2024 (8) TMI 1340 - HC - Service Tax

Sub-contractor loses service tax exemption challenge after bypassing statutory appeal process under Article 226

Chennuboyina Chittibabu Versus Union Of India and Others

The AP HC dismissed a writ petition challenging a service tax assessment order issued against a sub-contractor who failed to pay service tax despite ... Jurisdiction to issue order - Recovery of service tax with interest and penalty - Challenge to assessment order - execution of works contracts as a sub-contractor to the main contractor - petitioner having declared income from sub-contracts, and paid income-tax, failed to pay the service tax by duly filing the ST-3 returns - HELD THAT:- As against the order-in-original statutory appeal lies to the Commissioner (Appeals). However, without availing the said remedy the petitioner has approached this Court stating that the order of the 3rd respondent is without jurisdiction, in as much as the services rendered by it to the main contractor are exempt from payment of service tax in terms of the Notification No. 25/2012-Service Tax, dated 20.06.2012. On the basis of the material before it, the 3rd respondent has passed the order in original. If the petitioner is really aggrieved by the said order remedy is to file an appeal before the appellate authority before which the petitioner can in a better manner, if he has some material to support his contention, establish his case of sub-contract. It could not be argued by learned counsel for the petitioner as to how the order is without jurisdiction. The issue of the work in question was done as contractor or sub-contractor is one of fact on which finding has been recorded by the 1st authority against the petitioner. No justifiable ground has been pointed out by the petitioner seeking indulgence of this court under Article 226 of Constitution of India - the writ petition cannot be entertained - Writ Petition is dismissed on the ground of availability of alternative remedy to the petitioner. Issues:1. Challenge to Assessment Order dated 26.10.2023 passed by Assistant Commissioner of Central Tax and Central Excise.2. Allegation of levying service tax, interest, and penalty against the petitioner.3. Request for issuance of Writ of Mandamus to set aside the Assessment Order and Attachment Order.4. Claim of exemption from service tax under Notification No. 25/2012-Service Tax.5. Failure to establish exemption before the assessing authority.6. Jurisdictional issues and violation of principles of natural justice.7. Availability of alternative remedy through appeal to Commissioner (Appeals).Analysis:The petitioner challenged the Assessment Order dated 26.10.2023, which levied service tax, interest, and penalties. The relief sought included setting aside the Assessment Order and Attachment Order, alleging violations of the Finance Act, 1994 and constitutional rights. The petitioner claimed exemption from service tax under Notification No. 25/2012-Service Tax, citing sub-contract work for a government project. However, the assessing authority found no evidence of the petitioner's involvement in the project, leading to the imposition of tax, interest, and penalties.The petitioner contended that the services provided were exempt from service tax, but failed to provide sufficient evidence to support this claim. Despite objections and opportunities to present relevant material, the assessing authority upheld the tax liability. The petitioner argued that the order was without jurisdiction and violated natural justice principles. However, the court noted the lack of substantiating evidence and the failure to utilize the statutory appeal process available to challenge the Assessment Order.The court highlighted discrepancies in the alleged agreement between the main contractor and the petitioner, casting doubt on its authenticity. The address mentioned in the agreement indicated a district that did not exist at the time of the agreement's date, raising suspicions about its validity. The court emphasized the importance of factual evidence and proper documentation in establishing claims of exemption from service tax.Ultimately, the court dismissed the writ petition, citing the availability of an alternative remedy through the appellate process. The petitioner's failure to provide convincing evidence and the absence of grounds for intervention under Article 226 of the Constitution led to the dismissal of the petition. No costs were awarded, and pending applications were closed as a result of the judgment.