Gujarat High Court
Z R Enterprise vs State Of Gujarat on 4 April, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/21738/2023 ORDER DATED: 04/04/2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 21738 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 21950 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 803 of 2024
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Z R ENTERPRISE
Versus
STATE OF GUJARAT
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Appearance:
MR RUTVIJ M BHATT(2697) for the Petitioner(s) No. 1
ADVANCE COPY SERVED TO GOVERNMENT PLEADER/PP for the
Respondent(s) No. 1
MR CB GUPTA(1685) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE NIRAL R. MEHTA
Date : 04/04/2024
COMMON ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Learned advocate Mr.Rutvij Bhatt for the petitioner has tendered draft amendment. The same is allowed in terms of the draft. To be carried out forthwith.
2. Since the issue involved in all the three petitions is common, they have been heard together and would be disposed of by this common order. For the sake of convenience, facts are recorded from Special Civil Application No.21738 of 2023.
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3. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has challenged the order passed by the appellate authority dismissing the appeal of the petitioner on the ground of limitation.
4. The brief facts of the case are as under.
4.1 The petitioner was running business of goods transport agency with Mahindra Logistics Pvt. Ltd. as per the agreement executed on 02nd January, 2017 in transportation of hiring buses. The petitioner has also entered into similar agreement with DTDC for transportation and hiring buses. The petitioner was hiring vehicles and was providing such vehicles to above parties.
4.2 It is the case of the petitioner that petitioner is exempted from payment of service tax as per the amended list of categories of transport goods vehicles. The petitioner, therefore, raised invoices accordingly.
4.3 The petitioner has filed return of income for F.Y. 2015-16 and 2016-17 as per the income generated from the operations of hiring vehicles and supplying the same for transportation to above parties.
Page 2 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024NEUTRAL CITATION C/SCA/21738/2023 ORDER DATED: 04/04/2024 undefined 4.4 It is the case of the petitioner that respondent authorities issued show-cause notice dated 21st July, 2020 upon the petitioner for not filing service tax returns in Form ST-3 for the period 2015-16 and 2016-17 though the petitioner was liable to discharge the service tax liability. Prior to issuance of show-cause notice, respondent also issued letters dated 07th May, 2020 and 20th May, 2020 to provide details of services provided during the aforesaid period.
4.5 According to the respondent, the petitioner was engaged in business activity of courier agent service and registered with effect from 03rd February, 2016 with Service Tax Registration No.AABFZ0090QSD001.
4.6 From the details provided by the income tax department of various noticee from the income tax returns and Form 26AS (TDS) for F.Y. 2015-16 and 2016-17, inquiry was made by the respondent by issuing aforesaid letters and show-cause notice.
4.7 It is the case of the petitioner that petitioner could not reply to either of the letters or show-cause notice due to COVID-19 pandemic situation prevailing at the relevant point of time. Moreover, it is also the Page 3 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024 NEUTRAL CITATION C/SCA/21738/2023 ORDER DATED: 04/04/2024 undefined contention of the petitioner that he was having diabetes and premorbid condition and could not reply to the show-cause notice issued by the respondent.
4.8 The petitioner has also contended that he was affected during the second wave of COVID- 19 and had to undergo treatment since February, 2021 and was advised not to leave his residence. Thereafter, the petitioner was seriously infected in the month of April, 2021 and due to COVID-19, had to undergo operation of eye due to mukormycosis infection and was advised to stay at home. The petitioner was also advised not to travel for more than one hour and hence, it was contended that he could not reply to the notice in time. However, the petitioner did approach the respondent under such strenuous condition and apprised the respondent with the fact of the medical treatment being taken by the petitioner.
4.9 The respondent, however, passed an ex parte order-in-original on 31st March, 2022 issued on 13th April, 2022 confirming the service tax demand of Rs.33,23,826/- with interest and equivalent penalty under Section 78 of the Finance Act, 1994 and further penalty of Rs.10,000/- under Section 77(2) of the Finance Act.
Page 4 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024NEUTRAL CITATION C/SCA/21738/2023 ORDER DATED: 04/04/2024 undefined 4.10 According to the petitioner, the order- in-original was passed without considering the reply filed by the petitioner to the show-cause notice dated 21st July, 2020. The petitioner had filed reply on 22nd April, 2022 stating that petitioner is exempted as per the exempt list issued under the provisions of the Finance Act. The petitioner also relied on the Notification dated 20th June, 2012. In the list of exempted services, as per clause 22 - services by way of giving on hire, clause (b) provides that goods transport agency is in exempted category. The petitioner by reply dated 23nd March, 2022 requested the respondent to look into the facts of the case and and additional reply was filed on 31st March, 2022. However, according to the petitioner, without considering the same, respondent has passed the impugned order dated 13th April, 2022.
4.11 Being aggrieved by the aforesaid order and action on part of the respondent authorities, petitioner approaches this Court by filing the present petition.
5. Learned advocate for the petitioner Mr.Bhatt submitted that the respondent authority had no jurisdiction to issue the show-cause notice Page 5 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024 NEUTRAL CITATION C/SCA/21738/2023 ORDER DATED: 04/04/2024 undefined under the provisions of the Finance Act, 1994 for levy of service tax as the cause of issuance of such show-cause notice is on the basis of the information retrieved from the Income Tax Department for the year 2016-17 and 2017-18 and Form 26AS (TDS). It was submitted that the respondent Department without verifying the details obtained from the Income Tax Department has assumed that there was a sales of services attracting service tax at the rate of 14.5% for the year 2015-16 and at the rate of 15% for the year 2016-17.
