Swadhin Bose vs. State Of West Bengal And Ors.

Facts

The petitioner, M/s Union Publicity Bureau, challenged an order dated February 23, 2023, passed by the Joint Commissioner, Howrah, under Section 73 of the Finance Act, 1994. The petitioner, an advertisement agent, was served a show cause-cum-demand notice on December 31, 2020, invoking the extended period under proviso to Section 73(1) for financial years 2014-15, 2015-16, and 2016-17. The petitioner responded on February 12, 2021. The petitioner argued that service tax was only payable on commission receivable, not the entire contract value, citing internal instructions. They also contended that the order was vitiated because the hearing was conducted by an authority different from the one that issued the show cause notice and received the response, and that the adjudicating authority wrongly noted no reply was submitted. The revenue argued that the petitioner failed to avail the statutory appellate remedy and approached the High Court under Article 226 of the Constitution, and that the petition was filed beyond the limitation period.

Held

The Court held that the adjudication order was not vitiated by the change in adjudicating authority, as the Chief Commissioner of Central Tax and Central Excise, Kolkata Zone, had assigned the case to the present adjudicating authority in exercise of powers conferred by Rule 3 of the Service Tax Rules, 1994, read with Notification No.14/2017-CE(NT). Regarding the non-consideration of the reply, the Court noted that while the order recorded no reply submission, the petitioner had repeatedly failed to appear for personal hearings, and therefore, this recording did not warrant interference under Article 226. The Court also observed that the petitioner's reasons for non-appearance could not be a subject of inquiry in a writ petition. Concerning the non-consideration of the instruction regarding taxability on commission receivable, the Court noted some discussions in paragraph 5.3.2 of the order. The Court found that the correctness of the finding on grant or non-grant of exemption could not be questioned under Article 226. The Court reiterated that the petitioner had an adequate statutory remedy in the form of an appeal and that the writ petition was not the appropriate forum. The Court dismissed the writ petition.

Key Issues

1. Whether the adjudication order is vitiated because it was passed by an authority different from the one that issued the show cause notice and received the petitioner's response, contrary to Section 73 of the Finance Act, 1994? 2. Whether the adjudicating authority erred by noting that the petitioner did not submit a reply, despite the petitioner having responded to the show cause notice, thereby vitiating the order? 3. Whether the petitioner is liable to pay service tax on the entire contract value or only on the commission receivable, in light of the relevant notifications and internal instructions? Petitioner's arguments: The petitioner contended that the order was vitiated due to the change in adjudicating authority and the incorrect recording of no reply submission. They also argued that service tax was only leviable on commission receivable, citing Instruction F. No.341/43/96-TRU. They sought the setting aside of the order and remand for fresh adjudication. Revenue's arguments: The revenue argued that the petitioner had a statutory appellate remedy and should not have invoked the writ jurisdiction of the High Court. They also submitted that the writ petition was filed beyond the statutory period of limitation.