Service Tax Obligations Valid Post-CGST Act; Liabilities for FY 2014-18 Unaffected by Repeal, Court Confirms.

The HC dismissed the petition, affirming the validity of service tax obligations and enforcement actions even after the repeal of Chapter-V of the Finance Act by the CGST Act. The court held that the obligations to pay service tax for FY 2014-15 to 2017-18 remain unaffected by the CGST Act's enactment, as Section 174 preserves liabilities under the repealed statute. The court rejected the petitioner's arguments, aligning with prior rulings that obligations and liabilities under the Finance Act continue despite its repeal.

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Issues Involved:
1. Validity of demands for service tax payments post CGST Act enactment.
2. Applicability of Section 174 of the CGST Act on past service tax liabilities.
3. Interpretation of rights and obligations under repealed statutes.

Summary:

1. Validity of demands for service tax payments post CGST Act enactment:
The petitioner, a company engaged in foreign exchange, challenged letters demanding service tax payments for FY 2014-15 to 2017-18 and a Demand Cum Show Cause Notice. The petitioner argued that with the enactment of the CGST Act and the omission of Chapter-V of the Finance Act, no fresh proceedings for assessment or recovery of service tax could be initiated.

2. Applicability of Section 174 of the CGST Act on past service tax liabilities:
The court referred to Section 173 and Section 174 of the CGST Act, which state that the repeal of the Finance Act does not affect any duty, tax, surcharge, fine, penalty, or interest due. The court emphasized that the obligation to pay service tax for the specified period remains unaffected by the omission of Chapter-V of the Finance Act.

3. Interpretation of rights and obligations under repealed statutes:
The court relied on previous decisions in Aargus Global Logistics Pvt. Ltd. and Vianaar Homes Pvt. Ltd., which upheld the continuation of obligations and liabilities under the repealed Finance Act. The court rejected the petitioner's contention that no accrued right existed in favor of the State due to the absence of pending proceedings as of 01.07.2017. It clarified that the obligation to pay service tax was crystallized before the CGST Act's enactment and survives its omission.

Conclusion:
The petition was dismissed, affirming that the service tax obligations and corresponding enforcement actions remain valid despite the repeal of Chapter-V of the Finance Act by the CGST Act. The court found no merit in the petitioner's arguments, aligning with prior decisions that support the continuation of such obligations.

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