Shri. Dinesh vs. Union Of INDIA
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The petitioner, Shri Dinesh, a civil contractor, filed a writ petition before the High Court of Karnataka challenging an appeal order dated August 16, 2023, issued by the Commissioner of Central Tax (Appeals). The petitioner sought to quash this order and to declare that works contracts executed for authorities like BDA, BBMP, and the Police Department were exempted under Section 102 of the Finance Act, 1994, read with Mega Exemption Notification No. 25/2012 ST. The petitioner also contended that no service tax was payable for the period April 2015 to June 2017, as tax had already been paid under the KVAT Act on the total consideration. The respondents are the Union of India, the Commissioner of Central Tax (Appeals), and the Additional Commissioner of Central Tax.
Held
The High Court of Karnataka, in its oral order, noted that the issue in controversy was directly and squarely covered by a judgment of a Co-ordinate Bench of the same Court in M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax (WP No.11154/2023 & connected matters dated 03.07.2024). Following the precedent set in that case, the Court decided to quash the impugned show-cause notice dated April 23, 2021 (Annexure-D) and the impugned appeal order dated August 16, 2023 (Annexure-G). The matters were relegated to the designated officers to be reconsidered from the stage of the show-cause notice. The petitioner was granted liberty to file pleadings within a reasonable time fixed by the concerned officers. The reasoning was based on the established practice of the court in similar matters where challenges to show-cause notices and orders-in-original were being set aside and relegated for fresh consideration.
Key Issues
1. Whether works contract executed for BDA, BBMP, and Police Department are local authorities/governmental authorities exempt under Section 102 of the Finance Act, 1994, read with Mega Exemption Notification No. 25/2012 ST. (Question of law) 2. Whether the petitioner is liable to pay service tax for the period April 2015 to June 2017, given that tax was paid under the KVAT Act on the total consideration. (Question of mixed law and fact) Petitioner's arguments: The petitioner argued that the works executed for the aforementioned government bodies fall under the purview of exemptions provided by Section 102 of the Finance Act, 1994, and the relevant Mega Exemption Notification. Furthermore, the petitioner contended that payment of tax under the KVAT Act on the total consideration should preclude any liability for service tax on the same transactions for the specified period. Revenue's arguments: The judgment does not record specific arguments from the revenue or state. However, the existence of the appeal order and the challenge to it by the petitioner implies a dispute regarding the taxability of the services provided.
Sections Cited
Section 102, Finance Act 1994
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER
In this petition, the petitioner seeks the following reliefs: “(i) Issue a writ of certiorari, or Writ in the nature of Certiorari quashing the impugned appeal order No. MYS-EXCUS-000-APP-YCS-257-2023-24,Dt: 16/08/2023 at ANNEXURE "G", issued by the resp-2, in so for as the petitioner is concerned. (ii) Issue Writ of Declaration or Writ in the nature of declaration declaring that, BDA, BBMP, Police Department and other agencies are a local authority/ Governmental Authority/ any other body under section 102 of the Finance Act 1994 r/w Mega Exemption notification No. 25/2012 ST dated: 20/6/2012 in so for as the petitioner is concerned. NC: 2025:KHC:15939 (iii) Issue Writ or Declaration or Writ in the nature of the declaration declaring that, the works contract executed to BDA, BBMP, Police Department are exempted under section 102 of the Finance Act 1994 R/w Mega Exemption notification No. 25/2012 ST dated: 20/6/2012. in so for as the petitioner is concerned. (iv) Issue Writ of Declaration or Writ in the nature of Declaration, declaring that, When the petitioner has paid the tax under section 15 of the KVAT Act, on the total consideration, the petitioner is not liable to pay the service tax for the period April 2015 to June 2017 in so for as the petitioner is concerned..”
Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record.
Though several contentions have been urged by both sides in support of their respective claims, the issue in controversy between the parties is directly and squarely covered by the judgment of the Co-ordinate Bench of this Court in the case of M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax in WP No.11154/2023 & connected matters dated 03.07.2024, wherein it was held as under; NC: 2025:KHC:15939 "
Accordingly, the following: ORDER In light of observations made above, the writ petitions relating to challenge to show-cause notice, such matters will stand relegated to the officers to be designated in terms of the observations made in para 8 above, at the same stage. Accordingly, such of the petitions at Sl.No.1 to 5 in Column No.1 of the table relating to challenge to show-cause notice are disposed off. Insofar as such writ petitions as detailed in Column 2 of the table relating to challenge to Orders-in-Original, in light of the discussion made above, the Orders-in-Original stand set aside and the matters are relegated to the Officers to be designated to be reconsidered from the stage of show-cause notice. Accordingly, such of the petitions at Sl.No.1 to 35 in Column No.2 of the table relating to challenge to Orders-in-Original are disposed off. The petitioners who are now relegated before the authorities concerned are at liberty to file their pleadings within a reasonable time as may be fixed by the Officers concerned. Wherever the matters are pending in appeal in light of the arrangement that is made, petitioners to file a memo for withdrawal of appeal and accordingly, the orders- in-original in question would also receive the same NC: 2025:KHC:15939 treatment, i.e. be set aside as per the directions made above. Wherever demands have been made pursuant to the impugned orders, such proceedings are also set aside."
Under these circumstances, the present petition is also disposed of in terms of the aforesaid judgment of the Co- ordinate Bench of this Court.
Accordingly, the impugned show-cause notice at Annexure-D dated 23.04.2021 and the impugned order at Annexure-G dated 16.08.2023 are hereby quashed.
Ordered accordingly. (S.R.KRISHNA KUMAR) JUDGE
kcm List No.: 1 Sl No.: 25
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.