TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 696
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....he Petitioner to the State of Maharashtra for irrigation restoration charges. 2. The Respondents have put forth a preliminary contention that the writ petition should not be entertained. They argue that the petitioner has an alternative and efficacious remedy of appeal to the Customs Excise and Service Tax Appellate Tribunal and that no exceptional circumstances exist to justify interference in writ jurisdiction. The primary issue to be decided is whether the writ petition should be entertained, given the availability of the alternative remedy of appeal, as argued by the Respondents. 3. On 21 January 2003, Respondent No. 4 - the State of Maharashtra passed a government resolution concerning water allocation for non-irrigation purposes, such as industrial use. This resolution stated that the buyer would be responsible for paying the water charges. Additionally, on 21 February 2004, the State of Maharashtra issued a Circular outlining the procedure for calculating water charges. Regarding charges incurred by the Irrigation Department of the State of Maharashtra for constructing an irrigation network, the Circular specified that the capital cost would be considered. The charges reco....
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....t to the current issue as the Petitioner has already paid the amount of irrigation restoration charges to the State of Maharashtra. The dispute at hand concerns the imposition of service tax on the amount paid. 6. The Directorate General of GST Intelligence received information that the Water Resources Department of the State of Maharashtra was collecting non-irrigation charges, such as restoration charges and capital expenses, from various customers for water usage for non-irrigation purposes. Non-governmental entities paid these charges under the reverse charge mechanism but did not pay the service tax. An inquiry was initiated against the Petitioner and other institutions. During the investigation, the Petitioner provided a copy of the Agreement between the State of Maharashtra and India-bulls Private Limited. The Petitioner contended that irrigation restoration charges were meant to recover the cost of constructing the distribution network and that no service was rendered; hence, the liability to pay service tax did not arise. The statement of the Petitioner's employee was recorded under the provisions of the Central Goods and Services Tax Act, 2017, reiterating the Petiti....
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....ction 73 of the Finance Act, 1994 read with Section 142 & 174 of the Act of 2017 should not be invoked for the recovery of the Service tax due from them. Regarding the amounts to be paid, the show cause notice called upon the petitioner to demonstrate why the following amount should not be recovered. Service tax amounting to Rs.7,57,01,386/- inclusive of Education Cess, Secondary & Higher Education Cess and Swatch Bharat Cess in terms of proviso to Section 73(1) of the Finance Act, read with Section 142 and 174 of the Act of 2017. Interest at appropriate rates on the aforesaid amount under the provisions of Section 75 of the Finance Act, 2004, read with Sections 142 and 174 of the Act of 2017. Penalty under the provisions of Section 78 of the Finance Act, 1994 for willful suppression of facts and contravention of the various statutory provisions with intent to evade payment of service tax read with Section 142 and 174 of the Act of 2017. Lastly, the penalty under the provisions of Section 76 of the Finance Act, 1994, read with Sections 142 and 174 of the Act of 2017. Penalty under Section 77(1) of the Finance Act, 1994, for not taking registration for Business Support Service read ....
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....g an appeal. 13. The Petitioner contends, on various grounds set forth in the memo of the Petition, that the writ petition is maintainable because the impugned order lacks jurisdiction and is not authorised by law. The Petitioner asserts that the proceedings violate the principles of natural justice. The Petitioner argues that no service tax is leviable on irrigation restoration charges as they are a statutory levy and not paid in exchange for any service but rather for recovering construction costs. The Petitioner asserts that service tax cannot be levied under the "Business Support Service" classification. The Petitioner contends that since the jurisdictional facts are not established, the Commissioner- the Adjudicating Authority had no jurisdiction in passing the impugned order. Since the issue goes to the root and can be resolved on the existing record, it is unnecessary to relegate the Petitioner to the remedy of appeal. The Petitioner further asserts that the extended limitation period cannot be invoked. In this case, the normal limitation period was 18 months, not 30 months, for the return period up to May 2016. The Petitioner states that they had never suppressed any facts....
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....e respondents before the Supreme Court, who were the original writ petitioners in the High Court, were subjected to proceedings under the Maharashtra Value Added Tax (MVAT) Act, 2002. The assessing officer had issued a notice of assessment to the petitioner, requesting relevant documents and to show cause as to why they should not be assessed under Section 23 of the MVAT Act. The writ petitioner argued that they had supplied the necessary documents but were not given a hearing during the proceedings. Nonetheless, the assessing officer passed an order determining their tax liability. The writ petitioner did not file an appeal before the first appellate authority but instead filed a writ petition in the High Court to challenge the assessment order. The High Court entertained the writ petition and quashed and set aside the assessment order and the demand notice. The State of Maharashtra filed an appeal against the order of the High Court, contending that disputed questions of fact had arisen and the High Court should not have entertained the writ petition under Article 226 of the Constitution of India. The original writ petitioner sought to advance arguments on the merits of the case.....
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....of appeal, the High Court is not divested all its jurisdiction under Article 226 of the Constitution of India, and in this case, the Hon'ble Supreme Court had set aside the order of the High Court dismissing the writ petition on the ground of availability of alternate remedy. The Petitioners have also contended that not only should the writ petition be entertained, but a decision on the merits of the matter can also be given, as done in the case of Godrej Sara Lee. Upon analysing this decision, it becomes clear that it does not assist the Petitioner. The Hon'ble Supreme Court considered an appeal from the decision of the High Court of Punjab and Haryana, which had dismissed a writ petition and directed the petitioner to seek a remedy through an appeal under Section 33 of the Haryana Value Added Tax Act, 2003. The Supreme Court was faced with two questions. Whether the High Court was right to decline interference due to the availability of an alternate remedy, and whether the matter should be heard on merits or remitted to the High Court. The issue was that the original petitioner had challenged the jurisdiction of the revisional authority to reopen the proceedings in the e....
