Delhi High Court - Orders
Sharp Business Systems India L vs Uoi & Anr on 22 September, 2025
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~9
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 16454/2006
SHARP BUSINESS SYSTEMS INDIA L .....Petitioner
Through: Mr. J.K. Mittal, Ms. Vandana Mittal
and Mr. Mukesh Choudhary, Advs.
versus
UOI & ANR .....Respondents
Through: Mr. Harpreet Singh, SSC with Ms.
Suhani Mathur, Mr. Sanidhya Sharma,
Mr. Akshay Saxena and Ms. Shivali
Saxena, Advs.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE SHAIL JAIN
ORDER
% 22.09.2025
1. This hearing has been done through hybrid mode.
2. The present petition has been filed by the Petitioner under Article 226 of the Constitution of India seeking to quash Circular M.F. (D.R) Letter F. No. 233/2/2003-CX.4, dated 3rd March, 2006 and Notification No. 12/2003 - ST, dated 20th June, 2003.
3. Today, submissions made by Mr. J.K. Mittal, ld. Counsel for the Petitioner and Mr. Harpreet Singh, ld. SSC for the Respondents have been heard.
4. The short question that arises for consideration of the Court is whether under the provisions of the Finance Act, 1994, when any person is providing composite services, service tax is liable to be paid only on the service component or even in respect of material which is consumed or sold while providing the taxable service.
5. This issue has arisen in the context of the Notification No. 12/2003- ST, W.P.(C) 16454/2006 Page 1 of 3 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/09/2025 at 22:09:48 dated 20th June, 2003 wherein exemption is granted on the value of goods and materials sold by the service provider. This was thereafter clarified vide circular dated 3rd March, 2006 in the following manner:
"3. The matter has been examined by the Board The intention of the Notification No. 12/2003-ST, dated 20-6-2003 is to provide exemption only to the value of goods and material sold subject to documentary evidence of such sale being available. Therefore in case, the goods are consumed during the provision of service and are not available for sale, the provision of the said notification would not be applicable. Therefore, in supersession of clarification to contrary, it is clarified that goods consumed during the provision of service, that are not available for sale, by the service provider would not be entitled to benefit under Notification No 12/2003-ST, dated 20-6-2003."
6. The case of the Petitioner herein is that it had received a letter dated 27th March, 2006 from the Office of Commissioner Service Tax, stating as under:
"Parts & consumable when sold as such are not liable to Service Tax but such parts & consumable when provided under a composite maintenance contract service where a lump sum amount is paid towards consumables & service provided, are liable to Service Tax on the entire amount."
7. Thereafter, sometime in 2006, a Show Cause Notice (SCN) appears to have been issued to the Petitioner by the Directorate General of Central Excise Intelligence, though the same is undated. As per this SCN the allegation against the Petitioner is that there was suppression of the value of taxable services and the Petitioner was called upon to pay service tax to the tune of Rs.29,66,980/- along with certain other actions which were proposed. The period for which the SCN relates to, was December, 2003 to March, 2005.
8. Thereafter, the present petition was filed by the Petitioner. Notice was W.P.(C) 16454/2006 Page 2 of 3 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/09/2025 at 22:09:48 issued in this matter initially on 3rd November, 2006, however, no interim order was granted and thereafter on 4th October, 2007 the application for interim application was dismissed.
9. On 11th July, 2019, the matter was directed to be listed in due course and was thereafter listed in the regular board. It was taken up for hearing on 2nd July, 2025 and notice was issued to Respondent No.2- Central Board of Excise& Customs (Presently 'Central Board of Indirect Taxes and Customs).
10. After hearing the ld. Counsel for the parties, there appears to be no clarity as of today as to the status of the SCN and whether any proceedings have in fact been initiated or not. Further, there is also no clarity as to whether after March, 2005, the Petitioner was paying service tax and if so, in what manner.
11. Accordingly, let these facts be ascertained, both by the Petitioner as also by the Respondent No. 2- Department and relevant documents be filed in this regard.
12. If no SCN has been issued, the Department shall also check up and state as to whether and in what manner the Petitioner's services are being taxed for the period thereafter, i.e., after March, 2005.
13. The written submissions filed on behalf Mr. J.K. Mittal, ld. Counsel for the Petitioner are taken on record.
14. List for consideration on 18th November, 2025 as 'Item Number 1' on Board, considering that the petition dates back to the year 2006.
PRATHIBA M. SINGH, J.
SHAIL JAIN, J.
SEPTEMBER 22, 2025/kp/ss W.P.(C) 16454/2006 Page 3 of 3 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 23/09/2025 at 22:09:48