HVAC and Electromechanicals Private Limited V. The Assistant Commissioner of Central Tax and The Principal Commissioner of Central Taxes and Union of India and IDBI Bank Ltd

WP/28187/2023

AI Insights

The case involves M/s. HVAC and Electromechanicals Private Limited, which filed a writ petition against the Assistant Commissioner of Central Tax and others, challenging an order-in-original and a subsequent demand notice related to service tax liabilities for the financial years 2015-16 and 2016-17. The petitioner argued that the order was passed in violation of natural justice as they were not served with the show-cause notice or personal hearing notices. However, the respondents provided evidence of such notices being sent and received. The court found that the petitioner had not responded to the notices and had not availed the opportunity to appeal the order, leading to the dismissal of the petition.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 806086 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 17-10-2023
• Assessment Year: misc
• Other Referred Cases: S. Parvathy Sankaran, S. Venkatesam v. The Sales Tax Officer (Circle), The Assistant Commissioner (State Tax), Mettur Road Circle, Erode, M/s. Sai Constructions v. The Assistant Commissioner of Central Tax and 3 Others, B. Rajender Reddy v. The Commissioner of Central Tax, The Union Of India, Pushpam Reality v. State Tax Officer, Sathavahana Associates v. The Commissioner of Central Tax and others
• Laws Referred To: Finance Act, 1994, Constitution of India
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: B SWAPNA REDDY; GADI PRAVEEN KUMAR
• Assessee Lawyers: GADIPELLI
• Keywords: Demand notice; Financial years; Natural Justice; Penalty; Service tax; Tax liability; Writ of Mandamus
• Section: 69; 75; 226; 87; 87; 77; 78

