Eci Engineering And Construction Company LTD. vs. Commissioner Of Indirect Taxes And Customs

Facts

The petitioner, ECI Engineering and Construction Company Ltd., is challenging an Order in Original dated 23.03.2023 passed by the Commissioner of Indirect Taxes and Customs. The order confirmed a demand of service tax, interest, and penalty for the period 2016-17 to 2017-18 (up to June 2017). This demand arose from a show cause notice issued by the Commissioner of Central Tax alleging non-filing of service tax returns and non-payment of service tax on taxable services rendered. The petitioner contended that the services were rendered exclusively to Government or Government Undertakings, which are exempt under Notification No. 25/2012-Service Tax dated 20.06.2012. The impugned order rejected this contention for lack of documentary evidence.

Held

The Court held that it would meet the ends of justice if an opportunity is granted to the petitioner to produce relevant documents supporting its claim that the services rendered are exempted from service tax in terms of Notification No. 25/2012-Service Tax dated 20.06.2012. The Court set aside the impugned Order in Original dated 23.03.2023 and remanded the matter back to the file of Respondent No. 1. Respondent No. 1 is directed to give due opportunity of hearing to the petitioner and thereafter pass a fresh order in accordance with law within six weeks from the date of receipt of a copy of this order. The ratio decidendi is that principles of natural justice require an opportunity to be given to the assessee to produce evidence to substantiate their claim of exemption, especially when such evidence is crucial to the determination of tax liability.

Key Issues

1. Whether the impugned Order in Original No. 02/2022-23 dated 23.03.2023 passed by the 1st Respondent is illegal, arbitrary, violative of principles of natural justice, and without jurisdiction, contrary to Notification No. 25/2012-Service Tax dated 20.06.2012 and Articles 14, 19(1)(g), and 265 of the Constitution of India? Petitioner's arguments: The petitioner argued that the 1st Respondent did not provide an opportunity to produce original supporting documents, such as tenders and work orders, which would have substantiated their claim of exemption. They relied on paragraph 13.9 of the impugned order, which noted the failure to produce these documents, and submitted that if an opportunity had been granted, these documents could have been produced. They sought a remand for reconsideration after providing this opportunity. Revenue's arguments: The Revenue, through its counsel, submitted that the 1st Respondent was compelled to pass the impugned order as no documentary evidence was furnished by the petitioner, referring to paragraph 13.5 of the order. However, the counsel fairly submitted that the Court could pass an appropriate order considering the facts and circumstances.