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....ttract service tax or not. Therefore, the decision of the Hon'ble Supreme Court in Godrej Sara Lee does not assist the Petitioner. 19. The decisions of the Supreme Court in Godrej Sara Lee and in Greatship do not lay down any conflicting propositions. In both decisions, the Hon'ble Supreme Court has made a distinction between the maintainability of the writ petition and the entertainability. In the case at hand, the Respondents do not contend that the Petition is not maintainable, but they contend that it should not be entertained. This objection is based not only on the availability of an alternate remedy, but that factual enquiry is necessary for which appeal is provided under the statute. 20. The next point to consider is whether the Petitioner's argument presents a purely legal question that can be decided without any further adjudication. 21. The Petitioner is registered with the service tax department, and its liability to pay service tax is determined by Respondent No.1 to 3 the Tax Authorities (unless specifically referred to otherwise referred to as the Respondents) under reverse charge for the service received from the water resources department of the Maharashtra ....
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....a, the Adjudicating Authority, found that it granted permission to draw 87600 Million litres of water. The Adjudicating Authority found that, under the Agreement, the Petitioner was liable to pay Rs. 232.18 crores as irrigation restoration charges to the Government of Maharashtra. In a letter dated 18 October 2017, the Petitioner stated that irrigation restoration charges are meant to recover the construction costs of the canal network for distribution in the area. The Petitioner raised contentions that required an enquiry into facts. For instance, if the distribution network is only partially constructed, the cost of construction should still be recovered. But if there is no expenditure, then no such recovery should occur. To support their case, the Petitioner had referred to Part B of Circular No. BWS-1003 dated 21 February 2004, issued by the Irrigation Department. It stated that only if any expenditure is incurred it can be recovered in the name of irrigation restoration charges; otherwise no irrigation restoration charges should be recovered. The Petitioner further contended that irrigation restoration charges are not defined in the Agreement. However, in view of the Agreement....
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....e Charge Mechanism with reference to Section 68 (2) of the Finance Act, 1994, read with Clause I (A) (iv) (C) (2) of Notification No. 30/2012-ST dated 20 June 2012. This notification specified that the specified services provided by the government to the business entity are liable for service tax paid on a reverse charge basis by the business entity. The Circulars provided for prioritisation to be accorded to demands for water, with domestic users at S. No. 1, industrial users at S. No. 2, and irrigation at S. No. 3. Calculations were made to determine the expenditure required to restore the land's irrigation capacity. The total irrigation potential or capacity of the project was evaluated, along with the loss in that capacity because of the diversion of water for non-irrigational purposes. This calculation was necessary to compensate for that loss, and it, too required factual adjudication. 24. After examining the Agreement, the Adjudicating Authority observed that the Government of Maharashtra charges fees for water restoration services in the command area. Since the Petitioner received this service to support their business activity of power generation, it falls under the d....
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....res an examination of the relevant provisions of the Act and the factual position. The Respondents argue that post-2012, when the concept of the Negative List was introduced, there was a shift in the burden of demonstrating whether the activity attracts service tax or not. The Petitioner relies on Section 66D of the Finance Act and the Circular of the Board on the meaning of support services. The relevant period for payment, as referred to in the impugned order, is from 22 November 2012 to 31 May 2016. The Agreement between Indiabulls Power Ltd. and the Government of Maharashtra also provided that the amount of Rs. 232.18 crores as irrigation restoration charges to be paid in five instalments over a period of two years with applicable interest. During this period, the concept of a negative list was introduced, which changed the definition of support services. As such, a factual enquiry into the implications of this development in law during the period in question is necessary. 27. The Petitioner has placed a compilation of various case laws before us. The Petitioner has relied upon the decision of the Hon'ble Supreme Court in Union of India v/s. Garware Nylons Ltd. 1996 (10) SCC 4....
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....extended period is also a question of law based on the specific decision, the issue is intermixed with the first issue of liability, which should be a subject matter of an appeal. 29. Section 83 of the Finance Act, 1994 makes certain provisions of sections of the Central Excise Act, 1944, as in force from time to time applicable in relation to service tax as they would apply in relation to a duty of excise. One of them is Section 35L of the Act of 1944. Section 35L(b) provides that an appeal from any order passed by the Appellate Tribunal relating to, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for the purpose of assessment would lie to the Supreme Court. Section 35L(2) provides that determination of any question having a relation to the rate of duty shall include the determination of taxability or excisability of goods for the purpose of assessment. 30. The Adjudicating Officer framed a question as to whether the services received by the Petitioner by way of restoration of command area, against payment of consideration as non-irrigation charges, was a service and whether liability to pay servic....
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....Ors. O.S.W.P. 2223/21 dtd. 29.10.2021 considered a challenge to the order-in-original passed by the Principal Commissioner, GST assessing service tax dues of the Petitioner. The Respondents took a preliminary objection that since the final appeal lies to the Hon'ble Supreme Court, the writ court should not interfere. Reliance was placed on the decisions of the Hon'ble Supreme Court in the case of the Coastal Container Transporters Association. The petitioner therein sought to distinguish the decision of the Coastal Container Transport Association, submitting that in that case, the petition was filed at the stage of show cause notice and not when the order on show cause notice was passed. The Division Bench did not accept this distinction and found that the writ petition ought not to be entertained. The Division Bench also found that there was no breach of principles of natural justice, and no case was made out. It was held that the Finance Act 1994 provided complete machinery to challenge the order of the assessment in appeals, the last one being before the Supreme Court. This decision is, thus, directly applicable to the case at hand. Further, even assuming that the first ....