The Kerala High Court ordered re-adjudication as there was delay in producing audited balance sheet due to delay of statutory auditors.
The petitioner is the apex body of Consumer Co-operative Society in the State of Kerala. It is wholly owned and controlled by the Government of Kerala. It was issued with a show cause notice (Ext.P1) under the provisions of the Finance Act, 1994 (‘the 1994 Act’) alleging that it has not paid or it had short paid the amount of service tax payable under the provisions of the 1994 Act.
The petitioner contested the show cause notice. However, by the order the respondent confirmed the demands in the show cause notice and called upon the petitioner to pay the sums set out in the order.
A. Kumar, Senior Counsel appearing for the petitioner submitted that the petitioner did not get a proper opportunity to substantiate its case before the Adjudicating Authority and that the audited accounts of the petitioner were not available at the time when the show cause notice was adjudicated. It was submitted that the same issue has been considered earlier in other adjudications where the issues have been answered in favour of the petitioner and that the question of service tax liability of the petitioner on incentives and discounts was decided in favour of the petitioner and if this is taken into consideration a substantial portion of the demand in the order will be wiped out.
The Standing counsel appearing for the Department submitted that the order is an appealable order and no ground has been made out for interference under Article 226 of the Constitution of India. It was submitted that the claim of the petitioner that similar or substantially similar demands have been adjudicated in favour of the petitioner on earlier occasions is also a matter that can be considered by the Appellate Authority.
A Single Bench of Justice Gopinath P observed that “I also take note of the fact that the petitioner is an entity wholly owned by the Government of Kerala and the delay in producing the audited balance sheet was principally on account of the delay on the part of the statutory auditors under the provisions of the Kerala Co-operative Societies Act, 1969. Therefore, this writ petition will stand disposed of setting aside the order and restoring the adjudication of the show cause notice to the file of the respondent.”
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