Case Note & Summary
The petitioner, M/s Maharaja Developers, a partnership firm engaged in construction business, challenged an assessment order dated 23/24 October 2008 passed by the Assistant Commissioner, Service Tax Cell, Nagpur, demanding service tax under Chapter V of the Finance Act, 1994. The petitioner contended that the services rendered by builders were made taxable only in 2004 and 2005 under Section 65(105)(zzq) and (zzzh) of the Finance Act, 1994, but later CBEC circulars clarified that such demand could not be made. The petitioner's partner, who looked after the affairs, had undergone bypass surgery, rendering him unable to respond to show cause notices. The demand was first communicated on 24 August 2012, leading to the filing of the writ petition. The court considered the legal issues of whether the assessment order violated principles of natural justice and whether the tax demand was sustainable in light of CBEC circulars. The petitioner argued that the alternative remedy of appeal under Section 85 was not efficacious as the appellate authority could condone delay only up to three months beyond the three-month limitation period, and the delay in this case exceeded that. The respondents argued that the petitioner should have availed the alternative remedy. The court, relying on the Supreme Court judgment in Commissioner of Customs and Central Excise v. Hongo India Pvt. Ltd., held that where the order is without jurisdiction or violates natural justice, the writ court can entertain the petition despite alternative remedy. The court found that the assessment order was passed without considering the CBEC circulars and without affording proper opportunity to the petitioner due to medical emergency. Consequently, the court quashed the assessment order and remanded the matter to the Assistant Commissioner for fresh adjudication after giving the petitioner a reasonable opportunity of hearing. The writ petition was allowed with no order as to costs.
Headnote
A) Service Tax - Construction Services - Taxability - Sections 65(105)(zzq) and (zzzh) of Finance Act, 1994 - The petitioner, a builder, was assessed to service tax on construction services. The court considered whether the demand was sustainable given CBEC circulars clarifying that such services were not taxable prior to 2005. Held that the assessment order was passed without considering the circulars and without affording proper opportunity, hence liable to be set aside (Paras 2-3). B) Natural Justice - Right to Hearing - Medical Emergency - The petitioner's partner underwent bypass surgery, preventing response to show cause notices. The court held that the assessment order passed without considering the medical ground violated principles of natural justice (Para 3). C) Limitation - Appeal - Condonation of Delay - Section 85 of Finance Act, 1994 - The appellate authority can condone delay only up to three months beyond the initial three-month period. The court noted that the petitioner could not avail alternative remedy due to expiry of limitation (Para 3).
Issue of Consideration
Whether the assessment order dated 23/24 October 2008 is liable to be set aside on grounds of violation of principles of natural justice and lack of jurisdiction in light of CBEC circulars and the petitioner's inability to respond due to medical emergency.
Final Decision
Writ petition allowed. Assessment order dated 23/24 October 2008 is quashed and set aside. The matter is remanded to the Assistant Commissioner, Service Tax Cell, Nagpur for fresh adjudication after giving the petitioner a reasonable opportunity of hearing. No order as to costs.
Law Points
- Natural justice
- Service tax on construction services
- Limitation for appeal
- Condonation of delay
- CBEC circulars
- Section 85 Finance Act 1994
- Section 65(105)(zzq) and (zzzh) Finance Act 1994
