Judicial discipline requires revenue authorities to follow unstayed appellate orders when assessing construction-service tax exemptions.
Article 226 permits writ review despite an available statutory appeal where undisputed facts and legal questions, including prolonged pendency, make the alternate remedy inappropriate. Judicial discipline requires subordinate quasi-judicial revenue authorities to follow an operative, unstayed appellate order notwithstanding a pending departmental challenge. Construction-service exemption under Clause 12A(a) applies where a state-established entity has at least 90% governmental equity or control and performs municipal functions under Article 243W, including public-distribution activities linked to poverty alleviation and social and economic development. Clause 14(d) covers original works forming post-harvest storage infrastructure where godowns principally store paddy and rice procured from farmers.
Issues: (i) Whether writ jurisdiction could be exercised despite an available statutory appeal; (ii) Whether the original adjudicating authority was bound by the unstayed appellate order for an earlier period; (iii) Whether the recipient entity was a "governmental authority" eligible for construction-service exemption under Clause 12A(a); and (iv) Whether construction of the scientific storage godowns qualified as post-harvest storage infrastructure under Clause 14(d).
Issue (i): Whether writ jurisdiction could be exercised despite an available statutory appeal.
Analysis: Article 226 confers plenary writ jurisdiction, while availability of an efficacious alternative remedy is a self-imposed restraint and does not oust that jurisdiction. The controversy involved undisputed facts and legal questions, and the prolonged pendency made relegation to the statutory remedy inappropriate.
Conclusion: In favour of the assessee: the writ petition was maintainable notwithstanding the available appellate remedy.
Issue (ii): Whether the original adjudicating authority was bound by the unstayed appellate order for an earlier period.
Analysis: The prior appellate order granting relief for the earlier period remained operative, the departmental challenge to it was pending, and no interim stay had been obtained. Judicial discipline requires a subordinate quasi-judicial revenue authority to follow the decision of its appellate authority.
Conclusion: In favour of the assessee: the original adjudicating authority was bound by the unstayed appellate order and could not adopt a contrary view.
Issue (iii): Whether the recipient entity was a "governmental authority" eligible for construction-service exemption under Clause 12A(a).
Analysis: Clause 2(s) requires government establishment, at least 90% governmental equity or control, and performance of a function entrusted to municipalities under Article 243W. The entity was established by the State, had more than 99% governmental equity, and undertook procurement, storage and subsidised distribution of foodgrains through the public distribution system, advancing poverty alleviation and social and economic development functions reflected in the Twelfth Schedule.
Conclusion: In favour of the assessee: the recipient entity qualified as a governmental authority and was entitled to exemption under Clause 12A(a).
Issue (iv): Whether construction of the scientific storage godowns qualified as post-harvest storage infrastructure under Clause 14(d).
Analysis: Clause 14(d) exempts original works pertaining to post-harvest storage infrastructure for agricultural produce. The godowns were designed and immediately used for storage of paddy and rice procured from farmers; speculative future or auxiliary use for other commodities could not displace their primary post-harvest storage character.
Conclusion: In favour of the assessee: construction of the scientific storage godowns qualified for exemption under Clause 14(d).
Final Conclusion: The service-tax demand and consequential impositions founded on denial of the claimed exemptions lacked legal basis.
Ratio Decidendi: A subordinate revenue authority must follow an unstayed appellate order of its superior authority and cannot reject it merely because a further departmental appeal is pending.