2022 (2) TMI 903 - HC - Service Tax

Court allows SIM card dealer to defend tax notice, stresses exceptional circumstances for writ petitions

KAVEE MARKETING Versus ASSTT. COMMR., CENTRAL EXCISE DIV., KARAIKAL

The court disposed of the writ petition challenging a show cause notice for non-payment of service tax by a SIM card and recharge coupon dealer. The court ... Non-payment of service tax - purchasing and selling the SIM Cards and Recharge Coupons in the hands of subscribers of BSNL - petitioner made a submission that the issue was considered by this Court in number of writ petitions and decisions are rendered in favour of the persons, who all are similarly placed like that of the petitioner - HELD THAT:- It is left open to the writ petitioner to adjudicate the factual aspects before the authorities, enabling them to consider the same and pass order on merits and in accordance with law. Contrarily, the High Court need not entertain a writ petition against a show cause notice in a routine manner. The writ against a show cause notice may entertain only on exceptional circumstances where the authority without issuing such notice is incompetent under the provisions of the Statutes or the Rules. If there is an allegation of mala fide, then also writ can be entertained. In such circumstances, the authorities against whom such allegations on mala fide are raised is to be impleaded as a party respondent in his personal capacity in the writ proceedings - In the present case, the show cause notice itself was issued in the year 2011 and due to the pendency of the writ petition, the writ petitioner has not submitted the defence statement and the authorities have also not passed orders. This being the factum established, the petitioner is at liberty to submit his defence statement/explanation along with the documents as well as the judgments passed by the High Court in the subject, within a period of four weeks from the date of receipt of a copy of this order. On receipt of any such explanations/documents, etc., from the petitioner, the respondent is directed to consider the same on merits and in accordance with law - Petition disposed off. Issues:Challenge to show cause notice regarding non-payment of service tax.Analysis:The petitioner, a dealer in SIM cards and recharge coupons of a telecom company, challenges a show cause notice issued by the tax authorities for non-payment of service tax. The petitioner argues that they merely purchase and sell the SIM cards and recharge coupons, and the telecom company is responsible for discharging the service tax liability. The petitioner contends that similar cases have been decided in their favor previously. The court opines that the petitioner can present their defense statement, along with relevant judgments and evidence, to the authorities for consideration. The court emphasizes that a writ against a show cause notice can only be entertained in exceptional circumstances, such as incompetence under statutes or rules, or allegations of mala fide intentions. In such cases, the authorities accused of mala fide conduct must be made parties in their personal capacity. The court directs the petitioner to submit their defense statement and relevant documents within four weeks for the authorities' review. The respondent is instructed to consider the submissions within twelve weeks from receipt. The writ petition is disposed of with no costs awarded.This judgment addresses the challenge to a show cause notice related to service tax non-payment by a SIM card and recharge coupon dealer. The court highlights the dealer's limited role in purchasing and selling these items, shifting the service tax liability to the telecom company. The court allows the petitioner to present their defense statement and evidence for review, emphasizing that writ petitions against show cause notices are exceptional and require specific circumstances like incompetence or mala fide allegations. The timeline for submission and consideration of defense statements is set by the court, ensuring a fair review process. The judgment provides clarity on the process and criteria for entertaining writ petitions against tax-related notices, promoting transparency and adherence to legal procedures.