Withdrawal of service-tax exemption for works-contracts upheld; refunds denied, appeals allowed subject to Section 35F pre-deposit requirement

HC dismissed petitions challenging withdrawal of a service-tax exemption for certain works-contract services, holding the withdrawal via Notification No.6/2015-ST (effective 01.04.2015) was a policy decision not justiciable unless shown to be mala fide or actuated by extraneous considerations. The court affirmed that the services were taxable (liable from 01.06.2007) and denied refund claims, while granting petitioners liberty to prefer statutory appeals before the Appellate Authority subject to the pre-deposit requirement under Section 35F within 30 days of receipt of the order.

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Issues Involved:
1. Challenge to Notification No.6/2015-ST, dated 01.03.2015.
2. Challenge to Show Cause Notices.
3. Challenge to Orders-In-Original.
4. Challenge to both Notification No.6/2015-ST and Show Cause Notices.
5. Challenge to both Notification No.6/2015-ST and Orders-In-Original.
6. Challenge to Letters.
7. Prayer for Writ of Mandamus.

Detailed Analysis:

1. Challenge to Notification No.6/2015-ST, dated 01.03.2015:
The petitioners, who are contractors engaged by the Public Works Departments of both State and Central Government, challenged the withdrawal of exemptions under Notification No.6/2015-ST, dated 01.03.2015, which amended Entry 12(a), (c), and (f) of the Mega Exemption Notification No.25/2012-ST, dated 20.06.2012. The exemption was reintroduced only for contracts entered into prior to 01.03.2015, with a caveat that the exemption was confined to services provided to the Government, Local Authorities, or Governmental Authorities. The Court held that the withdrawal of the exemption was a policy decision taken in public interest and was not justiciable unless it was vitiated by malafide, extraneous consideration, or arbitrariness.

2. Challenge to Show Cause Notices:
The petitioners challenged the Show Cause Notices issued to them, arguing that they were exempt from service tax under the Mega Exemption Notification No.25/2012-ST. The Court held that the correctness of the Show Cause Notices could not be decided under Article 226 of the Constitution of India as they related to the appreciation of facts and settlement of disputed questions of facts, which should be decided by the appropriate Authority under the Finance Act, 1994.

3. Challenge to Orders-In-Original:
The petitioners also challenged the Orders-In-Original issued against them. The Court directed the petitioners to file statutory appeals before the Appellate Authority, subject to compliance with the requirements of pre-deposit under Section 35F of the Central Excise Act, 1944, as made applicable to the Finance Act, 1994, within thirty (30) days from the date of receipt of the order.

4. Challenge to both Notification No.6/2015-ST and Show Cause Notices:
For petitioners challenging both the Notification and the Show Cause Notices, the Court reiterated that the challenge to the Notification failed and directed the petitioners to reply to the Show Cause Notices and participate in the adjudicatory mechanism under the Finance Act, 1994.

5. Challenge to both Notification No.6/2015-ST and Orders-In-Original:
The Court dismissed the challenge to the Notification and directed the petitioners to file statutory appeals against the Orders-In-Original. The appeals should be filed within thirty (30) days, and the Appellate Authority should pass orders on merits without reference to the limitation.

6. Challenge to Letters:
The petitioners challenged letters/communications issued to them. The Court held that these challenges were premature and directed the petitioners to cooperate with the Department and furnish the required documents, information, and statements.

7. Prayer for Writ of Mandamus:
The petitioners sought a Writ of Mandamus directing the authorities to collect tax payable by them from the recipients of the service, namely, the State Public Works Department. The Court held that a Mandamus would lie only if there was a corresponding duty cast upon the respondent to collect the same from the State Public Works Department, which was not the case here.

Conclusion:
The Court dismissed all the Writ Petitions, holding that the challenge to the impugned Notification No.6/2015-ST, dated 01.03.2015, failed. The petitioners were directed to file statutory appeals or reply to Show Cause Notices as applicable and participate in the adjudicatory mechanism under the Finance Act, 1994. The Court also clarified that the petitioners could seek reimbursement of the tax from their clients (Government Departments) by invoking principles contained in Section 64A of the Sale of Goods Act, 1930.

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