Dismissed

M/S Gmmco Ltd. Thr. Its Manager/Auth. Signatory v. Union of India Thr. Ministry of Finance, New Delhi and Ors.

Bombay HC10 Sept 2012WP/5410/2011

Case brief

AI extract

What is this about?

The High Court of Judicature at Bombay (Nagpur Bench) dismissed a writ petition challenging a service tax demand. The court held that an efficacious alternate remedy exists under Section 86 of the Finance Act, 1994, to challenge the impugned order regarding the demand for supply of tangible goods.

What did the court decide?

Writ petition dismissed on the ground of existence of an alternate efficacious remedy under Section 86 of the Finance Act; liberty granted to file appeal within one month.

M/S Gmmco Ltd. Thr. Its Manager/Auth. Signatory Vs Union… — GST and Indirect Tax | Bombay HC (2012)

¶1

100912wpno.5410.11. 1

¶2

IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH, NAGPUR

¶3

Writ Petition No. 5410 of 2011

¶4

M/s GMMCO Limited VS. Union of India, through Ministry of Finance, New Delhi and others.

¶5

Notes, Office Memoranda of

¶6

Coram, appearances, Court's orders Court's or Judge's or directions and Registrar's orders. Orders.

¶7

Mr. A.M.Gordey, Senior Counsel with Mr. N.S. Bhattad, Adv. For petitioner. Mr. S.K.Mishra, ASGI for R-1 to 3. Mr. J.B.Jaiswal, AGP for R-4 and 5.

¶8

CORAM : SMT. VASANTI A. NAIK & S.P.DESHMUKH, JJ.

¶9

DATE : 10.9.2012

¶10

By this petition, the petitioner impugns the order

¶11

passed by the Commissioner of Customs and Excise dated 23.9.2011 confirming the demand of service tax for supply of tangible goods. The petitioner seeks a declaration that the leasing / renting of goods in a manner similar to the transaction which is the subject matter of the impugned order will not attract service tax under Section 65(105)(zzzzj) of the Finance

¶12

100912wpno.5410.11. 2

¶13

Act, 1994. In the alternative, if this Court declines to grant relief as aforesaid, the petitioner seeks a direction to the respondents 4 and 5 to pay the entire amount of value added tax recovered from the petitioner to the respondent no.3 in discharge of liability towards the service tax payment.

¶14

The petitioner company lets heavy machinery on hire to its customers. A show cause notice dated 25.3.2010 was issued to the petitioner asking the petitioner to pay service tax on two counts. The demand was made for 'business auxiliary service', and the 'supply of tangible goods service'. By the impugned order dated 23.9.2011, the Commissioner of Customs and Excise dropped the demand in respect of the 'business auxiliary services'. By the said order, the demand for 'supply of tangible goods service' was confirmed. The Department was aggrieved by the order of the Commissioner dated 23.9.2011 holding that the demand in respect of the business auxiliary service was improper and was liable to be set aside. The Excise Commissioner filed an appeal against the dropping of that demand, under Section 86 of the Finance Act, 1994.

¶15

100912wpno.5410.11. 3

¶16

Since the statutory appeal is provided under Section 86 of the Finance Act against the order of the Commissioner Excise dated 23.9.2011, a preliminary objection is raised by the respondents to the tenability of the instant petition. According to the learned Assistant Solicitor General of India, the petition cannot be entertained in view of the efficacious alternate remedy provided under Section 86 of the Act. It is submitted that the issues involved in the case could be well adjudicated in the appeal provided under Section 86 of the Act. According to the learned counsel, it was necessary for the petitioner to have preferred an appeal under Section 86, especially when the appeal filed by the Excise Commissioner against the part of the impugned order dated 23.9.2011 is pending before the appellate authority. The learned counsel relied on the decisions reported in 2011(21) S.T.R. Page 688 ( Indoworth India Ltd. vs. CESTAT, Mumbai), 2008(12)S.T.R. page 98(Mad) ( Nivaram Pharma Pvt.Ltd. vs. CEGAT, Madras) and an unreported order dated 23.8.2012 in W.P.No. 255312 for seeking dismissal of the writ petition in view of the existence of an alternate efficacious remedy.

¶17

Shri Gordey, the learned senior counsel appearing

¶18

100912wpno.5410.11. 4

¶19

on behalf of the petitioner submitted that the appeal under section 86 of the Act would not be an efficacious remedy in this case as the petitioner is not liable to pay service tax on transactions in question in view of the two circulars issued by the Finance Department. The learned senior counsel submitted that it is not permissible for the Central Government to impose the service tax and at the same time for the State to impose the sales tax and the value added tax. The learned Senior Counsel submitted that the issue involved in this case could be decided on the basis of the two circulars issued by the Finance Department and in the facts of the case, the remedy of appeal under Section 86 of the Finance Act would not be an efficacious remedy. The learned Senior Counsel relied on the Judgments reported in AIR 2006 Supreme Court, 1383 (BSNL vs. Union of India & others) and (1998) 8 Supreme Court Cases page 1(Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai and others) to submit that the existence of the alternate remedy would not be a bar to the tenability of a writ petition especially when the order of the authority is wholly without jurisdiction.

