Constitution of India: Art.226 – Show cause notice issued under s.73 of Finance Act by appellant-authority proposing to demand service tax from respondents under the category of “cargo handling service” – Respondent’s case was that the service provided by them fell under the taxable category of “goods transport agency” – Writ petition filed by respondents before the High Court challenging the show cause notice – High Court quashed the show cause notice – On appeal, held: High Court committed error in entertaining the writ petition under Art.226 at the stage of show cause notices – Neither it was a case of lack of jurisdiction nor any violation of principles of natural justice was alleged so as to entertain the writ petition at the stage of notice – High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to the Supreme Court – When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there was no reason to approach the High Court questioning the very show cause notices – Moreover, even the contents of show cause notices did not sow that there were no factual disputes – Finance Act, 1994 – s.73.
Allowing the appeal, the Court
HELD: 1. The controversy in the instant case related to the classification of services rendered by the respondents. It is not in dispute that if the show cause notices culminate into an order, the appeal would lie to this Court. If any finding is recorded by this Court at this stage, same will prejudice either of the parties. In view of the contentions raised, it cannot be said that there are no factual disputes. Applicability of the circulars dated 06.08.2008 and 05.10.2015 was also in serious dispute. Further the classifiability of service rendered by a particular assessee is to be considered with reference to facts of each case depending upon nature of service rendered and the contract entered into. There cannot be any general declaration, as prayed for. It is true that circulars issued by the CBEC are binding on the authorities, but at the same time, such circulars are applicable or not, is a matter which is to be considered with reference to facts of each case. When it is the case of the appellants that such circulars referred would apply only in case of road transportation but not otherwise, then it is a case for consideration by competent authority on receipt of the explanation but same is no ground to quash the show cause notices. [Paras 16, 18] [924-C; 925-B-H; 926-A]
2. When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices. [Para 19] [926-E-F]
Deputy Commissioner, Central Excise & Anr. v. Sushil and Company (2016) 13 SCC 223; Union of India & Anr. v. Guwahati Carbon Limited (2012) 11 SCC 651; Union of India v. Hindustan Dev. Corpn. Ltd. 1998
(100) ELT 14 (SC); Malladi Drugs & Pharma Ltd. v. Union of India 2004 (166) ELT 153 (SC) – relied on. Paper Products Ltd. v. Commissioner of Central Excise 1999 (112) ELT 765 (SC) – held inapplicable.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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