TMI Blog2011 (8) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... vices’. In the impugned show cause notice it is claimed that the activities constituted business auxiliary service. If the services clearly fell within the ambit of business auxiliary service, there would be no need to amend the definition of port-services. In any case there was some confusion. If there was any confusion or doubt which had to be cleared by amendment, it cannot be said that there was wilful suppression or contravention of Chapter V to evade payment of Service Tax, so as to attract the proviso to Section 73(1) of the Finance Act, 1994.It is immaterial that the petitioner is registered in Kolkata but explanation had been given to the authorities of Paradeep, Ranchi and Dhanbad. If the queries were answered, it cannot be said that there was wilful suppression. It appears that the concerned authorities initially accepted the explanation of the assessee, but later proceeded to issue the impugned show cause notice upon change of opinion. The impugned show cause notice is barred by limitation. The show cause notice is thus set aside. - W.P. No. 124 of 2011 - - - Dated:- 10-8-2011 - Indira Banerjee, J. Shri J.K. Mittal , for the Petitioner. Shri Bharadwaj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22,28,234 10.2% 2,27,280 F.Y. 06-07 1,99,40,961 1,75,36,530 24,04,431 12.24% 2,94,302 F.Y. 07-08 1,90,11,843 1,65,29,968 24,81,875 12.36% 3,06,760 F.Y. 08-09 1,86,75,356 1,66,06,478 20,68,878 12.36% 2,55,713 TOTAL 11,55,449 3. Processing of pyroxenite for M/s. TISCO : Period during which services were rendered Processing charges realized by the assessee (Rs.) Gross rate of Service Tax Gross Service Tax payable (Rs.) 16-6-2005 - 31-3-2006 1,30,34,408 10.2% 13,29,510 1-4-2006 - 31-3-2007 2,45,05,002 12.24% 29,99,412 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture within the meaning of clause (f) of section 2 of the Central Excise Act, 1944 (1 of 1944). Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this clause, - (a) commission agent means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services; (23) cargo handling service means loading, u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause (a), shall be classified as if they consisted of a service which gives them their essential character, in so far as this criterion is applicable; (c) when a scrvice cannot be classified in the manner specified in clause (a) or clause (b), it shall be classified under the sub-clause which occurs first among the sub-clauses which equally merits consideration; 66. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent. of the value of taxable services referred to in sub-clauses .. 68. Every person providing taxable service to any person shall pay service tax at the rate specified in section 66 in such manner and within such period as may be prescribed. (2) Notwithstanding anything contained in sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service. 69.(1) Every person liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice 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) wilful misstatement; 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 one year , 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 one year or five years, as the case may be. 7. Under the provisions of the Finance Act, 1994, as it stood at the material time and as amended up-to-date any service tax not levied or paid or short levied or short paid or erroneously refunded might be recovered by issuance of notice within one year from the relevant date. 8. However, by reason of the proviso to Section 73(1), a show cause notice may be issued within five years from the relevant date but o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e conditions precedent for invocation of the extended period of limitation as provided in the proviso to Section 73(1) of the Finance Act, 1994 were wholly absent. 14. Mr. Bharadwaj, appearing on behalf of the Department has taken a preliminary objection to the writ petition, inter alia contending that the petitioner had an equally efficacious alternative remedy of adjudication before the Adjudicating Authority. Mr. Bharadwaj argued that since the issue raised in the writ petition, that is, the question of whether the proviso to Section 73(1) had rightly or wrongly been invoked involves factual determination, the writ petition should not be entertained. 15. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. The High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. 16. The Courts have however, by way of judicial discipline, themselves evolved certain principles for entertaining writ petitions. The High Courts normally refrain from exercising jurisdiction under Article 226 of the Constitution of India whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of fact, this Court in exercise of its writ jurisdiction is entitled to examine whether the findings on jurisdictional facts arc correct or not. This proposition finds support from the judgment of the Supreme Court in the State of Madhya Pradesh Ors. v. D.K. Yadav reported in AIR 1968 SC 1186. 23. In M/s. Raza Textiles Ltd., Rampur v. The Income Tax Officer, Rampur reported in AIR 1973 SC 1362, the Supreme Court held that no authority, much less a quasi-judicial authority, could confer jurisdiction on itself by deciding a jurisdictional fact wrongly. The question of whether the jurisdictional fact had rightly been decided or not was a question open to examination by the High Court in an application under Article 226 of the Constitution of India. 24. In M/s. Raza Textiles Ltd. (supra), the Supreme Court held that, if in an application under Article 226 of the Constitution of India, the Income Tax Officer had assumed jurisdiction by deciding a jurisdictional fact erroneously, the assessee would be entitled to a writ of certiorari as prayed for, since it was incomprehensible to think that a quasi-judicial authority could erroneously decide a jurisdictional fact and impose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Officer must on information at his disposal believe that income has been under-assessed by reason of failure fully and truly to disclose all material facts necessary for assessment. Such a belief, be if said, may not be based on mere suspicion: it must be founded upon information. 27. The Court exercising jurisdiction under Article 226 of the Constitution of India may be required to examine jurisdictional facts to ascertain whether jurisdiction to issue a show cause notice has properly been exercised, or such jurisdiction has been usurped by a pretended invocation of a provision of Statute. 