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2017 (10) TMI 1556 - HC - Service TaxNon-payment of service tax - training and coaching service - exemption under Ext. P9 Notification dated 20-6-2012 - Non-application of mind - principles of natural justice - HELD THAT:- From a perusal of Ext. P3 show cause notice issued to the petitioner that, the case of the Department is essentially that the petitioner had been engaged in rendering commercial training or coaching services for the period from April, 2010 to June, 2012, and that for the subsequent period from April, 2012 to March, 2015, the activities of the petitioner were liable to service tax since the services rendered by petitioner would not qualify for the exemption contemplated under Ext. P9 Notification. In reply to the said show cause notice, the petitioner preferred a detailed reply, which is produced as Ext. P11 in the writ petition, wherein the case of the petitioner is essentially that the services rendered by him being in the nature of commercial training/coaching services leading to a qualification recognised by law, will not come within the ambit of the levy of service tax for the period prior to 1-7-2012. It was also pointed out in the said reply that, for the period subsequent to 1-7-2012, and upto March, 2015, the training services rendered by the petitioner would qualify for the exemption under Ext. P9 Notification under the head of “services by an entity registered under Section 12AA of the Income-tax Act, that conducts activities that answer to the description of charitable activities as defined under Clause 2K of the said Notification. The specific contention of the petitioner that, for the period prior to 1-7-2012, the demand for tax in respect of the services rendered by him would be hit by limitation, and the further contention of the petitioner that for the services rendered by him for the period subsequent to 1-7-2012 and till March, 2015, he would qualify for the exemption under Ext. P9 Notification, were not dealt with by the respondent, who merely proceeded to record the contentions of the petitioner, and then hold that the services rendered by the trust would not come under the charitable activities mentioned in the Notification, and further, that the services rendered by the trust were of commercial nature. In my view, when the petitioner had taken a specific contention with regard to the particular head of service under which he qualified for exemption as per Ext. P9 Notification, it was incumbent upon the respondent adjudicating authority to consider the contention of the petitioner and give reasons for rejecting the said contention of the petitioner. In Ext.P8 order, I do not find such an exercise as having been done by the respondent, as there is no reason stated as to why the contention of the petitioner regarding exemption available to the services rendered by him could not be accepted. Thus it is found that relegating the petitioner to his alternative remedy of an appeal against Ext. P8 order would be an exercise in futility since Ext. P8 order does not inform the petitioner of the reasons that found favour with the respondent while finding against the petitioner on the issue of exemption, and confirming the demand of service tax and penalty on him - the respondent are not directed to pass a fresh order in lieu of Ext. P8 after considering Ext. P11 reply of the petitioner and after hearing him in the matter.
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