Mithlaj. P vs The Commissioner Of Central Tax & ...
2023 Latest Caselaw 11382 Ker

                IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                   PRESENT
          THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
    WEDNESDAY, THE 8TH DAY OF NOVEMBER 2023 / 17TH KARTHIKA, 1945
                           WP(C) NO. 4079 OF 2023
PETITIONER/S:

             MITHLAJ. P.,AGED 40 YEARS, S/O SAIDALAVI, PORUTHIYIL HOUSE,
             P.O. VALARA, ADIMALI, PIN - 685561

             BY ADVS.
             ANIL SIVARAMAN
             RAJI VINCENT
             SREELEKHA. P
             JOTHISHA K.A.



RESPONDENT/S:

     1       THE COMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE (
             APPEALS ), CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, COCHIN,
             PIN - 682018

     2       ASSISTANT COMMISSIONER
             CENTRAL TAX & CENTRAL EXCISE, IDUKKI DIVISION, K.P.VARKEY'S
             MALL,2ND FLOOR, ROTARY JUNCTION, THODUPUZHA, PIN - 685584

     3       SUPERINTENDENT OF CENTRAL GST & CENTRAL EXCISE
             MUNNAR RANGE, TOP STATION ROAD, MUNNAR, PIN - 685612

             BY ADV P.R.SREEJITH




         THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
08.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 W.P.(C) No.4079/2023
                                    -2-




                        JUDGMENT

The present writ petition under Article 226 of the

Constitution of India has been filed by the petitioner

impugning Exts.P6 and P8 orders passed by the 2nd respondent.

2. The petitioner is engaged in providing services by

way of right to admission to the private spice garden and

services by way of joy rides, such as elephant rides. On the

basis of the information received from a third party, CBDT, it

was noticed that the value of the service provided by the

petitioner, as declared in the Income Tax Returns filed by the

petitioner for the Financial Year 2016-17, was Rs.2,42,62,747/-

The petitioner was, however, not registered under the

provisions of the Finance Act regarding service tax, and the

petitioner did not file the return under the provisions of the

service tax.

2.1 The petitioner was put to notice regarding the data

made available by the CBDT in respect of his income, and the W.P.(C) No.4079/2023

petitioner was directed to submit month-wise details of

services provided by the petitioner for the Financial Years

from 2016-17 to 2017-18 (up to June 2017), including

exemption/ abatement notices availed and month-wise details

of payments received for the services provided by the

petitioner. The petitioner was also directed to furnish the

balance sheet, Profit and Loss Account, and Income Tax

returns along with Annexures and 26AS for the Financial Years

2016-17 and 2017-18. The petitioner, thereafter, was issued a

show cause notice in Ext.P4 dated 12.04.2021 to show cause as

to why the services rendered by the petitioner in respect of

which the petitioner had received consideration from April

2016 to June 2017 should not be classified as 'Other taxable

services - Other than the 119 listed' in terms of Sections 65B(44)

and 65B(51) of Chapter V of the Finance Act 1994 and in turn

why services rendered by the petitioner were not liable to

service tax under Section 66B of the Act read with Section W.P.(C) No.4079/2023

174(2) of CGST Act 2017. The petitioner was also asked to show

cause as to why the service tax, along with Cess amounting to

Rs.36,19,736/-, should not be demanded and recovered from

the petitioner under the provisions of Section 73(1) of Chapter

V of the Finance Act 1994 read with Section 174(2) of the CGST

Act 2017, along with interest, penalty etc.

3. The petitioner filed a reply to the said show cause

notice in Ext.P5. The petitioner took the stand that the

petitioner had disclosed this amount of consideration as

income from business in the Income Tax Returns submitted for

the Financial Years 2016-17 and 2017-18, and due income tax

was paid on such receipts. The petitioner also said that several

persons are carrying out similar activities, but no one is paying

service tax as no one has registered for the payment of service

tax. The Income Tax Department did not reject the income tax

returns submitted by the petitioner, and the tax remitted by

the petitioner, including the amounts earned by way of the W.P.(C) No.4079/2023

sale of tickets for spice garden visits or elephant rides, was

accepted without any demur by the Income Tax Department.

It is said that as the Income Tax Department had accepted

returns and the treatment given to the receipts as business

income, the stand of the Department that the amount received

by the petitioner, which is business income, is liable to be

taxed as service tax, would not hold good. The petitioner also

made other submissions.

