Case Note & Summary
The petitioner, Karnataka Power Transmission Corporation Limited (KPTCL), filed a writ petition on 07.12.2016 challenging a Show Cause Notice dated 20.06.2016 issued by the Commissioner of Central Excise & Service Tax, Large Tax Payer Unit (Audit), New Delhi. The notice proposed to levy service tax on the transmission of electricity under Section 66E(e) of the Finance Act, 1994. The petitioner sought a declaration that Section 66E read with Section 65B(22) and particularly Section 66E(e) of the Finance Act, 1994 is unconstitutional and violative of Articles 246 and 265 of the Constitution of India. The court, after hearing the parties, held that the challenge at the stage of show cause notice was premature. The petitioner was directed to file a reply to the show cause notice and was given liberty to raise all contentions including the constitutional validity of the provisions. The court also noted that the petitioner had an alternative remedy of appeal under the Finance Act. Consequently, the writ petition was dismissed as premature, reserving liberty to the petitioner to pursue appropriate remedies.
Headnote
A) Constitutional Law - Writ Jurisdiction - Premature Challenge - Show Cause Notice - The petitioner challenged a show cause notice and sought declaration that Section 66E(e) of the Finance Act, 1994 is unconstitutional. The court held that the challenge at the stage of show cause notice is premature and the petitioner must first respond to the notice and avail alternative remedies. (Paras 1-3)
B) Service Tax - Declaratory Relief - Alternative Remedy - The court declined to entertain the writ petition as the petitioner had an efficacious alternative remedy of responding to the show cause notice and pursuing appeal. The court did not examine the merits of the constitutional challenge. (Paras 2-3)
Issue of Consideration
Whether the writ petition challenging the show cause notice and seeking declaration of unconstitutionality of Section 66E(e) of the Finance Act, 1994 is maintainable at the stage of show cause notice without exhausting alternative remedies.
Final Decision
The writ petition is dismissed as premature. The petitioner is at liberty to file a reply to the show cause notice and raise all contentions including the constitutional validity of the provisions. The court did not examine the merits of the challenge.
Law Points
- Service tax on transmission of electricity
- Declaratory relief
- Premature challenge
- Show cause notice
- Alternative remedy
- Constitutional validity of Section 66E(e) of Finance Act
- 1994
Case Details
2018 LawText (KAR) (10) 7
Writ Petition No.62960/2016 (T-TAR)
Mr. V. Raghuraman for Petitioner, Mr. Amit Deshpande for Respondents
M/s Karnataka Power Transmission Corporation Limited
Principal Commissioner of Central Excise, LTU & Ors.
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Nature of Litigation
Writ petition under Articles 226 and 227 of the Constitution of India challenging a show cause notice and seeking declaration of unconstitutionality of certain provisions of the Finance Act, 1994.
Remedy Sought
Petitioner sought a writ of declaration declaring Section 66E read with Section 65B(22) and particularly Section 66E(e) of the Finance Act, 1994 as unconstitutional and violative of Articles 246 and 265 of the Constitution, and to quash the show cause notice.
Filing Reason
Petitioner received a show cause notice proposing to levy service tax on transmission of electricity under Section 66E(e) of the Finance Act, 1994, which the petitioner contends is beyond the legislative competence of Parliament.
Issues
Whether the writ petition challenging the show cause notice and seeking declaration of unconstitutionality is maintainable at the stage of show cause notice without exhausting alternative remedies.
Submissions/Arguments
Petitioner argued that the provisions of Section 66E(e) are unconstitutional and that the show cause notice is without jurisdiction.
Respondents contended that the challenge is premature and the petitioner should first respond to the show cause notice and avail alternative remedies.
Ratio Decidendi
A challenge to a show cause notice at the stage of issuance is premature, and the party must first respond to the notice and exhaust alternative remedies before approaching the court under Article 226. The court will not entertain a writ petition seeking declaratory relief on constitutional validity without the party first availing the statutory remedy.
Judgment Excerpts
The main issue raised in the impugned show cause notice by the Respondent-Service Tax Department against the Government of Karnataka Power Transmission Corporation Limited is regarding the levy of service tax on transmission of electricity.
The challenge at the stage of show cause notice is premature and the petitioner must first respond to the notice and avail alternative remedies.
Procedural History
The petitioner filed the writ petition on 07.12.2016 challenging the show cause notice dated 20.06.2016. The petition came up for preliminary hearing in 'B' Group on 22.10.2018 and was dismissed as premature.
Acts & Sections
- Finance Act, 1994: Section 66E, Section 65B(22), Section 66E(e)
- Constitution of India: Article 226, Article 227, Article 246, Article 265