5.1 Learned advocate Mr.Bhatt further submitted that the petitioner could not reply to the letters dated 07th May, 2020, 20th May, 2020 and 02nd July, 2020 as there was peak COVID-19 pandemic period and the petitioner was also suffering from various ailments, for which the medical papers are placed on record.
5.2 It was submitted that even otherwise, the respondent authority has no jurisdiction to issue show-cause notice and ultimately the Order- in-Original could not have been passed by the respondent authority. It was also submitted that no notice was received by the petitioner which is very apparent from the facts of the case on record. It was, therefore, submitted that the Page 6 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024 NEUTRAL CITATION C/SCA/21738/2023 ORDER DATED: 04/04/2024 undefined appellate authority, without going into the merits that the appellate authority could have entertained the appeal on the ground of limitation or not, the impugned show-cause notice which is without jurisdiction the same may be quashed and set aside and consequently all the further proceedings could also not be in existence.
6. On the other hand, learned advocate Mr.C.B. Gupta for the respondent submitted that the petitioner has remained negligent for replying the show-cause notice and therefore, an ex parte order was passed by the respondent authority. It was submitted that the petitioner has also not filed appeal within the period of limitation and therefore, this Court should not interfere by condoning the delay which the appellate authority could not have condoned. Reliance was placed on the decision of the Apex Court in the case of Assistant Commissioner (CT) LTU, Kakinada v. Glaxo Smith Kline Consumer Health Care Limited [AIR 2020 SC 2819].
6.1 Relying on the aforesaid decision, it was submitted that all the petitions are required to be dismissed as the petitioner has failed to approach the appellate authority within the period of limitation.
Page 7 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024NEUTRAL CITATION C/SCA/21738/2023 ORDER DATED: 04/04/2024 undefined 6.2 With regard to assumption of jurisdiction for issuance of show-cause notice issued by the respondent authority, it was submitted that the respondent has issued the show-cause notice taking into consideration the nature of business of the petitioner being registered courier agent and on the basis of the information obtained from the Income Tax Department more particularly Form 26AS (TDS) showing that the TDS was deducted on the services rendered by the petitioner and accordingly, the show-cause notice was issued.
6.3 It was further submitted that the petitioner has remained negligent in not responding to various letters written by the respondent authority prior to issuance of the show-cause notice and as such the respondent had no option but to issue show-cause notice on the ground of suppression invoking the Proviso to Section 73(1) of the Finance Act, 1994 by extended limitation for five years. It was submitted that petitioner has also not filed any reply to the show-cause notice and therefore, an ex parte order was passed by the respondent authority. It was, therefore, submitted that the petitions being devoid of any merits, it may be dismissed.
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7. Having considered the submissions made by learned advocates for the respective parties and taking into consideration facts of the case as well as material on record, it is not in dispute that the show-cause notice is issued on the basis of the information obtained from the Income Tax Department with regard to returns filed by the petitioner as well as Form No.26AS (TDS), which reflects the amount of TDS deducted by the recipient for commission under Section 194 of the Income Tax Act, 1961.
7.1 On perusal of the facts and the documentary evidence placed on record, it is apparent that the notice issued by the respondent authority was not received by the petitioner and therefore, the petitioner could not file reply.
7.2 It is true that this Court cannot condone the delay which the appellate authority could not have condoned in view of the decision of the Apex Court in case of Glaxo Smith Kline Consumer Health Care Limited (supra). However when the show-cause notice issued by the respondent is without jurisdiction and the same is challenged before this Court, this Court while exercising jurisdiction under Article 226 of the Constitution of India, would examine as to whether the respondent authority had jurisdiction Page 9 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024 NEUTRAL CITATION C/SCA/21738/2023 ORDER DATED: 04/04/2024 undefined to issue such show-cause notice or not. On perusal of the show-cause notice, it is apparent that the show-cause notice only refers to the details provided by the Income Tax Department of various assessees for the I.T. Returns for the F.Y. 2015- 16 and 2016-17 and details in Form No.26AS (TDS) and only on that basis, without making any further inquiry by the respondent, the show-cause notice was issued making the petitioner liable to pay the service tax on the assumption that that there was sales of services on the basis of the Income Tax Returns filed by the petitioner without verifying that what type of services is provided by the petitioner. It is also apparent from the record that the respondent authority has not done any inquiry or informed the petitioner about the show-cause notice after the show-cause notice was issued during COVID-19 pandemic situation.
8. In view of the above facts, it is clear that the show-cause notice issued by the respondent is contrary to the provisions of the Finance Act, 1994 without disclosing the facts as to what type of services is rendered by the petitioner for which the service tax was leviable. As it appears from the facts of the case, the petitioner was rendering GTA services, Page 10 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024 NEUTRAL CITATION C/SCA/21738/2023 ORDER DATED: 04/04/2024 undefined for which the petitioner was not liable to pay the service tax on the basis of reverse charge mechanism. The entire basis of the show-cause notice is frustrated. The respondent authority assumed the jurisdiction without there being any basis for issuing the show-cause notice as the show-cause notice could not have been issued only on the basis of the information retrieved from the Income Tax Department in Form 26AS (TDS).
9. In such circumstances, we are of the opinion that the show-cause notice is liable to be quashed and set aside and all the consequential proceedings are accordingly quashed and set aside. All the three petitions are allowed. No orders as to costs.
(BHARGAV D. KARIA, J) (NIRAL R. MEHTA,J) ANUP Page 11 of 11 Downloaded on : Fri Apr 26 20:45:33 IST 2024