Madras High Court
V.S.Ekambaram vs The Additional Commissioner on 20 October, 2021
W.A. No.1837 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 20.10.2021
CORAM
The Hon'ble Mrs.Justice Pushpa Sathyanarayana
and
The Hon'ble Mr.Justice Krishnan Ramasamy
W.A. No.1837 of 2021
and C.M.P.No.11611 of 2021
1.V.S.Ekambaram
2. V.E.Gayathri ... Appellants
vs
1. The Additional Commissioner, Chennai-III,
Office of the Commissioner of Central Excise,
Chennai-III Commissionerate,
26/1, Mahatma Gandhi Road, Chennai 600 034.
2. The Superintendent (SIR),
Office of the Commissioner of Central Excise,
Survey Intelligence and Research Cell,
Tambaram- II Division,
Plot No.40, Ranga Colony, Rajakilipakkam,
Chennai 600 073. ... Respondents
Prayer: Writ Appeal is filed under Clause 15 of the Letters Patent, praying
to set aside the order passed by the learned single Judge dated 10.02.2021
in W.P.No.26356 of 2014.
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W.A. No.1837 of 2021
For Appellant : K.Ashok Kumar
For Respondents : Ms.R.Hemalatha
Senior Standing Counsel (Customs & Excise)
JUDGMENT
(Delivered by Krishnan Ramasamy, J.,)
This Writ Appeal has been directed against the order of the learned
single Judge passed in W.P.No.26356 of 2014 dated 10.02.2021.
2. The above Writ Petition was filed, challenging the impugned show
cause notice No.27/2014 (ST) bearing C.No.V/15/RIS/33/2014-ADC-
C.Ex.-Adj.-III dated 21.08.2014 issued by the 1st respondent herein, quash
the same and direct the 1st respondent to redo the adjudication in
accordance with law after completion of investigation by the 2nd
respondent.
3. The Writ Court, on 10.02.2021 after hearing both the parties,
passed the following order:
"2. It is a case of the petitioner that the petitioner was
under a bona fide belief that he was not liable to pay service
tax for renting of immovable property and that while the
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W.A. No.1837 of 2021
matter was pending before the second respondent, the first
respondent issued the impugned show cause notice thereby
denying the benefit of waiver from payment of Parenti
under section 73 (3) of the Finance Act,1994.
3. Though no counter has been filed, I am of the view
that this writ petition is liable to be dismissed. The
petitioner has been issued with the impugned show cause
notice only. It is for the petitioner to file reply to the same
and participate in the adjudication process under the
Finance Act,1994.
4. Therefore, I am refraining from making any
observations on the merits on the case of the petitioner. It is
open for the petitioner to make appropriate submission
before the respondent in the said show cause proceeding.
5.Petitioner is therefore directed to file a reply to the
impugned show cause notice within a period of 30 days
from date of receipt of this order. The 1st respondent shall
pass appropriate order on merits within a period of three
months from receipt of this order.
6.Before passing such order, petitioner shall be heard
either in person or through his representative physically or
through video conference. This Writ petition stands
disposed with the above observations. No cost.
Consequently, miscellaneous petition is closed."
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W.A. No.1837 of 2021
4. Aggrieved over the said order, the present Writ Appeal has been
preferred by the writ petitioners, contending that they are not liable to pay
any service tax on rental income in respect of an immovable property. It is
further contended that the investigation has not been completed and even
before completion of investigation, the 1st respondent has quantified the
amount payable towards service tax. Therefore, they prayed to interfere
with the impugned show cause notice and direct the 1st respondent to redo
the adjudication in accordance with law.
5. By the impugned show cause notice, dated 21.08.2014, the 1st
respondent directed the writ petitioners to show cause as to why:
"(i) an amount of Rs.18,57,144 (Rupees Eighteen
lakhs fifty seven thousand one hundred and forty four
only) (S.Tax + Edn. Cess +SHE Cess) being the service
tax liability cast upon them on the rent collected from
their tenants during the period from April 2009 to
December 2013 as mentioned in the earlier paragraphs,
should not be demanded under Proviso to Section 73(1)
of the Finance Act, 1994;
(ii) the amount of Rs.83,797/- being the service tax
amount paid by them through various challans as
mentioned in the above para, should not be appropriated
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W.A. No.1837 of 2021
against the total service tax liability mentioned at (i)
above.
(iii) an interest amount, at the appropriate rate,
should not be demanded on the Service Tax, Education
Cess and Secondary Higher Education Cess liability as
mentioned in (i) above, under Section 75 of the Finance
Act 1994;
(iv) a Penalty should not be imposed on them
under Section 76, 77 and 78 of the Finance Act, 1994 for
the contraventions mentioned supra."
6. The learned Senior standing counsel appearing for the respondents
contended that the appellants have not raised any jurisdictional issue with
regard to the issuance of the impugned show cause notice and since the
show cause notice was not challenged on the basis of jurisdiction, normally
the Writ Court will not interfere with the said proceedings. Therefore, he
prayed for the dismissal of the Writ Petition.
7. Heard the learned counsel appearing for both parties and perused
the entire materials available on record as well as the order of the learned
single Judge.
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W.A. No.1837 of 2021
8. Since the Writ Petition was filed challenging the impugned show
cause notice, the Writ Court does not want to interfere with the same and
directed the writ petitioners to file a reply within a period of 30 days from
the date of receipt of a copy of the order. We also do not find any infirmity
in the said order. We are also of the same view that no interference is
required at the stage of show cause notice.
9. The appellants raised a point that the demand was quantified even
when the investigation was in process. It is not for the appellants to contend
that the investigation was not completed before the issuance of the show
cause notice. In fact, there are sufficient materials available to issue the
show cause notice even before the completion of investigation and hence,
the 1st respondent has rightly issued the impugned show cause notice.
Therefore, the contention raised by the appellants that the impugned show
cause notice is liable to be quashed since it has been issued without
completion of the investigation, has no substance.
10. Therefore, we are not inclined to interfere with the order of the
learned single Judge and the same is hereby confirmed.
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W.A. No.1837 of 2021
11. Accordingly, the Writ Appeal fails and it is dismissed. The
appellants are at liberty to file a reply within a period of 30 days from the
receipt of receipt of a copy of this order. On receipt of the reply, the 1st
respondent is directed to pass appropriate order on merits and in accordance
with law, within a period of three months thereafter. The petitioner shall be
heard either in person or through his representative physically or through
video conference. No costs. Consequently, connected Miscellaneous
Petition is closed.
[P.S.N., J.] [K.R., J.]
20.10.2021
Index : Yes/No
suk/jd
Speaking order/Non-speaking order
To
1. Customs Central Excise and Service Tax
Settlement Commission,
Additional Bench, II Floor, Narmada Block,
Custom House, No.60, Rajaji Salai,
Chennai 600 001.
2. The Commissioner of Service Tax,
Service Tax III Commissionerate,
Newry Towers, Plot No.2054,
12th Main Road, II Avenue, Anna Nagar,
Chennai 600 035.
https://www.mhc.tn.gov.in/judis/
W.A. No.1837 of 2021
Pushpa Sathyanarayana,J.,
&
Krishnan Ramasamy,J.,
suk/jd
W.A. No.1837 of 2021
20.10.2021
https://www.mhc.tn.gov.in/judis/
