The Principal Commissoner Of Central Tax vs. M/S Bangalore Electricity Supply Company Limited
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Heard together (7 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Cause title — parties, addresses and appearances
ORAL JUDGMENT (PER: HON'BLE MR. JUSTICE K.V.ARAVIND)
Heard learned senior standing counsel Sri.Unnikrishnan.M., for appellants and learned counsel Sri.Annamalai.S., for respondent-company. Perused the entire writ appeal papers.
All these appeals arise out of the common order dated 04.09.2024 passed by the learned Single Judge in W.P. No.6144/2024. Accordingly, all the appeals were heard together and are being disposed of by this common order.
The Revenue has preferred the present intra-Court appeal under Section 4 of the Karnataka High Court Act, 1961, assailing the order dated 04.09.2024 passed by the learned Single Judge in W.P. No.6144/2024. 4. The brief facts are that the appellants/Revenue issued a show cause notice under Section 73 of the Finance Act, 1994 (for short, “the 1994 Act”). The assessee contended that a common show cause notice had been issued to different divisions of the respondent-company. It was submitted that HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
each division is separately registered as a service provider and, for the purposes of the 1994 Act, each division constitutes a distinct person.
1 The learned Single Judge accepted the said contention and held that a common show cause notice covering 5 divisions (28 units) of the respondent-company is not maintainable. Consequently, the show cause notice and the order-in-original were set aside. However, liberty was reserved to the appellants/Revenue to take recourse to remedies available in law, including the issuance of fresh show cause notices, subject to all just exceptions and defences.
Sri M. Unnikrishnan, learned Senior Standing Counsel appearing for the appellants/Revenue, submits that Section 73 of the Finance Act, 1994 refers to the issuance of a show cause notice to a ‘person’. He contends that the accounts of all 5 divisions are consolidated, a common balance sheet is prepared, and a single return of income is filed for the purposes of income tax. Hence, composite proceedings covering all 5 divisions are justified. HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
1 Learned counsel further, placing reliance on Rule 4 of the Service Tax Rules, 1994 (for short, “the 1994 Rules”), submits that every person is liable to be registered, and in the present case, such person is the company and not its individual divisions. On these grounds, he submits that the order of the learned Single Judge is unsustainable.
Per contra, Sri S. Annamalai, learned counsel appearing for the respondent-company, vehemently opposed the submissions made on behalf of the appellants/Revenue and contended that all the 5 divisions of the respondent-company are separately registered as service providers, each having been assigned a distinct registration number. It is submitted that all the said divisions have complied with the provisions of the Finance Act, 1994. 6.1 It is further contended that each division, being an independent registered service provider, proceedings under Section 73 of the 1994 Act ought to be initiated with reference to the respective registered entity. Learned counsel, inviting the attention of this Court to sub-rule (3A) of Rule 4 of the 1994 Rules, submits that where taxable services are provided HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
from more than one premises or office of an assessee, separate applications for registration in respect of each such premises or office are permissible. The separate registration of all 5 divisions is, therefore, in conformity with sub-rule (3A) of Rule 4 of the 1994 Rules.
We have considered the submissions made by learned counsel appearing for the parties and perused the records.
Sub-rules (2) and (3A) of Rule 4 of the Service Tax Rules, 1994 Rules read as under:
“(2) Where a person, liable for paying service tax on a taxable service, - (i) provides such service from more than one premises or offices; or (ii) receives such service in more than one premises or offices; (iii) is having more than one premises or office, which are engaged in relation to such service in any other manner, making such person liable for paying service tax, and has centralized billing system or centralized accounting system in respect of such service, and such centralized billing or centralized accounting systems are located in one or more premises, he may, at his option, register such premises or offices HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
from where centralized billing or centralized accounting systems are located.
(3) ………………
(3A) Where an assessee is providing a taxable service from more than one premises or offices, and does not have any centralized billing systems or centralized accounting systems, as the case may be, he shall make separate applications for registration in respect of each of such premises or offices to the juri ictional Superintendent of Central Excise.”
1 Section 69 of Finance Act, 1994 Act reads as under:
“69. Registration.
(1) Every person liable to pay the service tax under this Chapter or the rules made thereunder shall, within such time and in such manner and in such form, as may be prescribed, make an application for registration to the Superintendent of Central Excise.
(2) The Central Government may, by notification in the Official Gazette, specify such other person or class of persons, who shall make an application for registration within such time and in such manner and in such form as may be prescribed.”
2 Section 73 of Finance Act,1994 Act reads as under: HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
“73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within thirty months from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of – (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words thirty months, the words "five years" had been substituted.
Explanation: Where the service of the notice is stayed by an order of a court, the period of such HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
stay shall be excluded in computing the aforesaid period of thirty months or five years, as the case may be.
