The Patna High Court, in a writ petition challenging the imposition of service tax on license fees and demurrage charges under GST, held that the matter involves disputed questions of fact and an efficacious alternative remedy exists.
Petition disposed of without interference; rights reserved to seek appeal before a Tribunal.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF JUDICATURE AT PATNA Civil Writ Jurisdiction Case No.22415 of 2019
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Bihar State Beverages Corporation Ltd. a company established under the Companies Act, 1956, having its office at Vidyut Bhawan-2, Jawaharlal Nehru Marg, Patna-1, through authorised signatory Riyaz Ahmad Khan, male, aged about 50 years, son of Late md. Sahidul Hoda Khan, resident of Alinagar Colony, Near Imam Plaza, Anishabad, Patna-800002, P.s.- Gardanibagh, Distt.- Patna ... ... Petitioner/s
Versus
... ... Respondent/s
====================================================== Appearance : For the Petitioner/s : Mr. Ajay Kumar Rastogi, Advocate Mr.Parijat Saurav, Advocate For the Respondent/s : Mr.S.D.Sanjay (Adsg) Mr. Alok Kumar Agarwal, Advocate Mrs. Priya Gupta, Advocate
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CORAM: HONOURABLE THE CHIEF JUSTICE
and HONOURABLE MR. JUSTICE ANIL KUMAR UPADHYAY ORAL ORDER
(Per: HONOURABLE THE CHIEF JUSTICE)
2 03-12-2019
The petitioner, through the instant petition has prayed for the following relief:
“For quashing/stay of the order contained in order no. 05/S.T./Commissioner/2019 dated 09/05/2019, passed by the respondent no.3 wherein it has been ordered to levy service tax on reverse charge meachanism on the license fees charged by the Bihar State Government for the license issued to the petitioner as well as the privilege fee charged by the state government for granting exclusive wholesale business in liquor to the petitioner, both in exercise of its powers under the Bihar Excise Act,
Patna High Court CWJC No.22415 of 2019(2) dt.03-12-2019 2/3
1915 and also the service tax is imposed on the demurrage charges collected by the petitioner from the erring suppliers as per its policy in addition to interest and penalty, on the ground that the action of the respondent no.3 in imposing service tax on the license fee, exclusive fee and demurrage charges is ultra viires the provisions of the Constitution of India, the provisions of the Finance Act, 1994 as well as the provisions of the Bihar Excise Act, 1915, and the imposition of the aforesaid service tax and passing of the impugned order dated 09/05/2019 by the respondent no.3 is without jurisdiction.
These license fee and privilege fee are not fees levied for any services provided by the State of Bihar, but are fees levied for granting the right of exclusive wholesale business of alcoholic liquor for human consumption within the State of Bihar and/or fees charged for parting with the exclusive privilege to deal with such liquors. The levy of service tax by respondent no.3 on the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, encroachers into the fields covered under Entry 8 read with Entry 66 of List II of the Seventh Schedule of the Constitution (hereinafter referred to as the “State List”) which are exclusively reserved for legislation and taxation by the state government. Further, the levey of service tax by Respondent No.3 on the fees levied and collected by state government is in violation of Article 289(1) of the Constitution which exempts the
Patna High Court CWJC No.22415 of 2019(2) dt.03-12-2019 3/3
income of a State from Union taxation. The demurrage charges collected by the petitioner is a kind of penalty for default by the suppliers and it can not be termed as service being provided to the manufacturers/suppliers. as well as the Heard learned counsel for the petitioner and the learned counsel for the respondents.”
We are prima facie of the considered view that it is not
a case of inherent lack of jurisdiction, warranting interference by this Court by way of writ petition, in the present petition under Article 226 of the Constitution of India.
As such, in view of availabiliy equally efficacious alternative remedy, more so, in a case where disputed questions of fact are involved, we dispose of the present petition, reserving right to the petitioner to seek such remedies by way of appeal before the Tribunal in accordance with law.
It is needless to say that the period spent by the petitioner before this Court in pursuing the instant petition, shall stand excluded for the purpose of limitation.
(Sanjay Karol, CJ)
( Anil Kumar Upadhyay, J)
Ravi/- U
2 issues framed by the court
Whether the petitioner has approached the High Court prematurely when an alternative remedy exists before a Tribunal?
,
5 provisions across 3 enactments
Bihar State Beverages Corporation Ltd.
The Union of India
The Central Board of Indirect Taxes and Customs
The Commissioner Central GST and Central Excise, Patna
Sanjay Karol
Anil Kumar Upadhyay
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
