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ST – SCN issued for recovery of tax challenged as being not valid after 01.07.2017 – Held that s.174(2)(c) of CGST Act prima facie seems to preserve levy: HC

2019-TIOL-1711-HC-RAJ-ST

IN THE HIGH COURT OF RAJASTHAN

AT JODHPUR

D.B. Civil Writ Petition No. 7684/2019

ARAVALI MINERALS AND CHEMICAL INDUSTRIES PVT LTD

Vs

UNION OF INDIA AND ORS

S Ravindra Bhat & Pushpendra Singh Bhati, JJ

Dated: July 2, 2019

Appellant Rep by: Mr Tribhuvan Gupta
Respondent Rep by: None

ST/GST – Petitioner impugning that the SCN issued to it for recovery of service tax is not legally valid as w.e.f 01.07.2017, the legal regime has changed with introduction of GST which by section 174 repealed the Finance Act, 1994.

Held: Section 174(2)(c) of CGST Act, 2017 prima facie seems to preserve the levy insofar as any liability to pay tax was incurred by the individual or concern – Court is of the opinion that the present writ petition cannot be maintained – It is open to the Writ petitioner to raise all contentions including levy and extent of levy of service tax before the adjudicating officer concerned – Writ petition is disposed of: High Court [para 2, 3, 4]

Petition disposed of

JUDGEMENT

1. The petitioner is impugning show cause notice issued to it on the ground that the proposed levy of service tax is not legally valid. In support of this argument, it is submitted that w.e.f. 01.07.2017, the legal regime has changed with the introduction of the Central Goods and Service Tax Act, 2017 which by Section 174 repealed the Finance Act, 1994. It is also submitted that the basis for show cause notice appears to be some audit comments or objections, which cannot be the valid premise for imposition of the levy and collection of tax.

2. This Court by its judgment in Udaipur Chambers of Commerce and Industry & Ors. vs. Union of India & Anr. (D.B. Civil Writ Petition No.14578/2016) decided on 24.10.2017, upheld the levy of service tax under the Finance Act, 1994. The service tax was introduced for the first time on minerals w.e.f. 1.4.2016. The legality of that development, was the subject matter of decision in Udaipur Chambers (supra) when the levy and collection of service tax on that activity was upheld. Post the introduction of the Central Goods and Service Tax Act, the Finance Act has been repealed. Nevertheless, Section 174(2)(c) prima-facie seems to preserve the levy in so far as any liability to pay tax was incurred by the individual or concern, prior to its enactment w.e.f. 1.7.2017.

3. In these circumstances, this Court is of the opinion that the present writ petition cannot be maintained. It is, however, open to the writ petitioner to raise all contentions including the levy and extent of levy of service tax and other submissions which it wish to press before the concerned adjudicating officer. In that event, the said authority shall grant proper and reasonable opportunity and deal with each of such contention in a reasoned order to be made in accordance with law.

4. The writ petition is disposed of accordingly.

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