(1A) Notwithstanding anything contained in sub-section (1) (except the period of thirty months of serving the notice for recovery of service tax), the Central Excise Officer may serve, subsequent to any notice or notices served under that sub-section, a statement, containing the details of service tax not levied or paid or short levied or short paid or erroneously refunded for the subsequent shall be deemed to be service of notice on such person, subject to the condition that the grounds relied upon for the subsequent period are same as are mentioned in the earlier notices.
(1B) Notwithstanding anything contained in sub-section (1), in a case where the amount of service tax payable has been self-assessed in the return furnished under sub-section (1) of section 70, but not paid either in full or in part, the same shall be recovered along with interest thereon in any of the modes specified in section 87, without service of notice under sub-section (1).
(2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.
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(2A) Where any appellate authority or tribunal or court concludes that the notice issued under the proviso to sub-section (1) is not sustainable for the reason that the charge of,- (a) fraud; or (b) collusion; or (c) wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or the rules made thereunder with intent to evade payment of service tax, has not been established against the person chargeable with the service tax, to whom the notice was issued, the Central Excise Officer shall determine the service tax payable by such person for the period of thirty months, as if the notice was issued for the offences for which limitation of thirty months applies under sub-section (1).
(3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid.
PROVIDED that the Central Excise Officer may determine the amount of short payment of service tax or erroneously refunded service tax, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of thirty months referred to in sub-section (1) shall be counted from the date of receipt of such information of payment.
Explanation 1: For the removal of doubts, it is hereby declared that the interest under section 75 shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of service tax or erroneously refunded service tax, if any, as may be determined by the Central Excise Officer but for this sub-section.
Explanation 2: For the removal of doubts, it is hereby declared that no penalty under any of the provisions of this Act or the rules made thereunder HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
shall be imposed in respect payment of service-tax under this sub-section and interest thereon.
(4) Nothing contained in sub-section (3) shall apply to a case where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; ortola (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax.
[xxx]
(4B) The Central Excise Officer shall determine the amount of service tax due under sub- section (2) – (a) within six months from the date of notice where it is possible to do so, in respect of cases falling under sub-section (1);
(b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under the proviso to sub- section (1) or the proviso to sub-section (4A);
(5) The provisions of sub-section (3) shall not apply to any case where the service tax HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
had become payable or ought to have been paid before the 14th day of May, 2003. (6) For the purposes of this section, "relevant date" means, -
(i) in the case of taxable service in respect of which service tax has not been levied or paid or has been short-levied or short-paid-
(a) where under the rules made under this Chapter, a periodical return, showing particulars of service tax paid during the period to which the said return relates, is to be filed by an assessee, the date on which such return is so filed;
(b) where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder;
(ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof;
(iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund.” HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
3 Section 73 of the 1994 Act provides for the issuance of a notice to the person chargeable with service tax which has not been levied or paid, or which has been short-levied or short- paid, or to the person to whom such tax refund has been erroneously granted, requiring such person to show cause as to why he should not pay the amount specified in the notice.
4 The Revenue has contended that the “person” referred to in Section 73 is the company and not its individual divisions. However, when such a submission is examined in the light of the unambiguous language employed in Section 69 of the 1994 Act, it becomes clear that every person liable to pay service tax under the Act is required to make an application for registration before the juri ictional Superintendent of Central Excise.
5 In cases where an assessee has multiple offices or places from which taxable services are provided, the same is governed by sub-rules (2) and (3A) of Rule 4 of the 1994 Rules. Under sub-rule (2), where taxable services are rendered from multiple premises, the service provider has the option to obtain centralized registration. On the other hand, sub-rule (3A) provides that where an assessee provides taxable services from HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
more than one premises or office, separate applications for registration in respect of each such premises or office are required to be made before the juri ictional Superintendent of Central Excise.
6 In the present case, it is not in dispute that the respondent-company has obtained registration in terms of sub- rule (3A) of Rule 4 of the 1994 Rules, and that all 5 divisions have been assigned separate registration numbers. In view of sub-rule (3A) of Rule 4 of the 1994 Rules, each of the 5 divisions is required to be treated as a distinct person for the purposes of Section 73 of the 1994 Act.
7 The learned Single Judge, having regard to the aforesaid statutory requirements under Section 73 of the 1994 Act, was justified in holding that a common show cause notice issued to different service providers is not maintainable under Section 73(1) of the 1994 Act.
Having regard to the peculiar facts and circumstances of the present case, particularly the separate service tax registrations granted to each of the 5 divisions, we are of the HC-KAR NC: 2026:KHC:19829-DB AND 1 OTHER
considered view that the common show cause notice covering all the 5 divisions is unsustainable. We find no justifiable grounds to differ from the view taken by the learned Single Judge. In light of the reasons assigned herein, the conclusion arrived at by the learned Single Judge is affirmed.
Therefore, we are not inclined to entertain the writ appeal. The liberty reserved by the learned Single Judge under the impugned order shall, however, remain undisturbed.
Accordingly, the writ appeals stand disposed of. (S.G.PANDIT) JUDGE (K. V. ARAVIND) JUDGE
NC CT:bms List No.: 1 Sl No.: 24
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.