IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF DECEMBER, 2019 BEFORE THE HON’BLE MRS.JUSTICE S.SUJATHA WRIT PETITION No.52871/2018 (T – RES) BETWEEN :
SRI S.G.MANJUNATH S/O SHIVARUDRAPPA AGED ABOUT 49 YEARS NO.151, BHANUVALLI (ASALIGRAMA) HARIHAR TALUKU DAVANGERE DISTRICT-577 516.
AND :
.PETITIONER (BY SRI SHANTHAVEERANNA K. ABBIGERI, ADV.) 1 . THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX DAVANGERE DIVISION, C.R. BUILDING, DEVRAJ URS LAYOUT, DAVANAGERE-577 006.
2 . THE SUPERINTENDENT OF SERVICE TAX DAVANAGERE SERVICE TAX RANGE C.R. BUILDING, "C" BLOCK, DEVARAJ URS LAYOUT, DAVANGERE-577 006.
3 . THE COMMISSIONER OF CENTRAL TAX (APPEALS-II), TRAFFIC TRANSIT MANAGEMENT CENTRE BMTC BUILDING, 4TH FLOOR, ABOVE BMTC BUS STAND, DOMLUR, OLD AIRPORT ROAD, BANGALORE-560 071. …RESPONDENTS (BY SRI JEEVAN J. NEERALGI, ADV.) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ANNEXURES NAMELY: ANNEXURE-A ORDER IN ORIGINAL DATE OF PASSING 17.03.2016, DATE OF ISSUE 17.03.2016 ORDER PASSED BY SHRI KARTHIKEYAN P. IRS ASSISTANT COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, DAVANAGERE DIVISION, DAVANAGERE, THE R-1 AND ETC.
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 sought for the following reliefs;
(a) for issue of writ of certiorari or any order in the nature of writ of certiorari quashing the impugned Annexures, namely:-
Annexure-A : Order-in- Original date of passing 17/03/2016, date of issue 17/03/2016 bearing No.C.No.IV/16/22/2015 – Adjn ST/461 order passed by Shri. Karthikeyan P, IRS, Assistant Commissioner of Central Excise and Service Tax, Davangere Division, Davangere, the 1st Respondent.
Annexure-B; Show Cause Notice dated 11/12/2015 bearing No. C.No.IV/16/22/2015 ST ADJN/1714 issued by the Assistant Commissioner of Central Excise & Service Tax Davangere Division, C.R.Building, ‘C’ Block, Devaraj Urs Layout, Davangere -577 006, the 1st Respondent.
Annexure-C; proceedings dated 15/09/2015 bearing No.O.C.No.692/2015 issued by the Superintendent of Service Tax, Davangere Service Tax Range, C.R. Building, ‘C’ Block, Devraj Urs Layout, Davangere -6, the 2nd Respondent.
Annexure-D : Proceedings dated 09/10/2015 bearing No.O.C.No.733/2015 issued by the Superintendent of Service Tax, Davangere Service Tax Range, C.R. Building, ‘C” Block Devaraj Urs Layout, Davangere -6, the 2nd Respondent.
Annexure-E : Order in Appeal No.464/2018CT dated 05/11/2018 bearing No.GST A.No.129/2018 A-II passed by the Commissioner of Central Tax ( Appeals-II), Traffic Transit Management Centre, BMTC Building, 4th Floor, above BMTC Bus Stand, Domlur, Old Airport Road, Bangalore-560 071, 3rd Respondent.
