Karnataka High Court
M/S Indian Business Academy vs Commissioner, Service Tax on 30 May, 2018
Author: B.Veerappa
Bench: B.Veerappa
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF MAY 2018
BEFORE
THE HON'BLE MR. JUSTICE B.VEERAPPA
WRIT PETITION No.39387/2016 (T-TAR)
BETWEEN:
1. M/S INDIAN BUSINESS ACADEMY
(PRESENTLY KNOWN AS INDUS BUSINESS ACADEMY)
LAKSHMIPURA, THATTAGUNI POST
KANAKPURA MAIN ROAD
BENGALURU-560062
REPRESENTED BY TRUSTEE
SHRI HANISH JAIN
S/O SHRI B.M.L. JAIN
AGED ABOUT 43 YEARS. .... PETITIONER
(BY SHRI CHIDANANDA URS B G, ADV.)
AND
1. COMMISSIONER, SERVICE TAX
SERVICE TAX-II, 4TH FLOOR
TTMC-BTMC BUS STAND BUILDING
OLD AIRPORT ROAD
DOMLUR, BENGALURU-560071
2. THE DEPUTY COMMISSIONER
ADJUDICATION SERVICE TAX
16/1, S P COMPLEX
LAL BAGH ROAD.
BENGALURU-560027.
3. THE SUPERINTENDENT, ADJUDICATION
SERVICE TAX, 16/1, S P COMPLEX
LAL BAGH ROAD,
2
BENGALURU-560027
4. CENTRAL BOARD OF EXCISE AND CUSTOMS
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
NORTH BLOCK
NEW DELHI ... RESPONDENTS
(BY SHRI K V ARAVIND, ADV.)
THIS WRIT PETITION IS FILED PRAYING TO QUASH
AND SET ASIDE OF ANNEX-A THE IMPUGNED ORDER
NO.02/2016-17 DATED 05.05.2016 ON GROUNDS OF
UNREASONABLE AND UNEXPLAINED DELAY IN
ADJUDICATION LEADING TO JUSTICE GETTING DENIED
AND ISSUE A WRIT OF MANDAMUS, OR A WRIT DIRECTION
OR ORDER IN THE NATURE OF MANDAMUS OR ANY
OTHER APPROPRIATE WRIT DIRECTION OR ORDER UNDER
ARTICLE 226 OF THE CONSTITUTION OF INDIA DIRECTING
THE RESPONDENTS TO FORFEIT WITH LAW AND/OR
CANCEL THE PROCEEEDINGS AGAINST THE PETITIONERS
ETC.,
THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP THIS DAY, THE COURT MADE THE
FOLLOWING:
ORDER
Petitioner filed the present writ petition for Writ of Certiorari to quash the impugned order dated 05.05.2016 made in Order No.2/2016-17, Writ of Mandamus directing the respondent to forfeit or cancel the proceedings against the petitioner and also to declare that the recognised 3 education is not covered under commercial training or coaching service for purpose of charging service tax and to restrain respondent Nos.1 to 3 from charging or recovering any service tax, interest and penalty on the charges recovered towards educational programmes conducted by the petitioner.
2. It is the specific case of the petitioner that on 02.08.2005 he received a letter from respondents demanding for document/accounts for the period from the academic period 2003-04 for the purpose of verification of applicability of commercial training or coaching service and discharge of service tax by the petitioner. On 11.08.2005, petitioner filed the reply explaining that the petitioner is an educational institution and intention of the Government is not to bring education under category of taxable services under commercial training or coaching. Thereafter, on 18.08.2005, 01.09.2005 respondents issued two letters directing the petitioner to appear before the Superintendent, Anti-Evasion in Service Tax on 12.09.2005. On 07.09.2005 and 12.09.2005, petitioner 4 submitted detailed replies and thereafter, on 16.01.2006 petitioner issued a letter stressing on the point that IBA is not a commercial or training coaching center. Subsequently, by a letter dated 25.07.2007 the Superintendent, Anti-Evasion in Service Tax issued a letter. The same was replied by the petitioner and requested to satisfy the leviability of Service Tax in their case so that the matter is finally settled as IBA is not charging any amount of Service Tax from the students. Ultimately, a show cause notice came to be issued on 20.10.2008 to show cause why an amount of Rs.4,10,54,086/- cannot be recovered from the petitioner for the period 01.07.2003 to 31.03.2008 under the provisions of Section 73(1) of the Finance Act, 1994 and other reasons. The same was replied by the petitioner on 07.01.2009 itself. Thereafter, on 28.10.2009 a personal hearing was held before the Commissioner of Service Tax. Thereafter, on 28.01.2016 after a lapse of six years the petitioner was summoned for personal hearing. Petitioner appeared before the Commissioner of Service Tax on 5 10.02.2016 and the Commissioner subsequently passed the impugned order confirming the demand of Service Tax amounting to Rs.4,10,54,086/- Inclusive of education cess for the period from 01.07.2003 to 31.08.2008 on IBA under the proviso to Sections 73(1) and 73(2) of the Finance Act, 1994 and also confirmed the demand of interest at appropriate rate under the provision of Section 75 of the Finance Act on IBA in respect of Service Tax amount demanded and also imposed penalty Rs.10,000/- each under the provisions of 77(1)(a) and 77(2) of the Finance Act 1994. Hence, the present writ petition is filed.
