Punjab-Haryana High Court
State Of Punjab vs Union Of India And Others on 12 December, 2023
Author: G.S.Sandhawalia
Bench: G.S.Sandhawalia
Neutral Citation No:=2023:PHHC:158787-DB
CWP-19211-2023 1 2023:PHHC:158787-DB
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
109 2023:PHHC:158787-DB
CWP-19211-2023
Date of Decision: 12.12.2023
State of Punjab .....Appellant(s)
Versus
Union of India and others ...Respondent(s)
CORAM: HON'BLE MR. JUSTICE G.S.SANDHAWALIA
HON'BLE MS. JUSTICE LAPITA BANERJI
Present: Mr. Sandeep Goyal, Advocate,
and Mr. Rishab Singla, Advocate,
for the petitioner.
Mr. Sourabh Goel, Sr. Standing Counsel,
and Ms. Geetika Sharma, Advocate,
for the respondents.
G.S.SANDHAWALIA, J. (Oral)
1. Challenge herein in the present writ petition filed under Articles
226 and 227 of the Constitution of India is to the order dated 31.10.2022
(Annexure P-9) whereby, the authorities have imposed service tax of
Rs.4,82,14,665/- alongwith interest against the Department of Health and
Family Welfare, Government of Punjab while invoking the provisions of the
extended period under Section 75 of the Finance Act, 1994 read with Section
174(2) of the Central Goods Service Tax Act, 2017 (in short 'the CGST Act').
The demand of service tax for amount of Rs.68,77,616/- was vacated in view
of the discussion taken in Para No.4.14 on account of tax benefits. Penalty
has also been imposed of the similar amount plus an additional amount of
penalty of Rs.10,000/- under Section 77 of the Finance Act read with Section
174(2) of the CGST Act. The said order was passed in pursuance of the
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notice dated 21.09.2020 (Annexure P-7).
2. The issue in question was of the running of two hospitals on
the land given by the petitioner to MAX Super Speciality Hospital at
Mohali and at Bathinda. The notice was based on the ground that 5% of the
revenue was being received under the fixed cost of the hospitals on account
of the concessionaire agreements which are stated to be dated 05.08.2009
(Annexures P-1 and P-2). In pursuance of the show cause notice, the
petitioners had filed detailed reply dated 24.12.2020 (Annexure P-8) which
was duly considered by the Authorities while passing the order. The
authorities came to the conclusion that 5% of the gross revenue was being
received as concessionaire fees for running the operations of the hospital and
only the revenue generated from the hospital was being shared
by the authorities and no losses/expenses/liabilities were being shared by the
parties. All the revenue generated by the hospital was being deposited
promptly in the Escrow Account on daily basis during the operations period
upto the end of concession agreement and was being transferred to the
Government. In such circumstances, the finding has been recorded by
respondent No.4 that it was an arrangement of a lease of land apart from the
symbolic Rs.1 per year which was being received as per the agreement and
thus, it would amount to renting of immovable property to M/s. Hometrail
Buildtech Pvt. Ltd. and M/s. Max Healthcare Institute Ltd. Resultantly, it
was held that it was a declared service under Section 66(E)(a) and the liability
for service tax at the hands of the Government was assessed rejecting the
stand taken by the petitioner.
3. Mr. Sandeep Goyal, counsel appearing for the petitioner has
vehemently argued that there was no question as such of concealment, fraud
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or misrepresentation and the demand raised is beyond limitation since the
amount claimed is prior to 30.06.2017. The plea taken by the respondents in
their reply that there is an alternate remedy provided under Section 86 of the
Finance Act would not be tenable and this Court should go into the merits
of the case.
4. As noticed, as per reply having been filed, apparently due
opportunity was given and, therefore, there was no violation of principles of
natural justice. The vires of the Statute or any Legislation is not a subject
matter of challenge or any breach of fundamental rights. The only issue is of
jurisdiction which the petitioners allege against the respondents. The Apex
Court in M/s. Radhe Krishan Industries vs. State of Himachal Pradesh,
2021 AIR SC 2114 laid down the principles as under:-
"27. The principles of law which emerge are
that :
(i) The power under Article 226 of the
Constitution to issue writs can be exercised not only for
the enforcement of fundamental rights, but for any other
purpose as well;
(ii) The High Court has the discretion not to
entertain a writ petition. One of the restrictions placed
on the power of the High Court is where an effective
alternate remedy is available to the aggrieved person;
(iii) Exceptions to the rule of alternate remedy
arise where (a) the writ petition has been filed for the
enforcement of a fundamental right protected by Part
III of the Constitution; (b) there has been a violation of
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the principles of natural justice; (c) the order or
proceedings are wholly without jurisdiction; or (d) the
vires of a legislation is challenged;
(iv) An alternate remedy by itself does not divest
the High Court of its powers under Article 226 of the
Constitution in an appropriate case though ordinarily,
a writ petition should not be entertained when an
efficacious alternate remedy is provided by law;
(v) When a right is created by a statute, which
itself prescribes the remedy or procedure for enforcing
the right or liability, resort must be had to that
particular statutory remedy before invoking the
discretionary remedy under Article 226 of the
Constitution. This rule of exhaustion of statutory
remedies is a rule of policy, convenience and
discretion; and
(vi) In cases where there are disputed questions
of fact, the High Court may decide to decline
jurisdiction in a writ petition. However, if the High
Court is objectively of the view that the nature of the
controversy requires the exercise of its writ jurisdiction,
such a view would not readily be interfered with."