4. The reply of the petitioner was considered. The

petitioner was also afforded an opportunity for hearing by the

Assistant Commissioner, the 2nd respondent. Vide impugned

order (Ext.P6), the demand of service tax amounting to

Rs.33,96,785/- together with Swacch Bharat Cess and Krishi

Kalyan Cess totalling Rs.36,19,736/- has been confirmed in

respect of the alleged services rendered by the petitioner from

01.04.2016 to 30.06.2017 under the proviso to Section 73(2) of

the Finance Act 1994 read with Section 174(2) of the CGST Act W.P.(C) No.4079/2023

2017. A penalty of the equal amount was also imposed under

Section 78 of the Finance Act 1994 read with Section 174(2) of

the CGST Act 2017, and a penalty of Rs.10,000/- under the

provisions of Section 77 of the Finance Act 1994 read with

Section 174(2) of the CGST Act 2017 were imposed. It was also

observed that in case the petitioner pays the service tax and

interest within a period of thirty days from the date of receipt

of the order, the penalty payable under Section 78 shall be 25%

of the service tax so determined, instead of 100%.

5. The petitioner did not pay the service tax as

determined by the Ext.P6 order. The petitioner was thereafter

issued notice dated 27.11.2022 in Ext.P7 requesting him to

inform whether the petitioner had filed any appeal against the

order in Ext.P6 and if an appeal has been filed, the copy of the

appeal along with the copy of challans regarding the pre-

deposits shall be submitted before the Superintendent. It was

also said that if the petitioner had not filed any appeal, he W.P.(C) No.4079/2023

should pay the tax as confirmed and the penalty imposed in

Order-in-Original (Ext.P6).

6. The petitioner neither filed an appeal nor paid the

tax and penalty as determined, and therefore, notice under

Section 87(b) of Chapter V of the Finance Act 1994 came to be

issued for freezing the bank account of the petitioner. It was

also said that the total amount outstanding was

Rs.1,05,73,062/-.

7. The petitioner neither made use of the statutory

remedy of appeal within the time prescribed as per Section

85(3A) of the Finance Act 1994 nor did he reply to the notice

issued in Ext.P7 and after the expiry of the maximum period

of appeal of three months, the petitioner approached this

Court by filing this writ petition.

7.1 This Court does not exercise the appellate

jurisdiction against the Order-in-Original. It also cannot be

said that the Order-in-Original is without jurisdiction or that W.P.(C) No.4079/2023

there has been a violation of the principle of natural justice.

Considering the fact that the petitioner failed to exercise the

right of appeal within the limitation period prescribed under

the Statute, this Court is not in a position to extend the

limitation period for filing the appeal.

7.2 Since the order does not appear to be without

jurisdiction, nor has there been a violation of Article 14 of the

Constitution of India inasmuch as the petitioner was issued

show cause notice, he filed a reply, and he was also granted an

opportunity of hearing, I do not find any ground to interfere

with the impugned order and notice in Exts. P6 and P8.

The present writ petition, therefore, fails, which is

hereby dismissed, however, without costs. Interim order, if

any, stands vacated.

Sd/-

DINESH KUMAR SINGH JUDGE jjj W.P.(C) No.4079/2023

APPENDIX OF WP(C) 4079/2023

PETITIONER EXHIBITS

Exhibit P1 A TRUE COPY OF THIS COMMUNICATION NO. O.C.NO.

222/2020 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER DATED 1.06.2020

Exhibit P2 TRUE COPY OF THE LETTER NO. O.C.NO. 250/2020 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER DATED 4.9.2020

Exhibit P3 A TRUE COPY OF THE LETTER ADDRESSED TO THE 3RD RESPONDENT DATED 15.09.2020

Exhibit P4 A TRUE COPY OF THIS SHOW CAUSE NOTICE DATED 12.04.2021 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER

Exhibit P5 TRUE COPY OF THE REPLY SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 28.4.2021

Exhibit P6 TRUE COPY OF THE ORDER NO.38/2022-ST DATED 31.08.2022 ISSUD BY THE 2ND RESPONDENT

Exhibit P7 TRUE COPY OF THE NOTICE ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER DATED 27.11.2022

Exhibit P8 A TRUE COPY OF THE NOTICE NO. IV/ST/30/02/2021-

ST.ADJ DATED 19.01.2023