Contractor Gets Fresh Hearing on Rs. 1.46 Crore Service Tax Dispute Involving Claimed Exemptions Under Tax Law Changes

HC directed a fresh hearing for a contractor challenging a service tax demand of Rs. 1,46,41,544 for alleged willful suppression of facts. The petitioner claimed all taxes were paid with certain exemptions under law changes. The court refrained from evaluating tax payments under Article 226 without complete evidence. The Joint Commissioner was ordered to conduct a fresh hearing where the petitioner must present all relevant materials. No coercive action permitted against the petitioner pending the reasoned order from this hearing.

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Issues:
1. Alleged willful suppression of material facts to evade payment of service tax.
2. Petitioner's contention of having paid all necessary service tax.
3. Department's issuance of demand-cum-show-cause notice.
4. Lack of cooperation from the petitioner during the proceedings.
5. Direction for a fresh hearing and submission of relevant materials.

Analysis:

1. The petitioner, a registered contractor providing manpower supply service and a service provider to Oil India Limited, challenged a demand-cum-show-cause notice alleging willful suppression of material facts to evade service tax payment. The notice claimed a tax amount of Rs. 1,46,41,544 under the Finance Act, 1994.

2. The petitioner's counsel contended that all necessary service tax had been paid as per the law, highlighting exemptions due to changes in regulations. The petitioner argued that they were not liable to pay service tax for a specific period under the new law.

3. The GST department, represented by its counsel, issued the notice due to the petitioner's absence and lack of cooperation during the proceedings. However, the department expressed willingness to grant a fresh hearing and allow the petitioner to present relevant evidence supporting their tax payments.

4. The court acknowledged the petitioner's claim of having paid all taxes but refrained from delving into the matter under Article 226. The court deemed it inappropriate to assess tax payments without the petitioner submitting all relevant materials, as claimed by the department.

5. In the final judgment, the court directed the Joint Commissioner of Central Goods and Service Tax to conduct a fresh hearing for the petitioner. The petitioner was instructed to appear with all relevant materials on a specified date. The Joint Commissioner was tasked with evaluating the evidence, allowing the petitioner to raise any issues, and issuing a reasoned order superseding the earlier demand-cum-show-cause notice.

6. Pending the fresh hearing and the issuance of a reasoned order, the court prohibited any coercive actions against the petitioner. The writ petition was allowed in favor of the petitioner, subject to the outlined directives for the upcoming proceedings.

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