M/S.K Balakrishnan, Balu Cables vs. Office Of The Assistant Commissioner Of GST And Central Excise

Facts

The petitioner, M/s.K.Balakrishnan, Balu Cables, is challenging an order in original dated 27.09.2022 passed by the Assistant Commissioner of GST & Central Excise, Karur Division. The dispute concerns the levy of Service Tax for the financial years 2016-17 and 2017-18 (up to 30.06.2017) under the Finance Act, 1994. The petitioner, a cable service provider, allegedly failed to respond to a show cause notice which indicated discrepancies between income tax returns and Service Tax (ST-3) returns, suggesting undeclared taxable service value of Rs.23,10,156/-. The petitioner claims exemption from Service Tax registration due to turnover below the threshold, citing notifications No.8/08-ST and No.6/2005-ST.

Held

The Court held that the petitioner may have a case on merits, considering the exemption notification No.8/2008-ST (amending No.6/2005-ST) and the fact that the petitioner is a small entity engaged in cable network connections. The Court did not decide the merits of the exemption claim but allowed the petitioner to file a statutory appeal. The petitioner was permitted to file the statutory appeal before the Appellate Commissioner within 30 days of receiving the order, conditional upon depositing 25% of the disputed amount. This deposit is without prejudice to the petitioner's rights in the appeal. The Appellate Commissioner was directed to endeavour to pass final orders on merits within six months. The issue of latches and maintainability raised by the respondent was implicitly set aside by allowing the appeal to be filed.

Key Issues

1. Whether the petitioner is liable to pay Service Tax for the period 2016-17 and 2017-18 (up to 30.06.2017) given their turnover and the applicability of exemption notifications? Petitioner's arguments: The petitioner contends that their turnover was below the threshold for mandatory Service Tax registration and payment, citing Notification No.8/08-ST amending Notification No.6/2005-ST. They argue that their activities, though constituting service, were exempt. They are willing to deposit 25% of the disputed tax as a condition for entertaining their statutory appeal, even though Section 35(f) of the Central Excise Act, 1944 (made applicable to Service Tax appeals) permits a deposit of 7.5% of the disputed tax. Respondent's arguments: The respondent argues that the Writ Petition should be dismissed due to latches. They also contend that the issue is no longer maintainable, citing Supreme Court decisions in Singh Enterprises Vs. Commissioner of Central Excise, Jamshedpur and Assistant Commissioner (CT) LTU, Kakinada and others vs. Glaxo Smith Kline Consumer Health Care Limited.