Telangana High Court: Matter referred back to commissioner as it was not possible to take a definite view

M/s B. Aleem Miah Works Contractor vs The Commissioner of Central Tax & Anr.; W.P. No. 28690 of 2021; High Court of Telangana; 15.11.2021

A present petition has been filed praying that the show cause notice issued by the respondent proposing to impose Service Tax proposing to tax receipts in the State of A.P. and exempted services is barred by limitation, without jurisdiction, and also contrary to law and illegal.

Facts:

• Petitioner is a works contractor, carrying out such contract works with the Governmental authorities, like construction of buildings, roadsetc. According to the
• Petitioner all such works are indivisible composite work contracts and therefore, do not attract service tax.
• That apart, the Government of India has issued notifications from time to time exempting such services provided to the Governmental authorities from payment of service tax.
• On the basis of information received from the Income Tax Department, the respondent has prima facie taken a view that the petitioner had rendered certain taxable services and declared the value of the services in its return of income under the Income Tax Act 1961, but as the service provider had not paid any service tax, the same has resulted in non-payment of service tax.
• It is in such circumstances, that the impugned show cause notice has been issued.
• It was submitted that the said show cause notice was issued under subsection (1) of section 73 of the Act. As per the petitioner’s contention, the limitation for issuing show cause notice is 30 days, which period has expired long back.
• Under the proviso, for the reasons mentioned therein, the limitation period for issuance of show cause notice in a case where service tax not levied; or paid, or short levied, or short paid, or erroneously refunded, stands extended to 5 years.

Observations:

• The Bench was of the view that it would not be necessary for the bench to dilate on the decisions of the Kolkata High Court and Madras High Court as well as that of CESTAT, Allahabad.
• In so far the judgment of the Calcutta High Court in the case of Sourav Ganguly vs Union of India; (2016) 93 VST 40 (Cal) is concerned, it was found that after the show cause notice, Order-in original was passed by the authority, which was impugned in the writ proceeding. That apart, additional challenge made was to the instructions issued by the Central Board of Excise and Customs.
• As regards the judgment of the Madras High Court in the case of Nandhini Constructions vs Government of India;W.A. No. 756 of 2018 and CMP No. 7173 of 2018 dated 24.04.2018 is concerned, it was found that learned single judge of the said Court had declined to grant interim relief to the petitioner, for which writ appeal was preferred that proceeding, challenge was made to notification dated 01.03.2015 issued by the Government of India, Ministry of Finance, New Delhi. In the facts and circumstances of that case, Division Bench of Madras High COurt held that no service tax should be levied or recovered from the appellant.
• In the instant case, the two aspects i.e. whether the petitioner had provided services to only governmental authorities, and not others, and even if provided to Governmental authorities, whether the contracts were invisible, or composite, and secondly whether the extended period of limitation as per the proviso to sub section (1) of section 73 of the Act, would be applicable or not, would depend upon the factual examination and adjudication by the adjudicating authority.
• The judges were of the view that to pre empt the adjudicating authority from carrying out the said exercise at the threshold would not be justified.
• From reading the show cause notice, no definite view can be taken at this stage, that the said notice is beyond the period of limitation in terms of the proviso to sub section (1) of section 73. These are matters for examination and adjudication by the primary authority.
• In the circumstances the Bench was of the view that it would be in the interest of justice if the petitioner is relegated to the forum of adjudication before the Respondent.

Held:

• To enable the Petitioner to file his reply to the show cause notice it was directed that the Petitioner may file his reply to the aforesaid notice withing a period of 30 days from the date of the judgment.
• If the Petitioner filed the reply to the show cause notice within the period as mentioned above, the same may be considered by the Respondent in accordance with law. And a personal hearing shall also be afforded to the authorised representative of the petitioner.