(b) Issue writ of mandamus directing the respondents to refund all amount to the petitioner which was collected by them as tax, penalty, interest relating to the years 2013-2014 and 2014-2015 from the petitioner. ”
2. The relevant background facts are that, the petitioner being aggrieved by the order of the Assistant Commissioner of Central Excise and Service Tax, Davangere Division, Davanagere, denying the exemption of payment of Service Tax of Rs.2,26,323/- along with interest and penalty thereupon and raising demand for the said amount relating to the period from April 2013 to March 2015, had preferred W.P.No.27349-351/2016 before this Court. The learned single Judge having observed that the issue involved therein being a mixed question of facts and law deserves to be determined by the Appellate Forum, relegated the petitioner to the Appellate Authority. Being aggrieved, petitioner had preferred Writ Appeal Nos.6805-6807/2017 and the Division Bench of this Court having examined the matter, refrained to interfere with the order of the learned single Judge. Accordingly, writ appeals came to be dismissed vide order dated 12/03/2018, permitting the petitioner to file an appeal within thirty days and directed the Appellate Authority to consider the case on merits ignoring the question of limitation, if such an appeal is preferred within a period of thirty days. Pursuant to which, the petitioner has preferred an appeal before the Appellate Authority and the same came to be dismissed. Hence, the present writ petition.
3. Learned counsel Sri. Shanthaveeranna, K, appearing for the petitioner would submit that the Appellate Authority has failed to address the arguments advanced by the learned counsel for the petitioner inasmuch as the jurisdiction of the authority in passing the re-assessment order under Section 73 of the Service Tax ( Chapter-V of Finance Act, 1994.) Learned counsel submitted that the order in original dated 17/03/2016 does not bear any caption. No Best judgment assessment was passed under Section 72 of the Finance Act, 1994(‘Act’ for short). That being the position, passing an order of re-assessment under Section 73(1) of the Finance Act, 1994 (‘Act’ for short) is illegal and without jurisdiction.
4. It is further submitted that the detail scrutiny of the returns were undertaken by the Superintendent of Service Tax in terms of the communication dated 09/10/2015 whereas the order under Section 73(1) of the Act was passed by the Assistant Commissioner, which is against Rule - 3 of the Service Tax Rules, 1994.
It is further submitted that the judgment of the Hon’ble Apex Court in the case of STANDARD CHARTERED FINANCE LTD Vs. COMMISSIONER OF INCOME TAX AND ANOTHER, reported in (2016) 381 ITR 453(SC) was not considered by the Appellate Authority. Hence, the orders/notice impugned at Annexures-A, B, C, D and E deserves to be set aside directing the respondents to refund the amount collected by the authorities relating to the assessment orders in question by way of tax, penalty and interest from the petitioner.
5. Learned counsel for the revenue justifying the impugned orders/notice submitted that the Assistant Commissioner is empowered under Section 73(1) of the Act to pass the assessment order wherein, service tax has not been levied or paid or short levied or erroneously refunded. It is not the re-assessment order as contended by the petitioner and an order under Section 73(1) of the Act need not necessarily be preceded with any order passed under Section 72 of the Act.
6. It is further submitted that the Assistant Commissioner has been assigned with the power to proceed with the proceedings under Section 73 of the Act and moreover, no objections were raised by the petitioner at the first instance, inasmuch as the jurisdictional aspect. The Appellate Authority has duly considered all these material factors in rejecting the appeal. If the petitioner is aggrieved by the order of the Appellate Authority, the appeal lies to the Appellate Tribunal in terms of Section 86 of the Act. The petitioner without exhausting the statutory remedy, cannot invoke the writ jurisdiction. Hence, the writ petition deserves to be rejected.
7. I have carefully considered the rival submissions made by the learned counsel appearing for the parties and perused the material on record.
8. It is the primary contention of the learned counsel for the petitioner that the order in original passed under Section 73(1) of the Act, dated 17/03/2016 is the re-assessment order. The said approach of the petitioner is wholly misconceived. Section 72 deals with the Best judgment assessment. The provisions of Sections 72 and 73 during the relevant period reads thus:
“ 72. Best judgment assessment If any person, liable to pay service tax – (a) fails to furnish the return under Section 70;
b) Having made a return, fails to assess the tax in accordance with the Central Excise Officer, may require the person to produce such accounts, documents or other evidence as he may deem necessary and after taking into account all the relevant material which is available or which he has gathered, shall by an order in writing, after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment]”
73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within [[thirty months]] from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice. PROVIDED that where any service tax has not been levied or paid or has been short- levied or short-paid or erroneously refunded by reason of – (a) fraud; or (b) collusion; or (c) willful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words [thirty months], the words “five years” had been substituted.
