M/S Skill Tech Engineers vs. Commissioner Of Central Taxes

Held

The Court disposed of the writ petition by granting liberty and direction to the petitioner to appear before the concerned authority and present their case in response to the show cause notice dated July 12, 2017. The petitioner was also directed to cite relevant judgments before the authority. The Court expected the authority to consider the cited judgments and pass an appropriate speaking order within six months from the date of the order. The Court noted that while the Delhi High Court's judgment was reportedly upheld by the Supreme Court, the specific judgment and its date were not available for perusal. Therefore, the Court did not quash the show cause notice directly but directed the petitioner to pursue the matter at the original authority level, relying on the existing legal precedents.

Facts

The petitioner, M/s Skill Tech Engineers & Contractors Pvt Ltd., filed a writ petition challenging a show cause notice dated July 12, 2017, issued by the Commissioner of Central Taxes. The notice was based on Rule 5 of the Service Tax (Determination of Value) Rules, 2006. The petitioner argued that this rule had been struck down by the Delhi High Court in the case of Intercontinental Consultants and Technorats Pvt. Ltd. vs. U.O.I. & Anr. and that a previous writ petition filed by the petitioner concerning the same issue for earlier periods had resulted in an interim order. Despite these pronouncements, the respondent issued the impugned show cause notice for the period 2015-16.

Key Issues

1. Whether Rule 5 of the Service Tax (Determination of Value) Rules, 2006, which was invoked by the Respondent to issue the show cause notice, is ultra vires Section 66 and 67 of the Finance Act, 1994, in light of the Delhi High Court's decision in Intercontinental Consultants and Technorats Pvt. Ltd. vs. U.O.I. & Anr. and the Supreme Court's decision in Kusum Ingots & Alloys Ltd., v. Union of India? Petitioner's Contention: The petitioner contended that Rule 5 had been struck down by the Delhi High Court and that a Supreme Court decision (Kusum Ingots & Alloys Ltd.) held that once a provision is declared ultra vires by a High Court, it cannot be invoked by any authority nationwide. They argued that the respondent ignored these precedents. Respondent's Contention: The judgment does not record any specific arguments made by the respondent regarding the validity of Rule 5 or their reasons for issuing the show cause notice despite the High Court's decision. The respondent accepted notice and was directed to show cause.