M/S Aditya Builders And Developers vs. The Additional Commissioner Of

Held

The Court held that the matter required consideration, particularly regarding the petitioner's contention that the business transaction in Annexure-B was not 'service', which was a jurisdictional objection. While acknowledging that the petitioner had not responded to the show cause notices, the Court noted that the contentions raised on merits were not frivolous. The Court set aside the impugned order, which was passed ex-parte, to enable the petitioner to present its case on merits. The matter was remanded to the respondent authority for affording the petitioner an opportunity to reply to the show cause notices and to participate in a personal hearing, following which a reasoned order was to be passed. The Court clarified that its observations were not conclusive but were made to facilitate the setting aside of the ex-parte order. The attachment of the petitioner's bank account was directed to be lifted upon an undertaking by the petitioner not to sell or encumber the property.

Facts

The petitioner, M/s. Aditya Builders and Developers, challenged an order-in-original dated September 26, 2019, passed by the Additional Commissioner of Central Tax & Central Excise, Mysuru. This order pertained to the tax period April 1, 2016, to June 30, 2017. The petitioner contended that the transaction in question, as per an agreement (Annexure-B), could not be deemed 'service' under Section 65B(44) of the Service Tax Act, as it involved transfer of title in immovable property, which is excluded. The petitioner admitted to not responding to show cause notices issued by the authority, having initially sought to avail the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, but was unable to complete the formalities due to circumstances including the pandemic. The impugned order was passed ex-parte.

Key Issues

1. Whether the transaction reflected in Annexure-B, involving transfer of title in immovable property, constitutes 'service' taxable under Section 65B(44) of the Service Tax Act, thereby raising a jurisdictional objection? Petitioner's arguments: The petitioner argued that the transaction was not 'service' as defined under Section 65B(44) of the Service Tax Act because it involved the transfer of title in immovable property, which is expressly excluded from the definition of service. Therefore, the order passed by the respondent was without jurisdiction. Revenue's arguments: The revenue relied on a judgment in W.P.No.7712/2019, affirmed in W.A.No.3857/2019, arguing that the petitioner ought to have availed the statutory appeal remedy. They submitted that the cited judgment also dealt with grounds of violation of natural justice.