Commissioner Of Service Tax, Kolkata vs. M/S. Simplex Infrastructure Limited & Ors.

Held

The Court held that the appellant did not have the jurisdiction to issue the show cause and demand notice. The learned single judge rightly quashed the notice and consequential actions because the contracts were admitted to be indivisible works contracts. The Court affirmed the Supreme Court's decision in Commissioner of Central Excise and Customs, Kerala vs. Larsen & Toubro Limited, stating that at the material time, indivisible works contracts were not exigible to service tax. Since the indivisibility of the contract was an admitted fact, the show cause notice was ex facie without jurisdiction. The Court found no merit in the appellant's contention that the respondent should have pursued the alternative remedy, as the jurisdiction of the High Court under Article 226 of the Constitution could be invoked directly when a public law element is involved and facts are admitted. The appeal was dismissed, affirming the impugned judgment and order.

Facts

The Commissioner of Service Tax, Kolkata, appealed a judgment dated December 12, 2018, by a learned single judge of the High Court. The single judge had quashed a show cause-cum-demand notice dated September 7, 2009, and all consequential actions, including an order in original dated February 6, 2012. The show cause notice alleged that four works contracts entered into between September 10, 2004, and June 15, 2005, were exigible to service tax, and demanded service tax from M/s. Simplex Infrastructure Ltd. The core of the dispute revolved around the nature of these contracts.

Key Issues

1. Whether the appellant had the jurisdiction to issue the show cause and demand notice in question, concerning the taxability of indivisible works contracts under the relevant service tax provisions at the material time. Petitioner's arguments: The petitioner (Commissioner of Service Tax) contended that the learned single judge should have relegated the respondent (M/s. Simplex Infrastructure Ltd.) to the alternative remedy of adjudication before a departmental officer, arguing that the court should not entertain disputed facts in a writ application. Respondent's arguments: The respondent argued that the contracts were indivisible works contracts. They relied on the Supreme Court decision in Commissioner of Central Excise and Customs, Kerala vs. Larsen & Toubro Limited (2016) SCC vol. 1 page 170, which held that at the material point of time, an indivisible works contract was not exigible to service tax. They further submitted that this position was accepted by the appellant in the show cause notice and affidavit-in-opposition and was never disputed.