¶20

On hearing the learned counsel for the parties and

¶21

100912wpno.5410.11. 5

¶22

considering the issues involved in this case, it appears that the petitioner has an alternate efficacious remedy of filing an appeal under section 86 of the Finance Act and it would not be proper for this court to exercise the writ jurisdiction. It is necessary to note that by the show cause notice dated 25.3.2010 the service tax was demanded for business auxiliary service and for supply of tangible goods. By the impugned order the demand for business auxiliary service was dropped and the demand for supply of tangible goods was confirmed. The Excise Commissioner filed an appeal before the appellate authority under Section 86 of the Finance Act against the part of the order dropping the demand in regard to business auxiliary service. The question about the correctness or otherwise of the demand in regard to supply of tangible goods can be decided by the appellate authority in an appeal under section 86 of the Finance Act. The question of applicability of the two circulars issued by the Finance Department to the facts involved in this case can as well be considered by the appellate Authority while deciding the appeal under section 86. It is a well settled principle of law that the High Court should exercise restraint in entertaining the writ petitions in tax matters when effective alternate remedy is provided under the

¶23

100912wpno.5410.11. 6

¶24

statute. The question about the liability of the petitioner to pay only one of the taxes i.e. service tax or sales tax would arise only if the challenge of the petitioner to the order of the Commissioner fails. We are of the view that the issue in regard to the applicability of the provisions of Section 65 (105) (zzzzj) of the Finance Act to the transactions in question can be effectively decided under section 86 of the Act. The judgment reported in AIR 2006 Supreme Court, 1386 cannot be applied to the facts of this case as in that case the contention raised by the petitioner therein related to the construction of Article 366(29A) and the Supreme Court was of the view that if the construction as putforth by the petitioner therein was accepted, the petitioner would have been entitled to the relief. Such is not the case here. Similarly, in the other Judgment reported in (1998) 8 SCC page 1, the show cause notice issued by the authority was totally without jurisdiction and hence the Hon'ble Supreme Court held that the High Court ought to have entertained the Writ Petition.

¶25

In the result, we uphold the preliminary objection raised on behalf of the respondents and dismiss the writ petition. The petition stands dismissed with no order as to

¶26

100912wpno.5410.11. 7

¶27

costs.

¶28

At this juncture, the learned senior counsel appearing on behalf of the petitioner states that since the petition is dismissed on the ground of existence of alternate remedy and since the petitioner was bona fide prosecuting the matter in this court on the belief that the alternate remedy would not be a bar in this case, the petitioner may be granted liberty to file an appeal within a period of one month.

¶29

The request made on behalf of the petitioner is just and reasonable. In case an appeal is filed by the petitioner within a period of one month, the appellate authority should decide the same on merits. All the questions raised in this writ petitioner are kept open. Order accordingly.

¶30

JUDGE JUDGE

¶31

patle

¶32

100912wpno.5410.11. 8

M/S Gmmco Ltd. Thr. Its Manager/Auth. Signatory v. Union of India Thr. Ministry of Finance, New Delhi and Ors.

Case brief

What is this about?

What did the court decide?

M/S Gmmco Ltd. Thr. Its Manager/Auth. Signatory v. Union of India Thr. Ministry of Finance, New Delhi and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Anup Sureshrao Bende Vs Committee for Scrutiny/Verification of Tribe Claims, Amravati and Ors.

Adarsha Bahuudesiya Shikshan Prasarak Mandal, through Its President Mr. Umesh Ramprasad Lahote and Vs National Council for Teachers Education, through Its Convenor, New Delhi and 3 Others

The Pragati Co-Operative Housing Society Ltd. through Its Secretary, Vinod S/O Baliramji Tikle and Vs Shri Dnyaneshwar S/O Vitthalrao Chamat and 8 Others

Bhartiya Vikas Bahuddeshiya Shikshan and Prashikshan Sanstha Thr. Its President and Anr. Vs the State of Mah. Thr. Its Secty. and Anr.

Babanrao S/O Damduji Jawade Vs Dnyaneshwar S/O Ramaji Bhoyar and Another

Vishwanath Gopalrao Channe Vs State of Maharashtra, through Its Secretary, Department of Higher and Technical Education and 4 Oth