M/S. G Tech Services vs. Deputy Commissioner Of GST And Central Excise

Held

The Court, considering the submissions of both parties and their agreement, decided to remit the matter back to the respondent authority. The Court granted the petitioner one final opportunity to demonstrate that the levy of tax on the differential amount between the income tax return and the service tax return does not relate to services rendered. Consequently, the impugned order dated 28.02.2022 was set aside. The petitioner was directed to deposit 25% of the disputed tax within four weeks of receiving the order. Upon compliance, the impugned order of assessment would be treated as a show cause notice, and the petitioner would need to submit objections with supporting documents within six weeks. The respondent would then consider these objections and pass orders after affording a reasonable opportunity of hearing. The Court also ordered the respondent to lift the bank attachment forthwith upon payment of the 25% disputed tax. The Court noted that if the deposit or objections were not filed within the stipulated periods, the impugned order of assessment would stand revived.

Facts

The petitioner, M/s.G.Tech Services, filed a writ petition challenging an order in original dated 28.02.2022, passed by the Deputy Commissioner of GST & Central Excise, Trichy I Division. The impugned order levied service tax on the difference between the gross value of services declared in the petitioner's income tax returns and its service tax returns for the financial years 2015-2016 and 2016-2017, amounting to Rs.86,45,341/- and Rs.1,13,71,640/- respectively. The petitioner contended that income tax returns cannot be the sole basis for service tax levy and that it was not served with subsequent notices after the first one dated 25.01.2021, preventing it from presenting its case. The respondent argued that the writ petition was filed beyond the statutory limitation for appeal and that the issue of valid service is a question of fact.

Key Issues

1. Whether the respondent authority acted arbitrarily and without jurisdiction in levying service tax based on the difference between income tax returns and service tax returns for the financial years 2015-2016 and 2016-2017, and whether the burden lies on the respondent to prove that the consideration relates to taxable services rendered? (Question of law and fact, concerning the basis of assessment). Petitioner's Arguments: - Income tax returns cannot be the basis for levying service tax. - The burden is on the respondent to demonstrate that the consideration pertains to taxable services rendered. - The petitioner was not served with subsequent notices after the initial notice dated 25.01.2021, thus being deprived of an opportunity to present its case. Respondent's Arguments: - The writ petition was filed beyond the statutory period of limitation for filing an appeal. - The question of whether there was a valid service rendered is essentially a question of fact. - The respondent suggested the petitioner could be put on terms and the issue reconsidered.