:The court criticized the entertaining of the writ application, emphasizing that it should not have been allowed when the respondent had participated in assessment proceedings.7. Appropriate Adjudicating Authority:Highlighting the appellate authority under service tax law as the suitable forum for adjudication on mixed questions of facts and law, the court decided to refer the dispute to the statutory appellate forum.8. Referral to Statutory Appellate Forum:The court directed the respondent to file an appeal before CESTAT by a specified date, subject to pre-deposit requirements, and outlined the procedural steps for the appeal process.9. Compliance and Hearing Timeline:Instructions were given for compliance with formalities, pre-deposit, and a timeline for the tribunal to hear the appeal and issue a reasoned order within a stipulated period.10. Issuance of Certified Order:The Commissioner was instructed to provide a certified copy of the order promptly based on the court's decision.11. Prima Facie Observations:All observations made in the judgment were deemed prima facie, with the tribunal not bound by them, keeping all points open for further consideration.This detailed analysis covers the various issues addressed in the judgment, providing a comprehensive overview of the legal complexities involved in the case.