The Karnataka High Court remanded a case pertaining to Service Tax Exemptions available on the supply of Auto-Tippers and Manpower for Garbage Collection back to the post show-cause notice (SCN) stage citing lack of jurisdiction to ascertain the same.
The Writ Petition was lodged before the Karnataka High Court by Sapthagiri Cleaning Services, a contractor engaged in Municipal Solid Waste Management in certain areas of Bangalore. The Petitioner undertakes work on the basis of supply orders issued by the Bruhat Bengaluru Mahanagara Palike (BBMP).
The functions undertaken by the Assessee by way of supply order issued by BBMP dated 10.03.2016 required the Assessee to supply auto-tippers with drivers and helpers for the specific purpose of garbage collection.
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The events leading up to the present case was initiated when the Respondents received data from the Central Board Of Indirect Taxes & Customs (CBIC) claiming that the Petitioner-Assessee had erred in accurately declaring the value of services rendered by them in Income Tax Returns in Form-26AS; it was further observed that the Petitioner had not filed Returns under Form ST-3.
The Petitioner was subsequently served with SCN stating that the ‘cleaning services’ performed by the Assessee is liable to service tax.
The SCN was challenged by the Counsel for the Petitioner, Pradyumna Hejib contending that the work performed by the Petitioner clearly falls within the extent of exemptions provided under Notification No. 25/2012- Service Tax dated 20.06.2012 issued by the Ministry of Finance.
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Further reference was made to the Amendment made to Sl. No.2.2.2.(ii) of Notification No. 25/2012- Service Tax via D.O. Letter F.No.334/15/2014-TRU, dated 10.07.2014, which affirmed that ‘solid waste management’ would continue to be exempted from Service Tax but it would ‘not be applicable to other services such as consultancy, designing etc. not directly connected with the specified services’.
Aravind V. Chavan, Counsel for the Revenue Department averred before the Delhi High Court that the contentions raised deal with an issue of fact and not an issue of law and hence, submitted that the Delhi High Court’s intervention at this stage to not be appropriate.
The Single-Judge Bench of the Delhi High Court presided over by Justice S Sunil Dutt Yadav observed that the question whether the supply of auto-tipper and manpower is classifiable under ‘solid waste management’ requires a thorough interpretation of BBMP’s supply order and proper factual appreciation, which is not possible by the Delhi High Court.
In light of the Delhi High Court’s identification of its lack of jurisdiction to adjudicate on a matter of fact and not of law, the matter was remanded back to the stage post show cause notice.
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Additionally, the Petitioner was directed to draft a comprehensive reply, consisting of all necessary documents that would enable the Adjudicating Authority to make a well thought out decision on whether the activities rendered by the Petitioner would be exempt from Service Tax as per the Notification No. 25/2012- Service Tax.
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