3. I have heard the learned counsel for the parties at lis.
4. Sri. B.G. Chidananda Urs, learned counsel for the petitioner vehemently contended that the impugned order passed by the 1st respondent is in utter violation of the principles of natural justice. The same cannot be sustained. He would further contend that though show- cause notice is issued as long as on 20.10.2008, the impugned order is passed on 05.05.2016, after delay of 8 6 years. In the entire order, 1st respondent has not explained as to why the matter was kept pending for such a long time. He would further contend as on the date of show cause notice issued i.e., 20.10.2008, petitioner was not liable to pay service tax since, he was running an educational institution. In view of the amendment retrospectively issued by The Finance Act of 2010, petitioner was made liable to pay Service Tax. Because of the un-explained delay by the respondent, petitioner is not liable to pay. He would further contend that petitioner is engaged in imparting education of the standards and not in providing commercial training or coaching service which was made liable to Service Tax with effect from 01.07.2003. He would further contend that in the entire impugned order, respondent No.1 has not explained about the delay in adjudicating, which has resulted in injustice to the petitioner. Therefore, he sought to quash the impugned order passed by the respondent.
5. Per contra, Sri. K.V. Aravind, learned counsel for the respondents sought to justify the impugned order. 7 He would further contend that the very writ petition filed by the petitioner is not maintainable as the petitioner has got an alternative remedy by way of statutory appeal under the provisions of Section 86 of the Finance Act. He would further contend that on verification of records, it was found that the petitioner is a business school offering PGDBM programme, a management education programme. The petitioner conducts two years full time programme in management education leading to award of PG diploma in PBDBM, PGPM and PGPRM programmes and he was not registered under the Service Tax for the service of commercial training and coaching and also not discharging Service Tax towards the same. Therefore, he is liable to pay the tax as rightly demanded by issuing show cause notice and passing the impugned order. He would further contend that the notice was issued on 20.10.2008, the case was placed in call book as per the existing CB instructions and on placing the case in call book, subsequently, case was taken out of the call book and taken up for adjudication. 8 Therefore, there is no delay in adjudicating the case. Therefore, he sought to dismiss the writ petition.
6. Having heard the learned counsel for the parties. No doubt the impugned order passed by the respondent is appealable under the provisions of Section 86 of the Finance Act. The fact remains that admittedly, show cause notice was issued on 20.10.2008 and objections was filed by the petitioner to the said show cause notice in the year 2009. Subsequently, the matter was adjudicated on 8.10.2009. The matter was kept for 5 years and thereafter, it was called for hearing on 28.01.2016 and ultimately the impugned order was passed on 05.05.2016. From the date of issue of show cause notice in the year 2008 till the date of impugned order, there is an inordinate delay of 8 years. The same is not explained in the impugned order. Though the same is sought to be justified in the objection statement at paragraph-18, but when the impugned order does not reflect the reasons for the delay, the same cannot be taken into consideration merely because it is mentioned in the objection. What is 9 not stated in the impugned order cannot be substituted by way of statement of objection. Therefore, petitioner cannot be delegated before the appellate forum.
7. It is the specific case of the petitioner that he is running an educational institution and is not liable to pay any Service Tax and it is the specific case of the respondents that he is running professional courses without recognition by any competent authority and it is nothing but commercial coaching and training service. Therefore, petitioner is liable to pay Service Tax. The fact remains that from the date of issue show cause notice and impugned order, there is a gap of 8 years. Same is un- explained and there is no reasons assigned in the impugned order. In view of the inordinate gap between the show cause notice and the impugned order, the Commissioner was not justified in passing the impugned order without providing proper opportunity of personal hearing. It was for the Commissioner of Service Tax to provide reasonable opportunity to the petitioner to put forth all his contentions in reply to the show cause notice 10 and then to have passed orders strictly in accordance with law. The same has not been done in the present case. Therefore, without adverting to the merits and demerits urged by the learned counsels for both parties, in the interest of justice it is suffice to remand the matter to the Principal Commissioner of Service Tax, Bengaluru to provide an opportunity of personal hearing to the petitioner in view of the inordinate delay between show cause notice and the impugned order which is for more than 8 years and then adjudicate the matter and decide on merits. In such an event, petitioner shall not raise again the aspect of delay caused between the show cause notice and the impugned order passed. The Commissioner shall consider the entire material on record, provide an opportunity of hearing to the petitioner and then pass orders strictly in accordance with law.
8. In view of the above, Writ Petition is allowed. The impugned order passed by the Commissioner, Service Tax dated 05.05.2016 made in Order No.2/2016-17 is hereby 11 quashed. Matter is remanded to the to the Principal Commissioner of Service Tax, Bengaluru for fresh adjudication in accordance with law. The Commissioner shall proceed to decide the case within a period of 3 months from the date of receipt of this order. All the contentions of both the parties are kept open except the ground urged in the present writ petition with regard to the delay raised in the show cause notice dated 20.10.2008.
Accordingly, Writ Petition is disposed of.
Sd/-
JUDGE brn