2024 (8) TMI 97 - HC - Service Tax

Court Quashes Order, Directs Fresh Review with Compliance Mandates for Service Tax Liability and Fair Procedure.

Chithaian Satheesh Versus The Commissioner of Central Excise, The Deputy Commissioner of Central Goods and Services Tax & Central Excise, The Superintendent of GST & Central Excise, Madurai

Chithaian Satheesh Versus The Commissioner of Central Excise, The Deputy Commissioner of Central Goods and Services Tax & Central Excise, The ... Issues:Challenge to impugned Order in Original, Demand confirmation, Service tax liability, Violation of natural justice, Compliance with Finance Act, 1994, Liability to pay service tax, Balance of interests, Remittance of case for fresh orders, Deposit of disputed tax.Impugned Order Challenge:The writ petitioner challenged the impugned Order in Original No.MAD-ST-ASC-143-2022 confirming the demand proposed in show cause notice No.27/2021 ST. The petitioner contended being a Civil Contractor not liable to tax due to no services provided to Government institutions, thus withdrawal of exemption not applicable. The order was passed by comparing the profit and loss account filed for Income Tax Act, 1961, which the petitioner argued as a basis for quashing the demand sustained in the order.Violation of Natural Justice:The petitioner referred to a communication confirming non-service of preceding notices on the petitioner, alleging a gross violation of principles of natural justice. The petitioner sought the impugned order to be set aside based on this ground.Service Tax Liability:The Court found the petitioner in default for failing to comply with the requirements of the Finance Act, 1994, by not obtaining service tax registration. It was noted that the petitioner provided civil contract services, indicating liability to pay service tax. The Court held the petitioner accountable for providing services to private parties, emphasizing the need to establish turnover below specified limits to question the demand.Balance of Interests and Remittance of Case:Considering the balance of interests between the petitioner and respondent, the Court quashed the impugned order and remitted the case back for fresh orders. The petitioner was directed to file a consolidated reply to the show cause notice within thirty days and deposit 20% of disputed tax in two installments. Failure to comply would allow the respondents to proceed against the petitioner as per the order.Compliance with Finance Act, 1994:The Court noted the importance of complying with the Finance Act, 1994, and the Service Tax Rules, emphasizing the self-assessed returns required to be filed under these provisions. The order aimed to reduce further interest exposure by balancing the interests of both parties through remittance and payment directives.Deposit of Disputed Tax:The petitioner was instructed to deposit 20% of the disputed tax to the credit of the respondent department in installments, with the option to pay further amounts to reduce eventual tax liability and interest. Failure to comply would result in the revocation of concessions and dismissal of the writ petition.Conclusion:The High Court, after considering the arguments, balanced the interests of both parties by quashing the impugned order, remitting the case for fresh orders, and providing directives for compliance and deposit of disputed tax. The decision aimed to address the issues of service tax liability, violation of natural justice, and compliance with the Finance Act, 1994, while ensuring a fair balance between the petitioner and respondent's interests.