Gujarat High Court
M/S Educomp Solutions Ltd. vs Union Of India on 6 January, 2021
Author: J.B.Pardiwala
Bench: J.B.Pardiwala, Ilesh J. Vora
C/SCA/16827/2020 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16827 of 2020
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M/S EDUCOMP SOLUTIONS LTD.
Versus
UNION OF INDIA
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Appearance:
MR HARDIK P MODH(5344) WITH MR KP SINGH ADVOCATE for the
Petitioner(s) No. 1
for the Respondent(s) No. 1,2
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CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE ILESH J. VORA
Date : 06/01/2021
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 We have heard Mr. Hardik Modh, the learned counsel appearing for the writ applicant.
2 It appears from the materials on record that the show cause notice came to be issued to the writ applicant dated 27th August 2020. The show cause notice is at page : 154 (Annexure : 'I' to the writ application). In the show cause notice, the writ applicant was called upon to show cause as regards the following:
"15. Now, therefore, M/s. EDUCOMP SOLUTIONS LTD., 506, SHALIN COMPLEX, SECTION 11, GANDHINAGAR, GUJARAT, PIN CONDE - 382011 are hereby called upon to show cause to the Commissioner of CGST & C. Ex. Gandhinagar Commissionerate having its office located at :
Custom House, Nr. All India Radio, Navrangpura, Ahmedabad - 380009, as to why: Page 1 of 4 Downloaded on : Fri Jan 08 23:48:12 IST 2021 C/SCA/16827/2020 ORDER i. Total Service Tax Rs.20,98,89,780/ (Basis Service Tax of amounting Rs.20,37,76,487/ and Education Cess of Rs.40,75,529/and Sec. & Higher Edu. Cess of Rs.20,37,764/) for Financial Year 20142015, should not be demanded & recovered from them under proviso to subsection (1) of Section 73 of the Finance Act, 1994 read with Section 68 of the Finance Act, 1994 read with relaxation provisions of Section 6 of Chapter V of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (No.2 of 2020) promulgated on 30.03.2020 by invoking extended period of time limit with further amendments made vide Notification No.56/2020Central Tax dated 27.06.2020.
ii. Interest on such service tax at the appropriate rate prescribed under the provisions of Section 75 of the Finance Act, 1994, as amended should not be demanded and recovered from them;
iii. Penalty under section 78 of the Finance Act, 1994, as amended, should not be imposed on them for suppressing the taxable value and material facts before the department resulting into non payment of Service Tax, Education and Higher Education Cess as mentioned herein above.
iv. Penalty should not be imposed upon them under the provisions of Section 77 of the Finance Act, 1994, for failure to provide documents / details for further verification in a manner as provided under Section 77 of the Service Tax Rules, 1994."
3 It appears that before the writ applicant could even file his reply to the above referred show cause notice, the order in original dated 1 st September 2020 came to be passed by the Commissioner, Central GST and Central Excise, Gandhinagar Commissionerate. The operative part of the order reads thus:
"ORDER
(i) I order to recover Service Tax Rs.20,98,89,780/ [(Basis Service Tax of amounting Rs.20,37,76,487/ and Education Cess of Rs.40,75,529/ and Sec. & Higher Edu. Cess of Rs.20,37,764/) Rupees Twenty Crores Ninety Eight Lakhs, Eighty Nine Thousand Seven Hundred Eighty only)] for financial year 201415, from M/s. EDUCOMP SOLUTIONS LTD under the proviso to subsection (1) of Section 73 of the Finance Act, 1994 read with Section 68 of the Finance Act, 1994 read with relaxation provisions of Section 6 of Chapter V of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 (No.2 of 2020) promulgated on Page 2 of 4 Downloaded on : Fri Jan 08 23:48:12 IST 2021 C/SCA/16827/2020 ORDER 30.03.2020 by invoking extended period of time limit with further amendments made vide Notification No.56/2020Central Tax dated 27.06.2020;
(ii) I order to recover interest on such service tax at the appropriate rate prescribed under the provisions of Section 75 of the Finance Act, 1994, as amended from M/s. EDUCOMP SOLUTIONS LTD.
(iii) I impose a penalty of Rs.10,49,44,890/ (Rupees Ten Crores Forty Nine Lakhs Forty Four Thousand Eight Hundred Ninety Only) on M/s.
EDUCOMP SOLUTIONS LTD under Section 78 of the Finance Act, 1994, as amended, for suppressing the taxable value and material facts before the department resulting into nonpayment of Service Tax, Education and Higher Education Cess as mentioned herein above.
(v) I impose a penalty of Rs.10,000 (Rs. Ten Thousand) on M/s. EDUCOMP SOLUTIONS LTD under the provisions of Section 77 of the Finance Act, 1994, for failure to provide documents / details for further verification in a manner as provided under Section 77 of the Service Tax Rues, 1994."
4 The principal argument of Mr. Modh, the learned counsel appearing for the writ applicant is that without giving any opportunity to even file reply to the show cause notice, the authority proceeded to pass the final order referred to above. Mr. Modh further argued that no opportunity of hearing was given even before passing the impugned order in original. In para 3.14 of the impugned order, it has been stated that personal hearing for preconsultation of show cause notice before the issuance of same was fixed on 15th July 2020 and 4th August 2020 respectively, but none appeared. At the same time, in the very same paragraph, it has been stated that vide letter dated 24th August 2020, the writ applicant herein intimated to the department that the National Company Law Tribunal, Principal Bench at New Delhi (NCT) vide its order No.C.P.(IB)101 (PB)/2017 dated 30th May 2017 had admitted their application for intimation of Corporate Insolvency Resolution Process. Mr. Modh seeks to rely on Section 14 of the Insolvency and Bankruptcy Code, 2016, which provides for the moratorium. He would argue that the order in original, after imposition of moratorium, is nonest in law.
Page 3 of 4 Downloaded on : Fri Jan 08 23:48:12 IST 2021 C/SCA/16827/2020 ORDER5 In the aforesaid context, Mr. Modh seeks to rely on two decisions as follows:
(i) The decision of the Gauhati High Court in the case of National Plywood Industries Ltd vs. Union of India [2020 (34) G.S.T.L. 585 (Gau.)]
(ii) The decision of the Delhi High Court in the case of Principal Commissioner of Income Tax - 6 vs. Monnet Ispat and Energy Ltd [(2018) 304 CTR 234].
6 In view of the aforesaid, let Notice be issued to the respondents, returnable on 8th February 2021.
7 Having heard the learned counsel appearing for the parties and having gone through the materials on record, we are convinced that the writ applicant has been able to make out a strong prima facie case to have an adinterim order in his favour in terms of para 29(c) of the writ application. We, accordingly, grant such relief. The respondents shall be served directly through Email.
(J. B. PARDIWALA, J) (ILESH J. VORA,J) CHANDRESH Page 4 of 4 Downloaded on : Fri Jan 08 23:48:12 IST 2021