2021 (1) TMI 861 - HC - Service Tax

Court dismisses writ petition challenging order assigning adjudication, citing availability of statutory appeal.

The court dismissed the writ petition challenging an order assigning adjudication, stating that despite jurisdictional contentions and cited judgments, ... Availability of alternative remedy and writ jurisdiction - Appealability under Section 86(1) of the Finance Act, 1994 - Principles of natural justice and fundamental judicial procedure - Assignment of adjudication after repeal of statute and continuity of subordinate legislation - Tax incidence of security deposit and notional interest on security depositAppealability under Section 86(1) of the Finance Act, 1994 - Availability of alternative remedy and writ jurisdiction - Impugned order is an appealable order and statutory appeal lies before the Customs, Excise and Service Tax Appellate Tribunal, Bangalore; availability of alternate statutory remedy precludes entertaining the writ petition. - HELD THAT: - The High Court observed that the impugned order falls within the class of orders against which a statutory appeal under Section 86(1) of the Finance Act, 1994 is available. Where an efficacious alternate remedy in the nature of a statutory appeal exists, exercise of writ jurisdiction is limited. The court therefore confined its supervisory jurisdiction to circumstances where the impugned order is passed in defiance of fundamental principles of judicial procedure or in utter violation of principles of natural justice. In the present case the existence of the appeal remedy rendered the writ petition inappropriate as a substitute forum for challenging the order. [Paras 9]Proceedings under the writ are barred by the availability of a statutory appeal under Section 86(1); petition dismissed with liberty to pursue that alternative remedy.Principles of natural justice and fundamental judicial procedure - Assignment of adjudication after repeal of statute and continuity of subordinate legislation - Tax incidence of security deposit and notional interest on security deposit - Impugned order does not exhibit violation of natural justice or fundamental judicial procedure warranting writ jurisdiction; contentions about repeal, assignment of adjudication and characterization of security deposit were considered by the adjudicating authority. - HELD THAT: - The court examined whether the order was passed in such disregard of procedure or natural justice as to justify bypassing the statutory appeal. The impugned order records consideration of the petitioner's jurisdictional objection (noted at para 7.5 of the impugned order) and takes note of the case law relied upon by the petitioner. The High Court found no demonstration that the adjudicating authority acted in defiance of judicial procedure or denied the petitioner a fair hearing. Consequently, disputed questions - including the petitioner's contention that repeal of earlier law precluded assignment of adjudication and that the security deposit did not attract notional interest - were treated as arguable errors going to merits, remediable by appeal rather than by writ. [Paras 10]No breach of natural justice or fundamental procedural principle was made out to justify entertaining the writ; grievances to be agitated in the statutory appeal.Final Conclusion: Writ petition dismissed in view of the availability of the statutory appeal under Section 86(1) of the Finance Act, 1994; petitioner granted liberty to file the appeal, with the appellate authority being requested to consider any condonation of delay in light of the pendency of this writ petition. Issues:Challenge to order assigning adjudication, Repeal of Chapter 5 by CGST Act, 2017, Legality of subordinate legislation post-repeal, Consideration of cited decisions in impugned order, Security deposit nature, Availability of alternate remedy for appeal, Writ petition entertainment criteria.Challenge to order assigning adjudication:The petitioner challenged an order dated 22/09/2020, arguing that after the introduction of the CGST Act, 2017, Chapter 5 stands repealed, questioning the jurisdiction of assigning adjudication to the 1st respondent. The petitioner contended that the impugned order lacked jurisdiction.Repeal of Chapter 5 by CGST Act, 2017:The petitioner argued that after the repeal of the current statute, all subordinate legislation becomes invalid. The petitioner highlighted paragraph 7.5 of the impugned order as illegal, emphasizing the impact of the repeal on the legality of the order.Legality of subordinate legislation post-repeal:The petitioner asserted that the impugned order was illegal post-repeal, emphasizing that the decision cited by the petitioner was not considered correctly. The petitioner relied on the judgment in Murli Realtors Pvt. Ltd vs. Commissioner of Central Excise, Pune to support their argument.Consideration of cited decisions in impugned order:The petitioner contended that the cited decisions were not considered in the true perspective while passing the impugned order. The petitioner emphasized the importance of properly considering the judgments in the adjudication process.Security deposit nature:The petitioner argued that the security deposit received was for recovery of damages and not for any taxable service provision. Referring to paragraph 6.1 of a specific judgment, the petitioner demonstrated that no provision in the Service Tax Law allowed for notional interest on security deposits for leasing immovable properties.Availability of alternate remedy for appeal:The respondent argued that even if the contentions raised by the petitioner were accepted, the impugned order would be considered erroneous, suggesting that the matter should be addressed through an appeal rather than a writ petition. The respondent highlighted the statutory appeal available under Section 86(1) of the Finance Act, 1994.Writ petition entertainment criteria:The court considered the submissions and perused the impugned order, noting that it was appealable before the Customs Excise and Service Tax Appellate Tribunal. The court emphasized that for a writ petition to be entertained despite the availability of an alternate remedy, the order must violate fundamental principles of judicial procedure or judicial justice. Since the impugned order considered jurisdictional contentions and cited judgments, the court concluded that the writ petition did not need to be entertained, disposing of it with liberty to avail the alternate remedy of filing a statutory appeal.