Chinnathambi.R vs. The Govt Of INDIA

Facts

The petitioner, R. Chinnathambi, filed a writ petition challenging a Show Cause cum Demand Notice dated December 23, 2020, issued by the Additional Director General, DGGI, Coimbatore. The notice demanded service tax, Swachh Bharat Cess, and Krishi Kalyan Cess amounting to Rs. 9,37,17,910/- for the period from April 1, 2015, to June 30, 2017, for works contract services rendered to V.O. Chidambaranar Port Trust Ltd. and Kamarajar Port Trust Ltd. The petitioner argued that the services were exempted under Mega Exemption Notification No. 25/2012-ST, as amended. The petitioner had also paid Rs. 20,00,000/- in advance. The petitioner sought quashing of the notice and reimbursement of the amount paid, or alternatively, direction for reimbursement from the port trusts if the demand was upheld.

Held

The Court held that the Writ Petition was premature and therefore liable to be dismissed. While acknowledging that the Show Cause cum Demand Notice might indicate a predisposition of mind, the Court directed the petitioner to file a detailed reply within 30 days from the receipt of the order, providing reasons why they should not be held liable for the service tax. The second respondent (DGGI) was then directed to adjudicate the Show Cause cum Demand Notice preferably within 30 days thereafter, ensuring the petitioner was heard before passing any order, and that the order strictly complied with the law. The Court did not decide on the merits of the exemption claim or the liability for service tax.

Key Issues

1. Whether the Writ Petition is premature and ought to be dismissed as the petitioner has not yet responded to the Show Cause cum Demand Notice? Petitioner's arguments: The petitioner contended that the Show Cause cum Demand Notice was issued despite the services being exempted under Mega Exemption Notification No. 25/2012-ST, as amended. The petitioner also argued that the notice indicated a predisposition of mind by the adjudicating authority, rendering the adjudication a mere formality. Reliance was placed on the fact that Rs. 20,00,000/- was already paid in advance and that the contract with the port trusts should govern reimbursement. Revenue's arguments: The Revenue argued that the Writ Petition was premature and that the petitioner could not preempt the adjudication proceedings. Reliance was placed on several Supreme Court and High Court decisions, including Union of India Vs. Hindalco Industries, M/s.Metal Weld Electrodes Vs. CESTAT, Chennai, M/s.Nivaram Pharma Private Limited Vs. The Customs, Excise and Gold (Control) Appellate Tribunal, United Bank of India Vs. Satyawati Tondon, and Raj Kumar Shivhar Vs. Assistant Director, Directorate of Enforcement.