28. This Court is thus entitled to examine whether any cogent grounds have been made out in the impugned show cause notice for invocation of the extended period of limitation and whether the grounds, if any, are supported by materials on record. 29. This Court exercising jurisdiction under Article 226 of the Constitution of India does not, ordinarily interfere with a show cause notice. However, when the show cause notice is without jurisdiction, or barred by law, or suffers from any patent illegality this Court is duty bound to interfere. To ascertain whether the show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax on intra-port transport charges under port service contending that intra-port transportation was covered under the category of port service. 38. By a letter dated 5th April, 2007, the petitioner refuted the demand contending that the petitioner was neither a port nor had been authorized by any port and the service rendered by the petitioner did not constitute port service. The petitioner also filed a writ petition being W.P. (C) No. 6660 of 2007 challenging the letter dated 9th March, 2007. 39. By an Audit Spot Memo No. 3 dated 21st July, 2009, the Principal Director of Audit, Central Kolkata, sought information and/or documents with regard to intra port charges from 2001-2002 to 2008-2009. 40. Another memo being Audit Spot Memo No. 3 dated 21st June, 2009 was issued by the Audits and Accounts Department, calling for documents pertaining to intra-port transportation, conversion bill charges and transportation bills for the year 2001-02 to 2008-09. 41. Thereafter while conducting audit, the office of the Principal Director of Audit issued Audit Spot Memo No. 2 dated 21st July, 2009 calling for documents related to processing of pyroxenite . Service tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectronic transfer through internet banking, payment could be made within the 6th day of that month, that is one day later. Limitation, would thus start running from the seventh day of the month following the calendar month in which payment for the taxable service had been received by the petitioner. 49. The onus is on the authority issuing the show cause to disclose relevant facts in the show cause notice or documents annexed therewith to show that the show cause notice was within one year from the relevant date, or in case of invocation of the proviso to Section 73(1) of the Finance Act, within five years from the relevant date. 50. Limitation gives rise to a valuable right to the assessee. Service Tax cannot be recovered after one year from the relevant date except in circumstances stipulated in the proviso to Section 73(1). In no circumstances can any show cause notice be issued beyond the maximum period of 5 years from the relevant date. 51. As held by the Supreme Court in CCE, Ahmedabad-I v. M. Square Chemical reported in 2008 (231) E.L.T. 194 (S.C.), five years was to be computed by back calculation from the date of the show cause notice. The show cause notice having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r example deliberate non-disclosure of some bills pertaining to any particular taxable service rendered by the assessee. Similarly, if an assessee withholds information in spite of requisition to provide the same, with intention to evade tax, the assessee would be guilty of wilful suppression. 59. It is not the case of the respondents as made out in the show cause notice that the petitioner has withheld any information in spite of requisition or has refrained from filing returns in spite of any specific direction to do so. 60. This Court is, in view of the judgment of the Supreme Court in Anand Nishikawa (supra) and Bajaj Auto (supra), constrained to hold that the coke, by executing sub-contracts with coke oven plants. The explanation of the petitioner that rendering of the service of conversion of coal did not attract service tax at the material time was accepted. The extended period of limitation cannot be invoked, since it cannot be said that there was any suppression. 61. Mr. Mittal, appearing on behalf of the petitioner, submitted that even if conversion of coal into coke did not amount to manufacture and was covered under business auxiliary service, Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng materials to show that the assessee is guilty of any of the acts specified in the proviso to Section 73(1), the burden would shift on the assessee. In this case, the respondents have failed to discharge their initial onus. 68. Section 73(1) of the Finance Act , 1993 being substantially in pari materia with Section 11A(1) of the Central Excise Act, 1944, the judgments of the Supreme interpreting Section 11A(1) of the Central Excise Act, 1944 including Bajaj Auto (supra), operate as a binding precedent for interpretation of identical provisions of Section 73(1) of the Finance Act. 69. On the face of the impugned show cause notice, service tax of ₹ 49,93,998/- has been demanded for service of conversion of coal into coke under the head business auxiliary service. The definition of business auxiliary service expressly excludes activities which amount to manufacture. 70. Moreover, as argued by Mr. Mittal since the definition of business auxiliary service had numerous sub-clauses, enumerating the activities which would constitute business auxiliary service , the absence of any indication in the show cause notice of the specific sub-clause and/or sub clauses under whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of port-services prior to its amendment with effect from 2010 or into the definition of cargo handling services . In the impugned show cause notice it is claimed that the activities constituted business auxiliary service. If the services clearly fell within the ambit of business auxiliary service, there would be no need to amend the definition of port-services. 76. In any case there was some confusion. If there was any confusion or doubt which had to be cleared by amendment, it cannot be said that there was wilful suppression or contravention of Chapter V to evade payment of Service Tax, so as to attract the proviso to Section 73(1) of the Finance Act, 1994. 77. It is immaterial that the petitioner is registered in Kolkata but explanation had been given to the authorities of Paradeep, Ranchi and Dhanbad. If the queries were answered, it cannot be said that there was wilful suppression. It appears that the concerned authorities initially accepted the explanation of the assessee, but later proceeded to issue the impugned show cause notice upon change of opinion. The impugned show cause notice is barred by limitation. 78. The show cause notice is thus set asid ..... 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