5. Section 86 of the Finance Act reads thus:-
SECTION 86.Appeals to Appellate Tribunal. --
(1) Save as otherwise provided herein an assessee
aggrieved by an order passed by a Principal
Commissioner of Central Excise or Commissioner of
Central Excise under section 73 or section 83A by a
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Commissioner of Central Excise (Appeals) under
section 85, may appeal to the Appellate Tribunal
against such order within three months of the date of
receipt of the order.
Provided that where an order, relating to a
service which is exported, has been passed under
section 85 and the matter relates to grant of rebate of
service tax on input services, or rebate of duty paid on
inputs, used in providing such service, such order shall
be dealt with in accordance with the provisions of
section 35EE of the Central Excise Act, 1944 (1 of
1944):
Provided further that all appeals filed before the
Appellate Tribunal in respect of matters covered under
the first proviso, after the coming into force of the
Finance Act, 2012 (23 of 2012), and pending before it
up to the date on which the Finance Bill, 2015 receives
the assent of the President, shall be transferred and
dealt with in accordance with the provisions of section
35EE of the Central Excise Act, 1944 (1 of 1944)."
(1A) (i) The Board may, by order, constitute such
Committees as may be necessary for the purposes of this
Chapter.
(ii) Every Committee constituted under clause (i) shall
consist of two Principal Chief Commissioners of Central
Excise and Chief Commissioners of Central Excise or
two Principal Commissioners of Central Excise or
Commissioners of Central Excise] as the case may be.
(2) The Committee of Principal Chief
Commissioners of Central Excise or Chief
Commissioners of Central Excise] may, if it objects to
any order passed by the Principal Commissioner of
Central Excise or Commissioner of Central Excise
under section 73 or section 83A [***],direct the
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[Principal Commissioner of Central Excise or
Commissioner of Central Excise] to appeal to the
Appellate Tribunal against the order :
Provided that where the Committee of Principal
Chief Commissioners of Central Excise and Chief
Commissioners of Central Excise differs in its opinion
against the order of the Principal Commissioner of
Central Excise or Commissioner of Central Excise], it
shall state the point or points on which it differs and
make a reference to the Board which shall, after
considering the facts of the order, if is of the opinion
that the order passed by the Principal Commissioner of
Central Excise or Commissioner of Central Excise is not
legal or proper, direct the Principal Commissioner of
Central Excise or Commissioner of Central Excise]to
appeal to the Appellate Tribunal against the order.
(2A) The Committee of Commissioners may, if it
objects to any order passed by the Commissioner of
Central Excise (Appeals) under section 85, direct any
Central Excise Officer to appeal on its behalf to the
Appellate Tribunal against the order :
Provided that where the Committee of
Commissioners differs in its opinion against the order of
the Commissioner of Central Excise (Appeals), it shall
state the point or points on which it differs and make a
reference to the jurisdictional [ Principal Chief
Commissioners of Central Excise or Chief
Commissioner] who shall, after considering the facts of
the order, if is of the opinion that the order passed by
the Commissioner of Central Excise (Appeals) is not
legal or proper, direct any Central Excise Officer to
appeal to the Appellate Tribunal against the order.
Explanation. -- For the purposes of this sub-
section, "jurisdictional Principal Chief Commissioners
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or Chief Commissioner" means the Principal Chief
Commissioners or Chief Commissioner having
jurisdiction over the concerned adjudicating authority
in the matter.
(3) Every appeal under sub-section (2) or sub-
section (2A) shall be filed within four months from the
date on which the order sought to be appealed against is
received by the Committee of Principal Chief
Commissioners or Chief Commissioners or, as the case
may be, the Committee of Commissioners.
(4) The Principal Commissioner of Central Excise
or Commissioner of Central Excise or any Central
Excise Officer subordinate to him or the assessee, as the
case may be, on receipt of a notice that an appeal
against the order of the Principal Commissioner of
Central Excise or Commissioner of Central Excise or
the Commissioner of Central Excise (Appeals) has been
preferred under sub-section (1) or sub-section (2) or
sub-section (2A)] by the other party may,
notwithstanding that he may not have appealed against
such order or any part thereof, within forty-five days of
the receipt of the notice, file a memorandum of cross-
objections, verified in the prescribed manner, against
any part of the order of the Principal Commissioner of
Central Excise or Commissioner of Central Excise or
the Commissioner of Central Excise (Appeals), and such
memorandum shall be disposed of by the Appellate
Tribunal as if it were an appeal presented within the
time specified in sub-section (3).
(5) The Appellate Tribunal may admit an appeal
or permit the filing of a memorandum of cross-
objections after the expiry of the relevant period
referred to in sub-section (1) or sub- section (3) or sub-
section (4) if it is satisfied that there was sufficient cause
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for not presenting it within that period.