Explanation: Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of [thirty months] or five years, as the case may be.
9. Thus, the language employed in the provisions of Section 73 as it stood during the relevant period does not contemplate for an order of assessment, a condition precedent to invoke Section 73, as contended by the learned counsel for the petitioner. In other words, Best judgment assessment order passed under Section 72 of the Act, is not sine qua non for initiating proceedings under Section 73 of the Act.
10. Section 73 provides for recovery of service tax in the following circumstances ;
(i) not levied or paid ii) short-levied or short-paid iii) erroneously refunded.
Hence, even while furnishing the returns under Section 70 of the Act, if the service tax is not paid or short paid, Section 73 of the Act can be invoked subject to the period of limitation. The order impugned dated 17/03/2016 at Annexure-A specifies the same as ‘ORDER –IN ORIGINAL’. There is no cavil on the legal proposition that no re-assessment order could be passed without there being any assessment order. The judgment relied upon by the learned counsel for the petitioner in the case of Standard Chartered Finance Ltd, supra is not applicable to the present facts of the case. The said judgment was rendered in the context of the returns filed by the assessee under the Interest Tax Act, 1974 where no assessment order was passed. Much after the last date of the assessment year, the Assessing Officer has sought to re-open the assessment by issuing notice under Section 10 of the Act, 1974 and proceeded to re-assess the interest chargeable under the Act. The Commissioner (Appeals) had set aside the re-assessment order and this was upheld by the Appellate Tribunal and the High Court had reversed the said order. On further appeal before the Hon’ble Apex Court, it was held that there was no assessment order as such, there could not be a notice for re-assessment inasmuch as the question of re-assessment would arise only when there has been assessment for the first instance. The proceedings under section 73(1) of the Act 1994 not being merely the re-assessment proceedings, the arguments of the learned counsel for the petitioner stands negated.
11. As regards the jurisdiction aspect is concerned, the Appellate Authority in the order impugned at Annexure-E dated 05/11/2018 has categorically given a finding in para-6 of the order and the same is quoted hereunder.
“ It is seen from the appeal memorandum that the appellant has questioned the jurisdiction of the officers to raise a demand notice. It is pertinent to mention that the appellant has not raised this issue before the adjudicating authority during initial proceedings. CEGAT, New Delhi in the case of Sangameshwar Pipe and Steel Traders vs CCE, Belgaum 2002 (141) E.L.T.252 (Tri. Del) has held that “ Jurisdiction of adjudicating authority not disputable for first time at appellate stage – Appellant esstopped from raising jurisdictional objection at appellate state, having submitted to and acquiesced in jurisdiction of ‘Additional Collector. The appellant’s jurisdictional objection will be rejected as barred by estoppel. A jurisdictional objection has to be raised at the earliest opportunity. Such opportunity was available to the appellants when the show cause notice was served on them. They did not challenge the Additional Collector’s jurisdiction while replying to the show cause show cause notice, nor did they choose to do so before the adjudicating authority later. The appellants, having submitted to, and acquiesced in, the jurisdiction of the departmental authorities are estoppel from challenging it as they did through Counsel at this stage.”
If the petitioner is aggrieved by the said findings of the Appellate Authority including the merits of the case, it is open to the petitioner to challenge the same before the Appellate Tribunal under Section 86 of the Act, 1994.
12. Hence, on the aforesaid grounds now urged by the petitioner, the writ petition cannot be entertained.
Accordingly, writ petition stands dismissed with liberty to the petitioner to approach the Appellate Tribunal and if such an appeal is filed within a period of four weeks from the date of receipt of certified copy of the order, the Appellate Tribunal shall consider the same on merits without objecting to the period of limitation.
Sd/- JUDGE Msu