Karnataka High Court
Nmdc Limited vs Union Of India on 4 September, 2017
Author: Vineet Kothari
Bench: Vineet Kothari
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 4th DAY OF SEPTEMBER 2017
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION No.43900/2016 (T-TAR)
BETWEEN:
NMDC Limited
Khanij Bhawan, 10-3-311/A
Masab Tank
Hyderabad, Telangana
Rep. by Pradip Kumar Mahapatra
s/o M.N.Mahapatra
Aged about 46 years. ...Petitioner
(By Sri.Raghavacharyulu, Adv. for
Sri D.R.Ravishankar, Adv. for M/s Lex Nexus)
And:
1. Union of India
Rep. by its Secretary (Finance)
Government of India
New Delhi - 110 001.
2. The Superintendent of Central Excise &
Service Tax
Hospet - C Range, (Tax/demand issuing
Authority), Patel Nagar, Hospet,
Bellary - 583 201.
3. State of Karnataka
Rep. by its Principal Secretary
Commerce & Industries
Bangalore - 560 001.
Karnataka. ..Respondents
Date of Order 04-09-2017 W.P.No.43900/2016
NMDC Limited Vs. Union of India & Ors..
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(By Sri Jeevan J Neeralgi, Adv. for R.1 & R.2,
Sri T.K.Vedamurthy, AGA for R.3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 OF
THE CONSTITUTION OF INDIA PRAYING TO DECLARE THE
PROCEEDINGS OF R-2 VIDE PROCEEDINGS NO.OC
NO.772/2016 DATED 04.05.2016 AT ANNEXURE-A AND ALSO
THE PROCEEDINGS DATED 30.05.2016 BEARING NO.OC
NO.873/2016 AT ANNEXURE - B TO W.P. AS
UNCONSTITUTIONAL, WITHOUT JURISDICTION, ILLEGAL AND
ARBITRARY AND TO QUASH THE SAME.
THIS W.P. COMING ON FOR PRELIMINARY HEARING THIS
DAY, THE COURT MADE THE FOLLOWING:-
ORDER
Mr. Sri.Raghavacharyulu,Adv.for Sri D.R.Ravishankar, Adv.for M/s Lex Nexus, Adv. for Petitioners Mr . Sri Jeevan J Neeralgi, Adv. for R.1 & R.2, Sri T.K.Vedamurthy, AGA for R.3, AGA for R.3 The petitioner - NMDC Limited, a Central Government Undertaking has filed the present petition before this Court under Article 226 of the Constitution of India aggrieved by a mere communication issued by the respondent Superintendent of Central Excise & Service Tax vide Annexure "A" dated 04.05.2016, whereby the said Central Excise Authority has informed the petitioner that with effect from 01.04.2016, any Date of Order 04-09-2017 W.P.No.43900/2016 NMDC Limited Vs. Union of India & Ors..
3/8 service provided by Government or a Local Authority to a business entity has been made taxable and such service tax is also levied on the services in the nature of allocation of natural resources, right of way charges or any Fee/Licence for any service not exempted, provided by Government or a Local Authority.
2. Bringing to the notice of petitioner this change in law with effect from 01.04.2016, the said Authority of Central Excise Department merely informed the petitioner/Company to make payment of the service tax on the Royalties paid to the Government of Karnataka, for mining of Iron Ore within the State of Karnataka in terms of Notification No.30/2012 ST dated 20.06.2012 as amended by Notification No.18/2016 ST dated 01.03.2016.
3. The petitioner Company - NMDC Ltd. instead of raising any objection or grievance against the said Date of Order 04-09-2017 W.P.No.43900/2016 NMDC Limited Vs. Union of India & Ors..
4/8 communication before the concerned authority, has straight away chosen to file this petition before this Court on 11.08.2016 without getting the said issue adjudicated by the competent authority of the respondent Central Excise & Service Tax Department.
4. Upon issuance of notice, the co-ordinate Bench of this Court stayed the further proceedings on 18.08.2016. However, that stay order was vacated by this Court by passing the following order on 21.08.2017:
"Learned ASG has raised a preliminary objection that the petitioner being a Central Public Sector Undertaking, has filed this petition against the mere communication vide Annexure- A dated 04-05-2016, calling upon the petitioner-NMDC Limited to start paying the service tax with effect from 01-04-2016 on the Royalties paid to the Government of Karnataka, since the service tax is also leviable even on the Government or a Local Authority.