Judgement Text

"I s386 ] HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE SEVENTEENTH DAY OF OCTOBER TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE LAXMI NARAYANA ALISHETW WRIT PETITION NO:28187 OF 2023 Between: M/s. HVAC AND ELECTROMECHANICALS PRIVATE LIMITED, Represented by its Managing Director, Moiunuddin Sarwar Having its office at 10-4-441419, Hiline Ansari Complex, Humayun Nagar, Mehdipatnam Hyderabad, Telangana - 500028 ...PETITIONER AND 1. The Assistant Commissioner of Central Tax, H.No. 10-3-30'1-303, 2nd Floor Serene Helghts, Humayunnagar, ltilasab Tank, Hyderabad - 500028 2. The Principal Commissioner of Central Taxes, Hyderabad GST Commissionerate ll Floor, GST Bhavan, Basheerbagh Hyderabad - 500004 3. Union of lndia, Through Principal Secretary to Government, Ministry of Finance, Department of Revenue, Udyog Bhavan, North Block, New Delhi- '1 10001 4. lDBl Bank Ltd, Secunderabad Contonment 9-1-1MA, Amsri Faust Building Opp. Deccan Chronicle S.D. Road, Secunderabad - 500003 ...RESPONDENTS Petition under Article 226 ot the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ, Order or direction particularly one in the nature of a WRIT OF MANDAMUS (i) seeking declaration that the lmpugned Order vide Order-in- Original No.2612022-23 (ST) dated 20.06.2022 passed by Respondent No.1, for the period 2015-16 and 2016-17 is in violation of the principles of natural justice, illegal, arbitrary, without authority of law, (ii) to set aside the Demand Notice, issued under the provisions of Section 87 of the Finance Act 1994, vide Ref. lVl16101lo2l2o23-Arrears MP Range dated 07.08.2023 issued to the Respondent No.4. ( lA NO: 1 OF 2023 Petition under Section 15i cpc praying that in the circumstances stated in the affidavit filed in support of the petition, the High court may be pleased to stay (i) all further proceedings including stay collection of the disputed tax of Rs.30,23,8231 penalty of Rs.30,23,823/- impos;ed under Section 78, penalty of Rs. 10,0001 imposed under section 77 pursuant to Impugned order vide order-in- original No.2612022-23 (ST) dated 20.06.2022 passed by Respondent No.1 and (ii) the consequential Demand Notice dated 07.o8.2o23, issued under the provisions of section 87 of the Finance Act 1994, vide Ref. lvt16to1to2l2o23- Arrears MP Range dated 07.08.2023 issued to ttre Respondent No.4. Counsel for the Petitioner: SRt GAD|pELLI pRAHLAD FOR SRI KARAN TALWITR Counsel for the Respondent Nos.1 & 2: M/s. B.SWAPNA REDOy FOR SRI DOMINIC FERNANDES, senior standing counsel for CBIC Counsel for the Respondent No.3: SRI GADI ptRAVEEN kUUnn, Dy. SOLICI'rOR GENERAL OF |NDIA Counsel for the Respondent No.4: - The Court made the following: ORDER .i:'\". 'I HONOURABLE SRI JUSTICE P.SAM KOSITY AND HON'BLE SRI JUSTICE LAXMI NARAYANA ALISHETTY WRIT PETITION NO.28187 OF 2023 ORDER: (per Hon'ble Si Justice Laxmi Naragana Alisttettg) The present writ petition has been liled to declare the impugned order-in-original No.26 /2O22-23(ST)' dated 20 -06 '2022 passed by respondent No.l and also set aside the demand notice, dated O7.08.2O23 uide reference No.IV/16/01/02/2023 issued under the provisions of Section 87 of the Finance Act, 1994. 2. The brief facts leading to filing of present petition are as under: 3. The petitioner is a company engaged in the business of supply, installation, testing and commissioning of bare chilled/conditioner water piping of M.S.Heary class complete wittr frtting etc. The pelitioner was registered vide Service Tax registration No.AAICMT663ESDOO 1 under the category of maintenance or repair service under SecLion 69 of Chapter V of the Finance Act, lgg4- The petitioner is an income tax assessee with PAN No.AAICM7663E. The petitioner hled statement of profit arld loss for the Assessment Year 2OL6-77 and 2017-18 declaring PSK.J & L A,J tt/P No 23187 of2023 revenue of Rs.24, 17,817 l- and Rs.2,06 32,665/- respectively and paid VAT and dischargcd his tax liability. 4. The petitioner received order in original No.26 /2O22_23, dated 20 .06.2022 requesting petitic)ner to provide certain information and documents pertaining to Financial years 20 15- 76,2016-17 and 2O17-18 with regard to the difference in taxable value of ST-3 returns when compared w.ith the va.lue of ITR/TDS for 2015-16 artd 20).6-17. Vide impugnr:d order dated 20.06.2022, the respondent confirmed demand of se:-vice tax of Rs. 30,23,g23 / _ for the pcriod 2015-16 and 2016-17 under Section T3(2) of the Finance Act, 1994 and also raised demzmd of interest at applicabte rates under Section 75 of the Finance Act, 1994 ald further imposed penalty of Rs. 3O,23,823/- under Section 7g of the Finance Act, 7994 and also imposed penalty of Rs. IO,00O/- under Section 77 of Lhe Finance Act,l994. In t]re impugned order, it was observed that petitioner had failed to d:Lscharge service tax liability on services provided and also had wil.lfully suppressed the facts about the taxable services with an int,3ntion to evade payment of servrce tax. 5. It is further contended tJ:at the irnpugned order was received by tlre petitioner on 1,3.12.2022, however, due to inadvertence the 2 ....,'r f PSK.J & I,NIl.J Ll/P No.28t87 of 2023 3 same was misplaced by the petitioner. Subsequently, the petilioner came to know about the impugned order only when the bank attachment notice was received by the petitioner on LZ.OB.2O23. Therefore, there is a delay in filing the present writ petition and petitioner prays this Court to condone the delay in the interest of justice. He further contended that show-cause notice, dated 3O.12.2O2O, which was said to have been issued to the petitioner prior to passing of the impugned order was not received by the petitioner. 6. Heard Sri Gadipelli Prahlad, Iearned counsel representing Sri Karan Talwar, learned counsel for the petitioner and Ms. B.Swapna Reddy, learned counsel representing Sri Dominic Fernandes, Special Standing Counsel for CBIC for respondent Nos.1 & 2 and Sri Gadi Praveen Kumar, Deputy Solicitor General for respondent No.3. 