By TIOL News Service

NEW DELHI, OCT 10, 2016: THE State of Rajasthan has filed the suit against the Union of India and others with the following prayers:

(a) Declare the activity of, providing/deploying additional police force at various Banks/Institutions/Organisations or at various events and the work of character verification and providing security as per the provisions of Sections 11 and 46 of the Rajasthan Police Act, 2007 for the purpose of maintaining law and order situation, are in the nature of sovereign functions and are hence exempt from the levy of service tax.

(b) Declare that the plaintiff being not a person is outside the scope and ambit of the Section 73 of the Finance Act, 1994 and therefore the levy of service tax is without authority of law.

(c) Declare that the levy of service tax on the plaintiff in relation to the activities of providing/deploying additional police force at various Banks/Institutions/Organisations or at various events and the work of character verification for the purpose of maintaining law and order situation as per the provisions of Section 11 and 46 of the Rajasthan Police Act, 2007 is violative of Article 289 of the Constitution of India and therefore without authority of law.

(d) Declare that the adjudication orders passed levying service tax on the plaintiff and the action of collection/recovery of service tax from the plaintiff is without jurisdiction.

(e) Pass a decree of permanent injunction restraining the defendant no. 3 from issuing further show cause notices to the plaintiff for imposing any service tax.

(f) Pass such further or other orders as this Hon'ble Court may deem fit and proper in the circumstances of the case and in the interests of justice.

In nutshell, the case of the plaintiff is that no service tax is payable on the activity of the Rajasthan Police in providing/deploying additional police force at various Banks/Institutions/Organisations etc.

The Union of India has filed a written statement contesting the suit on merit. Preliminary objection to the maintainability of the suit is also taken on the ground that a show cause notice was issued to the plaintiff by the Adjudicating Authority and after the plaintiff filed its reply, the Adjudicating Authority held that service tax was payable on the aforesaid services rendered by the plaintiff. It is further mentioned in the written statement that against the order passed by the Assessing Officer, the plaintiff had even preferred an appeal before the Commissioner, Central Excise, Jaipur, which appeal was dismissed by the Commissioner. Not only this, against the order of the Commissioner, the plaintiff has filed statutory appeal before the Customs Excise & Service Tax Appellate Tribunal (CESTAT), which is pending consideration by the CESTAT . It is, thus, submitted that since the statutory remedy under the Finance Act has been availed by the plaintiff seeking the same relief, the present suit, therefore, would not be maintainable as the plaintiff cannot invoke two remedies for one cause of action.

The Supreme Court, after hearing the arguments of the counsel for the parties, found substance in the submission of the defendants and observed,

"Even if it is presumed that the suit was maintainable, at the same time the plaintiff also had remedy of filing the statutory appeals etc. by agitating the matter under the Finance Act. It chose to avail the remedy under the Finance Act. The Doctrine of Election would, therefore, become applicable in a case like this. After choosing one particular remedy the plaintiff cannot avail the other remedy as well, in respect of the same relief founded on same cause of action."

The plaint is, therefore, rejected under Order VII Rule 11 of the Code of Civil Procedure, 1908.

(See 2016-TIOL-171-SC-ST)