2. Instead of showing cause before the Service Tax Authority, the present Central PSU, a Government Company has approached this Court and has obtained an exparte interim order as granted by the Co-ordinate Bench of this Court on 18-08-2016, for which, I.A.No.1/2017 Date of Order 04-09-2017 W.P.No.43900/2016 NMDC Limited Vs. Union of India & Ors..5/8
has been filed by the Respondent-Department for vacating that interim order.
3. Prima facie, this Court is seriously concerned about the Central Public Sector Undertaking approaching the High Court against a mere show cause notice against the Central Government Department itself.
4. It is most unfortunate and least desirable litigation in the Courts of Law.
5. Therefore, the learned Counsel for the Petitioner is called upon to file an affidavit of the Managing Director or Director dealing with legal affairs of the Petitioner-Company as to under what circumstances, the Assistant General Manager (Finance) Mr.Pradip Kumar Mahapatra whose affidavit is filed along with the petition was authorized to file a petition before this Court. The copy of relevant Board Resolution if any and Authority given to the said officer be produced along with such an affidavit positively by the next date of hearing, failing which, the said Director of the petitioner-Company will remain present before this Court.
6. The petitioner-Company may also show cause why exemplary costs not be imposed upon the petitioner-Company for filing such a frivolous petition before this Court.
7. Interim order dated 18-08-2016 shall stand vacated.
8. List on 28-08-2017."
Date of Order 04-09-2017 W.P.No.43900/2016 NMDC Limited Vs. Union of India & Ors..
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5. Today, learned counsel appearing for the petitioner submitted before the Court that since the said communication, interalia made a demand for payment of service tax from the petitioner Company to pay the Service Tax on the Royalties, a cause of action arose to the petitioner company to approach this Court. He has also submitted that even the Association of the Iron Ores Miners approached the respondent Department for seeking a clarification in the matter, however, that clarification was never issued. He has also submitted that certain petitions involving similar issues are pending in other High Courts also. However, none of the documents with regard to these submissions made, have been placed before this Court.
6. On the contrary, learned counsel for the respondent Department has submitted before the Court that the impugned communication - Annexure "A" dated 04.05.2016 is not even a show cause notice issued to the petitioner company under Section 73 of the Finance Act, 1994 and if the petitioner had any objection to the payment Date of Order 04-09-2017 W.P.No.43900/2016 NMDC Limited Vs. Union of India & Ors..
7/8 of the said service tax, the petitioner company could very well approach the concerned authority by way of suitable representations or objections and it would be premature for this Court to pronounce upon the claim of the petitioner under Article 226 of the Constitution of India.
7. Having heard the learned counsels, this Court is of the opinion that the litigation between the two Government Undertaking and Department is most unfortunate and least desirable, to say the least. If the Union of India has thought it proper to impose service tax by these Notifications referred to above, even on the Government Undertakings or Local Authority, such Organizations cannot claim exemption or immunity from such payment of tax on their own, nor they can refuse to appear before the concerned competent authority and make out their case. On the contrary, the law should have been followed by them without any demur or objection. Such an attitude on the part of the Government Undertakings to take the cause straightaway before the Court of law, without even getting the claim adjudicated by Date of Order 04-09-2017 W.P.No.43900/2016 NMDC Limited Vs. Union of India & Ors..
8/8 the competent authority of the Respondent Department, is indeed unfortunate and deserves to be deprecated. This Court does not find any material on record to hold that the petitioner is not liable to pay Service Tax ex-facie but, on the contrary, the Notifications referred to in the impugned communication prima facie, may enjoin the said liability of Service Tax on the petitioner company.
8. Be that as it may, this Court would not make any observation or give a finding about the exigibility of the Service Tax on the petitioner company on such Royalties paid by the petitioner company to the State of Karnataka, at this stage and would dismiss this petition as premature, leaving it free for the petitioner company to agitate its claim before the respondent Authority in accordance with law.
Petition is accordingly dismissed. No costs.
Sd/-
JUDGE brn