IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7TH DAY OF MARCH, 2019 BEFORE THE HON’BLE MRS.JUSTICE S.SUJATHA W.P.No.11882/2018 (T –R ES) BETWEEN :
M/s GLOBAL AGENCY NO.172, 1ST CROSS, 1ST BLOCK, B.S.K. 3RD STAGE, 3RD PHASE, BANGALORE-560085 REP. BY ITS PARTNER C.SATISH ...PETITIONER (BY SRI S.VASUDEVA NAIDU, ADV.) AND :
1. THE PRINCIPAL COMMISSIONER OF CENTRAL TAX BENGALURU WEST COMMISIONERATE, 1ST FLOOR, TTMC (BMTC BUILDING), BANASANKARI, BENGALURU-560070.
2. THE ADDITIONAL DIRECTOR GENERAL DIRECTORATE GENERAL OF GST INTELLIGENCE BELGAUM-590016, KARNATAKA …RESPONDENTS (BY SRI K.M.SHIVAYOGISWAMY, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE ORDERS BEARING NO.05/2018 [PR.COMMR] DATED 21.02.2018 VIDE ANNEXURE-A PASSED BY THE R-1 AS ARBITRARY ILLEGAL CONTRARY TO THE STATUTORY PROVISIONS AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND CONSEQUENTLY SET ASIDE THE SAME AND FURTHER DIRECT THE RESPONDENTS TO FOREBEAR FROM LEVYING ANY SERVICE TAX ON THE SERVICES RENDERED UNDER THE ABOVE MENTIONED CONTRACTS.
THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R The petitioner has challenged the order dated 21.02.2018 passed by the respondent No.1 at Annexure-A to the writ petition.
2. The petitioner is claiming to be a partnership firm engaged in the works contracts of mechanized cleaning, washing (both interior and exterior), watering including cleaning of pit lines and stabling lines at coaching depots at various stations under various Railway zones of Indian Railways. The petitioner had entered into various agreements with South Western Railway, South Central Railway and other Zonal Railways of the Indian Railways vide several agreements. It is the contention of the petitioner that the tenders were quoted based on the Mega Notification issued by the Ministry of Finance by virtue of which the contractors are exempted from the payment of service tax under the contracts where services are rendered to the Governmental authority for carrying out the work of sanitation conservancy.
3. It is the grievance of the petitioner that the respondent No.2 had issued a show cause notice to tax the cleaning activity carried out by the petitioner, the services rendered to the railways under Finance Act, 1994. Rejecting the reply filed by the petitioner, final orders have been passed demanding service tax of Rs.2,53,77,996/- (Rupees two crores fifty three lakhs seventy seven thousand nine hundred ninety six only) as well as penalty of the same amount of Rs.2,53,77,996/- for the period 01.04.2012 to 31.03.2017 treating the services of cleaning of Railway platform and coaches as taxable service.
4. Being aggrieved by the same, the petitioner is before this court.
5. Learned counsel Sri.Vasu Deva Naidu appearing for the petitioner placing reliance on the Mega Notification issued by the Ministry of Finance would submit that services provided to Government, a local authority or a Governmental authority by way of water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation is exempted from service tax. Further, by Notification dated 22.8.2016 issued by the Ministry of Finance for the period 1.7.2012 to 10.7.2014, services provided to Government, a local authority or a government authority by way of carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and up-gradation, are exempted from service tax.
6. Learned counsel also placed reliance on the judgment of the Customs, Excise & Service Tax Appellate Tribunal in Appeal No.ST/55322 & 58124/2013 (D.D.22.01.2018) 7. Learned counsel argued that the order impugned is non-est in the eye of law since the order is passed without jurisdiction inasmuch as bringing the cleaning activity, the services rendered to the railways as a taxable service ignoring the Mega Notification issued by the Ministry of Finance referred to above.
8. Learned counsel Sri. Shivayogiswamy for the Revenue would contend that the writ petition is not maintainable in view of the alternative statutory remedy of appeal available under the Finance Act, 1994. The interpretation of the Notification/applicability of the Notification vis-à-vis several agreements entered into between the petitioner and the railways, are all factual aspects required to be determined by the appellate forum. Hence, the writ petition requires to be rejected.
9. In support of his contention, learned counsel has placed reliance on the judgment of the Hon'ble Apex Court in the case of Raj Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and another reported in (2010)4 SCC 772 and Commissioner of Service Tax Vs. Scott Wilson Kirkpatrick (India) Private Limited reported in LAWS (Karnataka) 2011 4 70.
10. I have carefully considered the rival submissions of the learned counsel appearing for the respective parties and perused the material on record.
11. The focal point of the dispute relates to the interpretation and application of Mega Notification dated 20.6.2012 as well as 22.08.2016 issued by the Ministry of Finance. It is not in dispute that several agreements have been entered into by the petitioner with the Railways to render the services of cleaning activity in railway coaches and Railway platforms for the period relating to 1.4.2012 and 31.3.2017 which is the subject matter of this writ petition certainly has to be considered in the light of the Notification issued by the Ministry of Finance for the period up to 30.6.2012 and for the period with effect from 1.7.2012 as discussed by the original authority. These aspects are not mere questions of law which can be examined under writ jurisdiction but the mixed questions of fact and law which necessarily requires to be adjudicated before the appellate Forum, the machinery provided under the statute.
12. The Hon'ble Apex Court in the case of Raj Kumar Shivhare, supra, has observed that if the appellant is allowed to file a writ petition despite the existence of an efficacious remedy by way of appeal under Section 35 of FEMA this will enable him to defeat the provisions of the statute which may provide for certain conditions for filing the appeal, like limitation, payment of court fee or deposit of some amount of penalty or fulfillment of some other conditions for entertaining the appeal. It is observed that a writ court should not encourage the aforesaid trend of bypassing a statutory provision.
13. It is well settled law that applicability of the notification has to be examined qua the Clauses of the agreements and related matters. In such scenario entertaining the writ petition would not be justifiable.
Without expressing any opinion on the merits or demerits of the case. Writ petition is dismissed with liberty to the petitioner to approach the appellate forum and if such an appeal is filed within a period of four weeks from the date of the receipt of the certified copy of the order, the same shall be considered by the CESTAT on merits without objecting to the period of limitation subject to fulfillment of other procedures prescribed under law.
Registry shall refund the amount deposited by the petitioner, if any, to the petitioner forthwith through cheque or demand draft.
With the aforesaid observations and directions, writ petition stands dismissed.
Sd/- JUDGE Dvr: