2022 (10) TMI 428 - HC - Service Tax

Petitioner granted appeal rights within 3 weeks, appellate authority to decide promptly. Writ petitions disposed, petitioner granted liberty.

West Asia Maritime Limited, Represented by G.N. Krishnan, Chief Financial Officer Versus Additional Commissioner of Service Tax, Assistant Commissioner of GST & Central Excise, Chennai

The Court allowed the petitioner to appeal to the appellate authority within three weeks without limitation constraints. The appellate authority was ... Non-payment of service tax - insurance services provided by Protection and Indemnity Clubs (P & I clubs), an entity situated outside India that provided for coverage in respect of third party liabilities - principles of mutuality - pooling of risks - HELD THAT:- No doubt, the authority has marshalled the facts presented - it is for the officer to set the facts against the ratio of the judgement, appreciate the same in proper perspective and arrive at his conclusions as to whether the petitioner is entitled to its claim. The availability of a statutory remedy is not an absolute bar to the maintainability of a writ petition and there are instances when the Writ Court will intervene to decide legal issues. However such a decision must be in the backdrop of undisputed facts and materials that emanate from the record or to correct flaws in the application of settled propositions where there has been such application, by the officer. In the present case, the entirety of the petitioners’ claim rests upon the judgement in the case of Calcutta Club that the officer has not had the benefit of, in passing the impugned orders. Thus, it would be preempting the issue, and stepping into the shoes of the officer, for this Court to embark upon the exercise of assessment, in such circumstances - The petitioner is permitted to approach the appellate authority, and appeals, if filed within three weeks from today, will be taken on file without reference to limitation but subject to all other statutory conditions and decided expeditiously in line with the judgement in Calcutta Club and in accordance with law. Writ petition disposed off. Issues Involved:1. Validity of orders-in-original and statements of demands.2. Applicability of the principles of mutuality.3. Impact of the judgment in the case of State of West Bengal v. Calcutta Club Limited.4. Availability and appropriateness of alternate statutory remedies.Issue-wise Detailed Analysis:1. Validity of orders-in-original and statements of demands:The petitioner challenged the orders-in-original and statements of demands for various periods between April 2012 and June 2017, issued by the service tax authorities. The authorities presumed that the petitioner failed to remit service tax as required under the Finance Act, 1994. Show cause notices (SCNs) were issued, alleging that the petitioner received taxable insurance services from Protection and Indemnity Clubs (P&I Clubs) situated outside India, which should be taxed under 'General Insurance' as per Section 68 of the Finance Act and applicable Service Tax Rules.2. Applicability of the principles of mutuality:The petitioner argued that it was not liable for the demanded tax or penalty based on the principles of mutuality, asserting that the service provider and recipient were the same entity. The petitioner, a member of Britannia Steam Ship Insurance Association Limited, claimed that the amounts paid were contributions for mutual protection, not insurance premiums. However, the authority concluded that the amounts remitted constituted consideration for marine insurance services, rejecting the plea of mutuality. The authority found that the P&I Club and its members were distinct legal entities, establishing a service provider and service receiver relationship.3. Impact of the judgment in the case of State of West Bengal v. Calcutta Club Limited:The petitioner relied on the Supreme Court's judgment in the Calcutta Club case, which dealt with the levy of service tax in the context of the doctrine of mutuality. The Court held that the Finance Act of 1994 does not levy service tax on members' clubs in the incorporated form. The petitioner argued that this judgment applied to its case, supporting its claim for exemption based on mutuality. The respondent countered that the applicability of the Calcutta Club judgment depended on the specifics of the transaction, which the officer had not yet analyzed.4. Availability and appropriateness of alternate statutory remedies:The single Judge initially dismissed the writ petition, directing the petitioner to pursue alternate statutory remedies. However, the Division Bench allowed the appeal, stating that the availability of an alternate remedy was not an absolute bar to the maintainability of a writ petition. The case was restored to the single Judge for a hearing on merits. The Court noted that the judgment in Calcutta Club was rendered after the impugned orders were passed, and thus, the officer had not considered it. The Court opined that the issue of mutuality should be reassessed by the officer in light of the Calcutta Club judgment.Conclusion:The Court permitted the petitioner to approach the appellate authority, allowing appeals to be filed within three weeks without reference to limitation, subject to other statutory conditions. The appellate authority was directed to decide expeditiously in line with the Calcutta Club judgment and in accordance with law. The writ petitions were disposed of with the liberty granted to the petitioner, and no costs were imposed.