K Uma Maheshwara Rao vs. State Of Karnataka

Heard learned counsel Sri. N.S.Vijayanth Babu for appellants, learned Additional Government Advocate Sri.Aditya Vikram Bhat for respondent No.1, learned counsel Sri.S.N.Prashanth Chandra for respondent No.2, learned Central Government Counsel Sri.Madanan Pillai for respondent No.3 and learned senior standing counsel HC-KAR NC: 2025:KHC:35709-DB Sri.Aravind V. Chavan for respondent Nos.4 to 7. Perused the entire writ appeal papers.

The appellants were petitioners before the learned Single Judge and the parties would be referred to as they stood before the learned Single Judge.

The petitioners claim that they are contractors providing solid waste management services to the BBMP. They were before the learned Single Judge questioning the show cause notices issued to them under Section 73 of the Finance Act, 1994 (for short, ‘1994 Act’) read with Section 174 of the Central Goods and Services Tax Act, 2017 (for short, ‘CGST Act’) calling the petitioners to show cause against the proposed action under the show cause notices.

Learned counsel for the petitioners Sri.N.S.Vijayanth Babu would contend that the petitioners are not liable for service tax as they are exempted from paying service tax, referring to various notifications. Further, learned counsel would submit that in respect of HC-KAR NC: 2025:KHC:35709-DB some of the petitioners, in pursuance to the show cause notices, the authority competent has passed orders negating the contentions raised by the petitioners and appeal filed against the original order was also rejected which were the subject matter of some of the writ petitions. Further, learned counsel would also bring to the notice of this Court that in one of the matters of the Contractor in pursuance to the show cause notices, after considering the reply submitted by the said particular contractor, the adjudicating authority by order dated 07.04.2021 dropped the proceedings by observing that the service rendered by the said contractor is not taxable service tax. Therefore, learned counsel would submit that the respondents cannot take dual stand and the benefit granted to one of the contractor shall have to be extended to the petitioners also.

Learned counsel for the petitioners would refer to the charging Section 66B as well as Section 66D, negative list of services of the 1994 Act and submit that HC-KAR NC: 2025:KHC:35709-DB the service rendered by the petitioners would fall under the Negative List of the services, as the petitioners are providing service to the local authority or they are providing services on behalf of the local authority. Therefore, the respondent-authorities could not have issued show cause notice under Section 73 of 1994 Act.

Learned counsel takes us through the show cause notices and submits that what is stated in paragraph 6.2 is the only reason for issuing show cause notices. Thus, learned counsel would submit that the learned Single Judge could not have remanded the matter back to the adjudicating authority and he ought to have quashed the show cause notices by allowing the writ petitions. Further, learned counsel would submit that the learned Single Judge has not assigned any reason for remanding the matter to adjudicating authority. Thus, learned counsel would submit that, by taking note of the Negative List and subsequent notifications issued, would pray for allowing the writ appeals and to set aside the show cause notices. HC-KAR NC: 2025:KHC:35709-DB

Per contra, learned counsel Sri.Aravind V. Chavan submits that the learned Single Judge has rightly remitted the matters back to the adjudicating authority. Learned counsel would submit that it is not open for the petitioners to contend that the respondents-adjudicating authority has no juri iction to issue show cause notices. In fact, he submits that it is for the petitioners to go before the adjudicating authority and convince the adjudicating authority that they are not liable to pay any service tax or that their services are exempted from paying the service tax by placing reliance on Negative List.

Further, learned counsel Sri.Aravind V. Chavan and learned Additional Government Advocate Sri.Aditya Vikram Bhat would submit that when the Act provides remedy or mechanism for adjudication, the petitioners shall avail the said remedy and it is not open for the petitioners to approach this Court under Article 226 of the Constitution of India. Moreover, they submit that the Writ Court would not HC-KAR NC: 2025:KHC:35709-DB go into factual aspects and particularly in this lis raised by the petitioners involves the adjudication of factual position as to the services rendered by the petitioners falls under exemption as claimed by the petitioners. Thus, they pray for dismissal of the writ appeals.

Having heard the learned counsel appearing for the parties and on perusal of the entire writ appeal papers, we are not inclined to interfere with the order passed by the learned Single Judge for the following reasons:

Learned Single Judge relegated the petitioners to the stage of post show cause notice, reserving liberty to file reply/additional reply and in some of the writ petitions where the Order-in-original was the subject matter, set aside the same and relegated the matter to the stage of post show cause notice with liberty to file additional reply apart from the reply. We do not find any error or illegality in the order passed by the learned Single Judge.

Learned Single Judge has also taken care to maintain commonality and consistency, directed the department to assign adjudication process to one competent authority. Learned counsel for the respondents- Revenue Sri.Aravind V. Chavan has placed on record the order bearing No.1/2025-26 dated 04.08.2025 nominating HC-KAR NC: 2025:KHC:35709-DB or assigning the adjudication process to the set of officers indicated therein.

It would be premature for this Court to examine the contentions raised by the petitioners herein as to whether the petitioners would be liable to pay service tax or whether the petitioners services are exempted from service tax or whether each of the petitioners herein would be entitled to the same benefit as granted to one Smt.B.M.Rukmini under order dated 07.04.2021 referred to above in the file bearing C.NO.IV/06/38/2020 BW AE- V/3232 (OR NO.77/2020-21) dated 16.06.2020, who is petitioner in W.P.No.8121/2021. It is submitted that the said order is also set aside and it is sent back to the stage of filing objections. The entire process as to whether the petitioners are liable to pay service tax on the services rendered by them involves examination of factual aspects. The petitioners have failed to point out any juri ictional error so as to interfere with the show cause notices which HC-KAR NC: 2025:KHC:35709-DB is only the ground available to interfere with the show cause notices.

In the above circumstances we are not inclined to interfere with the learned Single Judge’s order and accordingly writ appeals stand rejected. (S.G.PANDIT) JUDGE (K. V. ARAVIND) JUDGE