Court quashes order overlooking petitioner's reply, deems show cause notice invalid. Natural justice emphasized.

The Court quashed the impugned order dated 27.04.2021 due to non-consideration of the Petitioner's reply and relevant documents, necessitating a fresh evaluation by Respondent No.2. The show cause notice issued for non-payment of service tax was deemed invalid as it overlooked the termination of the joint venture agreement. The Court emphasized the importance of complying with principles of natural justice and instructed the Respondent to reconsider the matter, taking into account all pertinent information within four weeks.

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Issues Involved:
1. Validity of the impugned order dated 27.04.2021.
2. Legality of the show cause notice dated 03.02.2016.
3. Compliance with principles of natural justice.
4. Jurisdictional overreach by Respondent No.2.
5. Consideration of the joint venture agreement termination.
6. Application of previous Tribunal decisions.
7. Justification of service tax demand for the period from April 2013 to March 2015.

Issue-wise Detailed Analysis:

1. Validity of the Impugned Order Dated 27.04.2021:
The Petitioner challenged the impugned order on the grounds that it was "cryptic and non-speaking," and violated principles of natural justice. The Court observed that Respondent No.2 failed to consider the reply filed by the Petitioner and the documents attached, specifically the deed of cancellation of the joint venture agreement dated 1 April 2013. The Court found that the impugned order did not reference the reply or documents, indicating non-application of mind and necessitating the quashing of the impugned order.

2. Legality of the Show Cause Notice Dated 03.02.2016:
The show cause notice was issued for the period from April 2013 to March 2015, alleging non-payment of service tax on amounts received from the joint venture. The Petitioner argued that the joint venture had been terminated effective 1 April 2013, thus nullifying any service provider-service receiver relationship. The Court noted that the Respondent did not address this termination in their order, leading to the conclusion that the show cause notice was issued without proper consideration of the facts.

3. Compliance with Principles of Natural Justice:
The Petitioner contended that the impugned order violated principles of natural justice as it did not consider their reply or the deed of cancellation. The Court agreed, referencing a similar case (Goregaon Sports Club v. Assistant Commissioner of Income Tax) where ignoring the reply led to quashing of the order. The Court emphasized that Respondent No.2's failure to consider the reply and documents compelled the Petitioner to seek judicial intervention, adding to the Court's burden.

4. Jurisdictional Overreach by Respondent No.2:
The Petitioner claimed that Respondent No.2 acted beyond its jurisdiction by issuing the impugned order. The Court found that the Respondent's order lacked a discussion on the Petitioner's reply and the termination of the joint venture, indicating a jurisdictional overreach. The Court remanded the matter for fresh consideration, instructing the Respondent to take into account all relevant documents and provide a personal hearing.

5. Consideration of the Joint Venture Agreement Termination:
The joint venture agreement between the Petitioner and GGCPL was terminated effective 1 April 2013. The Petitioner argued that this termination nullified any service provider-service receiver relationship, making the service tax demand for the period from April 2013 to March 2015 illegal. The Court noted that the Respondent failed to consider this termination in their order, leading to the conclusion that the demand was unjustified.

6. Application of Previous Tribunal Decisions:
The Petitioner referred to a Tribunal decision dated 5 March 2019, which negated the demand for the period from October 2007 to March 2013, stating there was no service provider-service receiver relationship. The Court found that the Respondent did not consider this decision, further indicating non-application of mind. The Court instructed the Respondent to consider this Tribunal decision in their fresh evaluation.

7. Justification of Service Tax Demand for the Period from April 2013 to March 2015:
The service tax demand was based on the assumption that the joint venture continued to exist. The Petitioner argued that the joint venture was terminated, and thus, no service tax was due. The Court agreed, noting that the Respondent's order failed to address the termination and the Tribunal's previous decision. The Court quashed the demand and instructed the Respondent to reconsider the matter in light of the termination and previous Tribunal decisions.

Conclusion:
The Court quashed the impugned order dated 27.04.2021 and remanded the matter to Respondent No.2 for fresh consideration, instructing them to take into account the Petitioner's reply, the deed of cancellation, and previous Tribunal decisions. The Respondent was directed to decide the matter within four weeks, ensuring compliance with principles of natural justice. The parties were instructed to bear their own costs.

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