2021-TIOL-1563-HC-AHM-ST

Dharamshil Agencies Vs UoI

ST - Audit Team vide audit objection dated 28.2.2019 raised an objection for non-payment of service tax for the period 2016-17 to June 2017 - Superintendent of Central Tax Audit, Ahmedabad visited the office of the petitioners and handed over a copy of the letter dated 12.4.2019 at 13.55 hours, calling upon the petitioners to remain present on the same day at 16 hours before the respondent No. 2 - It was stated in the said letter/notice that if the petitioners did not appear for such pre-show-cause notice consultation, it would be presumed that the petitioners did not wish to be consulted before the issuance of show-cause notice - The petitioners, therefore, addressed a letter to the authority requesting for another date for pre-show-cause notice consultation as it was not possible to effectively make any representation on such a short notice - However, the respondent No. 2 issued the show-cause notice on the same day demanding service tax to the tune of Rs.1,13,47,313/- along with interest and penalty on the premise that the transaction between the petitioners and M/s. Arvind Limited was in the nature of services rendered by the petitioners and amenable to the service tax, which was not discharged by the petitioners - The legality and validity of the said notice is under challenge in the present petition - Petitioners have basically challenged the impugned show-cause notice dated 12.4.2019 on the ground of being violative of the master Circular dated 10.3.2017 issued by the Board.

Held:

+ The short question, therefore, that falls for consideration before the Court is, whether the pre-show-cause notice consultation dated 12.4.2019 calling upon the petitioners at 13.55 hours to remain present before the respondent No. 2 at 16.00 hours on the same day, could be said to be an illusory or an eye-wash notice only with a view to show the compliance of the Master Circular 1053/02/2017-CX dated 10.3.2017 issued by the Board? [para 6]

+ In view of the Master Circular dated 10.03.2017, it is clear that the Board had made issuance of pre-show-cause notice consultation mandatory for the Principal Commissioner/Commissioner prior to the issuance of show-cause notice in cases involving the demands of duty above Rs.50 lac and that such consultation was to be done by the adjudicating authority with the assessee as an important step towards the trade facilitation and for promoting necessary compliance, as also to reduce the necessity of issuing show-cause notice.

+ Despite such mandatory requirement of the pre-show-cause notice consultation at the instance of the respondent authority, in utter disregard of the said mandate, and without considering the laudable object behind issuing such circular, the respondents issued the impugned pre-show-cause notice consultation dated 12.4.2019 delivering the same to the petitioner assessee at 13.55 hours and calling upon them to remain present before the respondent No. 2 at 16.00 hours.

+ The petitioners having requested for reasonable time for the effective consultation, without considering the said request, the respondent No. 2 issued the show-cause notice on the same day i.e. on 12.4.2019. Such a high-handed action on the part of the respondent No. 2, not only deserves to be deprecated but to be seriously viewed. [para 8]

+ It was the respondent authorities who had not issued the pre-show-cause notice for consultation immediately after the final audit report issued on 28.2.2019, and they waited till the last date on 12.4.2019, knowing fully well that the period of five years was to expire on 15.4.2019.

+ If the respondents did not take any steps on time, and issued the pre-show-cause notice for consultation on the last date as an eye-wash, it could not be said that the petitioner assessee had requested for time to prevent the respondent authorities from making demand of the service tax, which was to expire on 15.4.2019.

+ Such a pre-consultation notice and the impugned show-cause notice issued on 12.4.2019, being in contravention of the circular dated 10.3.2017 issued by the Board, the same cannot be sustained and deserve to be quashed and set aside. [para 9

+ Now, since the said notice is sought to be set aside on the ground that adequate opportunity of hearing was not given to the petitioners for consultation prior to the issuance of the said notice, the petitioners cannot be permitted to take unfair advantage on the ground that the demand made in the notice had now become time-barred in view of the statutory provisions. [para 10]

+ Court sets aside the impugned notice dated 12.4.2019 on the ground that the petitioners were not granted an adequate opportunity for the consultation prior to the issuance of the said notice.

+ The parties are relegated to the stage prior to the issuance of the impugned show-cause notice. The respondent No. 2 will now issue afresh pre-show-cause notice for consultation in view of the Circular dated 10.3.2017 giving the petitioner a reasonable opportunity of making effective consultation, and the respondent No. 2 shall issue the show-cause notice only on having been satisfied for issuance of the same.

+ It is clarified that the petitioner shall extend full cooperation to the respondent authority by providing necessary information that may be asked for and shall not raise the issue of limitation in respect of the demand, if made, by the respondent authority, as the action of raising demand was taken by the respondent authority within the prescribed time limit, in view of the decision of the Supreme Court in case The Director of Inspection of Income-tax (Investigation), New Delhi 2002-TIOL-907-SC-IT . [para 11]

+ Such an action on the part of the respondent No. 2 in issuing the illusory pre-show- cause notice for consultation only two hours before the hearing is not only arbitrary, but is in utter disregard and in contravention of the very object and purpose of the circular dated 10.3.2017, which mandated such consultation with the assessee as an important step towards trade facilitation, for promoting voluntary compliance and for reducing necessity of issuing show-cause notice.

+ Cost of Rs.20,000/- imposed on respondent department, to be paid within eight weeks. [para 12]

- Petition allowed: GUJARAT HIGH COURT

2021-TIOL-1562-HC-DEL-ST

Pyramid Buildtech Pvt Ltd Vs UoI

ST - Petitioner has challenged the order passed by the Commissioner confirming the service tax demand as well as penalties totalling Rs.21.51 crores - Petitioner seeks a direction to respondent no. 2 to decide the matter on merits by giving a hearing and following the principles of natural justice; that service tax is not liable on procurement of the land from land owners and no service tax can be demanded merely upon an agreement which was not performed.

Held: Keeping in view the fact that the demand is a high-pitched one and subsequent notices issued by the respondent to the petitioner had not been served upon the petitioner or its authorised representative before the hearing, Court, in the interest of justice, grants last and final opportunity to the petitioner to appear before the respondent No. 2 on 2nd and 9th August, 2021 at 11.00 A.M., subject to payment of costs of Rs.2,50,000/- to Delhi High Court Bar Association Pandemic Relief Fund within a week - Petition disposed of: High Court [para 5]

- Petition disposed of: DELHI HIGH COURT

2021-TIOL-1561-HC-MAD-CUS

Sri Raghavendra Logistics Pvt Ltd Vs CC

Cus - The relief sought for is to set aside the order passed by second respondent with reference to the claim due to floods during December, 2015 - The 4th respondent filed a counter affidavit - In view of the fact that the 4th respondent remitted the Customs Duty, there is no further adjudication needs to be entertained with reference to the grounds raised in present writ petition: HC

- Writ petition disposed of: MADRAS HIGH COURT