Maintainability of writ challenging service tax demand: statutory remedies must be exhausted; appeal with pre-deposit to be heard on merits.

Maintainability of a writ challenging a service tax show-cause notice is examined against the availability of an alternate statutory remedy and the pre-deposit requirement; the court emphasises the doctrine of exhaustion of alternative remedies, holding that ordinarily the statutory remedy must be pursued and pre-deposit cannot be treated as rendering it inefficacious, with questions of limitation and taxability requiring factual adjudication. The petitioner is directed to file the statutory appeal within six weeks after complying with pre-conditions including pre-deposit, and the appellate authority must decide the appeal on merits without referring to limitation.

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Issues: Whether the writ petition under Article 226 should be entertained to bypass the statutory appellate remedy against an Order-in-Original demanding service tax, or whether the petitioner must be relegated to the statutory appeal; and whether exceptions to exhausting the alternate remedy (such as absence of jurisdiction, violation of natural justice, or impracticability due to pre-deposit) apply.

Analysis: The statutory scheme provides an alternate appellate remedy which is ordinarily to be exhausted before invoking extraordinary writ jurisdiction. Questions whether the impugned order suffers from want of jurisdiction or is barred by limitation, and whether the services are exempt, raise mixed questions of fact and law that are suited for determination by the specialised adjudicatory authorities under the statute. The availability of a pre-deposit requirement and the quantum of demand are factors to be considered but do not, by themselves, render the statutory remedy ineffectual. Exceptional circumstances that would justify bypassing the statutory remedysuch as orders passed without jurisdiction or breaches of natural justicehave not been established on the record.

Conclusion: The writ petition is not entertained and the petitioner is directed to pursue the statutory appeal; the petitioner is granted liberty to file the appeal within six weeks and, upon instituting the appeal after complying with prescribed pre-conditions including pre-deposit, the appellate authority must decide the appeal on merits without taking a preliminary view on limitation. This outcome is in favour of Revenue.

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