(6) An appeal to the Appellate Tribunal shall be
in the prescribed form and shall be verified in the
prescribed manner and shall, irrespective of the date of
demand of service tax and interest or of levy of penalty
in relation to which the appeal is made, be accompanied
by a fee of,--
(a) where the amount of service tax and interest
demanded and penalty levied by any Central Excise
Officer in the case to which the appeal relates is five
lakh rupees or less, one thousand rupees;
(b) where the amount of service tax and interest
demanded and penalty levied by any Central Excise
Officer in the case to which the appeal relates is more
than five lakh rupees but not exceeding fifty lakh rupees,
five thousand rupees;
(c) where the amount of service tax and interest
demanded and penalty levied by any Central Excise
Officer in the case to which the appeal relates is more
than fifty lakh rupees, ten thousand rupees :
Provided that no fee shall be payable in the case
of an appeal referred to in sub-section (2) or sub-
section (2A) or a memorandum of cross-objections
referred to in sub-section (4).
(6A) Every application made before the Appellate
Tribunal,--
(a) in an appeal **** for rectification of mistake or for
any other purpose; or
(b) for restoration of an appeal or an application, shall
be accompanied by a fee of five hundred rupees :
Provided that no such fee shall be payable in the
case of an application filed by the Principal
Commissioner of Central Excise or Commissioner of
Central Excise or Assistant Commissioner of Central
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Excise or Deputy Commissioner of Central Excise, as
the case may be under this sub-section.
(7) Subject to the provisions of this Chapter, in
hearing the appeals and making orders under this
section, the Appellate Tribunal shall exercise the same
powers and follow the same procedure as it exercises
and follows in hearing the appeals and making orders
under the [Central Excise Act, 1944] (1 of 1944)."
6. We are of the considered opinion that in view of a three-Judge
Bench judgment in The Assistant Commissioner of State Tax and others vs.
Commercial Steels Ltd., 2021 (9) TMI 480-SC which was also arising out of
the proceedings of a similar Statute, the Apex Court had come to the
conclusion that the order of detention and notice as such which was issued
was not liable to be challenged by the petitioner under Article 226 of the
Constitution of India and the order of the High Court had been set aside. In
similar circumstances, in The State of Punjab vs. M/s. Shiv Enterprises and
others, 2023 (96) GST 120, similar view has been taken wherein the Division
Bench of this Court had interfered in a show cause notice issued and had
passed detention order. The Apex Court set aside the order of the Division
Bench by holding that once there is a statutory remedy provided under the
Act, the High Courts are not supposed to interfere. We are also of the
considered opinion that no such hardship will be caused to the State of Punjab
if an appeal is to be filed under Section 86 of the Finance Act.
7. Keeping in view the above, we are of the considered opinion that
it is a matter of how the agreement is to be construed as such and whether the
State was contributing in any manner in the running of the hospital. This is a
matter of fact which has to be analyzed by the statutory authorities in appeal
and to be summerized. The right of the petitioner thereafter to challenge
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the order in case the same is decided against it would always be available.
The issue of extended period of limitation whether it has been rightly invoked
or not, is a matter which the Appellate Authority can go into and since the
impugned order records the fact that the consideration was being received at
5% of the gross revenue and as per the provisions of the concessionaire
agreement. Apparently from the show cause notice, it would be clear that it
was only when the revenue had started investigation against Max Super
Speciality Hospital, Mohali regarding non-payment of service tax, it had
come to their notice about the arrangement which has been made with the
petitioner and thereafter the proceedings had been initiated and, therefore, the
issue of jurisdiction is also based on a factual matrix.
8. In such circumstances, it would also be a matter of fact which
would be within the jurisdiction of the Appellate Authority as to whether the
notices as such issued were within the prescribed period and whether the
action of the Revenue in extending the period of limitation is justified or not
in the facts and circumstances. Therefore, we feel that it is not a fit case for
exercise of our extra ordinary writ jurisdiction. The judgment rendered by
the Apex Court in Godrej Sara Lee Ltd. vs. Excise and Taxation Officer-
cum-Assessing Authority and others, 2023 SCC Online 95, upon which
reliance has been placed by counsel for the petitioner, would be of no help
since it was a case of exercise of revisional jurisdiction by the authorities.
Similarly in Union of India and another vs. State of Haryana and another,
(2000) 10 SCC 482, a finding was recorded by the Apex Court that the issue
raised was prestinely legal which required determination as to whether
provision of telephone connections and instruments amounted to sale and
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even if so was the Union of India exempted from payment of sales tax under
the respective Statutes. No such issue as such arises in the present case
and, therefore, we do not feel that the said judgment is applicable in the facts
and circumstances of the present case.
9. Accordingly, the writ petition is disposed of and the petitioners
are relegated to the remedy of appeal. Needless to say that since the
petitioners had approached this Court on 29.08.2023, if the appeal is filed
within a period of 4 weeks from today, the Tribunal shall proceed to decide
the same on merits.
(G.S. SANDHAWALIA)
JUDGE
12.12.2023 (LAPITA BANERJI)
shivani JUDGE
Whether reasoned/speaking Yes
Whether reportable Yes
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