7. Learned counsel for the petitioner submitted that show- cause notice and personal hearing notices were never served on the petitioner and therefore, petitioner could not submit reply to show- cause notice ald also could not appear for personal hearing. He further submitted that the impugned order was passed in the absence of petitioner and the petitioner was not extended opportunity of personal hearing in violation of principles of natural justice and thus, the impugned order is vitiated and liable to be -/ PSK -I & LNA..I hP nio.)8137 of 202 i set-aside. Learned counsel for the petitioner relied upon lollowing judgments: i Honble Madras High Court in the <:ase of S. parvathy Sankaran, S.Venkatesam v. The Sales Ta>: Oflicer (Cn.cle), ThL Assistani C-ommissioner (State Tax), Mettur Road Circle, Erode reported in I2O2l(2Il TMI 62-Madras High Courtl. ii-Honble Telanga_na High Court in the case of M/s.Sai Constructions v. The Assistalt Commissioner of Centra.l ,Iax and 3 Others reported in 2o22(t2l TMr 1149. iii.Hon'ble Telangana High Court in the case of B.Rajender Reddy v. The Commissioner of Central Tax, The Union Of India ieported in 2O23(3) TMI 893. iv.Honble Madras High Court in the case :f pushpam Reality v. State Tax Oflrcer reported in 202213) TMI 86 (Mad.) v.Honble Telangana High Court in the carse of Sathavahana Associates v. The Commissioner of Central Tax arrd others reported in 2022 (71 TMI 342. 8. Learned counsel for the petiti,rner further submitted that petitioner would be put to hardship and also incur substantial loss, if the impugned order as /ell a s demand notice are not set aside and thus, prayed to allow the wr.it petition. 9. Per contra, Ms. B.Swapna Reddy representing Sri Dominic Fernandes, learned counsel for the respondents submitted that show-cause notice q.as sent to the registered e_mai1 of the petitioner on 31.12.2020. Therefore, the petitioner cannot agitate that show-cause notice was not sierved on him. She further submitted that notice for perso nal hearing was sent on 04.O4.2022, 2a.O4-2022 and 07.05.2r122 Lo tlle petitioner to attend ,/ .+ PSK,J & LNA,J tlP No.28187 of2023 5 the personal hearing and these notices were served on the petitioner. Therefore, the contention of petitioner that no personal hearing was afforded to the petitioner and that the impugned order was passed in the absence of the petitioner is factually inconect and untenable. She also placed on record, email dated, 37.12.2020 by which show-cause notice was sent to the petitioner and also, the track consignment details from India post portal in proof of service of personal hearing notices. 10. A perusal of the impugned order, dated 20.06.2022 passed by respondent No.1 shows that a letter dated 09.12.2020 was sent to the petitioner to provide following information for the Financial year 2075-16,2O16-17 and 2OlZ-tB (up to June, 2017). a.Income Tax returns together with Form 26,q.5. b.FORM No.3CB (Audir Report U/Sec.44AI| of IT Act, 1961 c.Ba-lance Sheet a.lsong with p&L Account statemtn, schedules, in case of firm/company. d.Bank Account Statements/ Service Income L€dger. e.Bills/Invoices/Contracts/Agreements entered by you with persons/hrm/company for provision of any service(s). f.ST-3 Retums. g. Any other pertinent information/document/record. It appears that petitioner neither responded nor submitted data sougAt for in the letter, d,ated 09.12.2O2O. I 'i{ PSK,J & I', 'A,J u'P , -o 28)87 of2023 6 1 1 . [t is also evident from impugned r>rder, dated 20 .06.2022, the show-cause notice dated 3O.12.2C)20 was issued to the petitioner, but the petitioner did not re:;pond to the show-cause notice. It is also evident that personzLl hearing was fixed on O5.O4.2O22, O3.O5.2O22 and 18.05.20211 and the petitioner was informed to attend personal heanng and also hle reply to show- cause notice vide letters, dated 29.03.2022, 25.04.2022 and. 06.O5.2022 rcspectiveiy. However, the p,:titioner failed to respond to the notices issued by the responclent No.l and therefore, respondent No.1 proceeded with adjudication and passed the impugned order- in-original, dated'2O.06.2022. 12. Admittedly, the petitioner receiued the impugned order, dated 20.06.2022 on 73.12.2022, w}:.icl:, is approximately about six (06) months after passing of order. However, the petitioner has not taken any steps to challenge the impu gred order. The petitioner has eflicacious alternate remedy of hling appeal under Section 85(3A) of the Finance Act, 1994 within zL period of two months from the date of communication of order, evr:n this opportunity was not availed by the petiLioner. Instead, tJ:re petitioner filed present petition to set-aside the impugned ordt:r as well as demand notice belatedly i.e., about ten (10) months frr>m the date of receipt of tJle impugned order. / I a, 'i PSK,J & LN/,J WP No.28)87 of2a23 13. The explanation offered by the petitioner that after receipt of impugned order, the same was misplaced inadvertently and therefore, he could not take further steps and thus, delay caused in filing present writ petition, does not inspire conlidence of this Bench, considering the conduct of the petitioner even after service of the show-cause notice, personal hearing notices and order in original. There are clear latches, defaults on the part of petitioner. Firstly, in not availing alternate elficacious remedy of filing appeal before the Commissioner (Appeals) and secondly, unexplained delay in approaching this Court. 74. For the above reasons, in considered opinion of this Bench, the writ petition is devoid of any merits and no grounds are made out to interfere with the impugned order. Thus, the writ petition deserves to be and accordingly, dismissed. No order as to costs. 15. As a sequel, miscellaneous petitions pending, if any, shall 7 stand closed. //TRUE COPY// SD/- T. JAYA$REE ASSTSTANT REGISIRAR :1 ,Dl SECTION OFFICER To 1. One CC to SRI KARAN TALWAR, Advocate IOPUCI i: 5il; dd i; Siii obrrilrr.rrc'rEnr'rAitioEs, senior standins counselfor cBlc TOPUCI s. b\",iutt to sRt GADI PRAVEEN KUMAR, Dv sollclroR GENERAL oF rNDrA [OPUC] Two CD CoPies 4. PSK. GJP HIGH COURT DATED:1711012023 ORDER WP.No.28187 of 2023 DISMISSING THE WRIT PETITTON WITHOUT COSTS. e STArT [ 2 !{ou [13 z o ). '.r/ o n k ( o "