Existence of Alternative Remedy: Gauhati HC Refuses to Entertain Writ against Service Tax Demand [Read Order]

The Gauhati High Court refused to entertain writ petition against service tax demand on the existence of alternative remedy.

The petitioner no. 1, Ayursundra Hospitals (Guwahati) Pvt Ltd and Anr, is a company registered under the service tax laws as a clinical establishment providing healthcare services, health check-up and diagnosis services. The petitioner no. 2, Abhijit Hazarika, is a share-holder as well as Director of the petitioner no. 1 company.

A show-cause notice was issued upon the petitioner no. 1 by the respondent, proposing to initiate proceedings for recovery of service tax of Rs.23 crores, which was disclosed in their income tax returns for financial year 2016-17. The respondent had also proposed to invoke extended period of limitation as per proviso to Section 73(1) of the Finance Tax Act, 1994, on the ground of suppression of facts and non-filing of return.

The Counsel for the petitioner submitted that the issue of exemption from service tax was not dealt with in a lawful manner and due consideration of the notification by which levy of service tax was exempt on health care services rendered by clinical establishment and the contention of the petitioners that the petitioner no. 1 was not liable to pay service tax for the financial year 2016-17 was not properly addressed.

The standing counsel for the respondents has submitted that the contentions raised by the petitioners were all addressed in the impugned order. It was submitted that by the impugned order, the respondent had decided the case on facts and has extensively referred to the statutory provisions.

The standing counsel thus submitted that the writ petition would not be maintainable and it was submitted that the writ petition be dismissed by relegating the petitioners to avail the alternative and efficacious remedy available to the petitioners under the Goods and Services Tax Act, 2017 before the Customs, Central Excise and Service Tax Appellate Tribunal, Kolkata.

On the issue of alternative remedy, in Whirlpool Corporation v. Registrar of Trademarks, Mumbai, where it was held that an alternative remedy is not a bar to the exercise of the writ jurisdiction of the High Court (i) if the writ petition is filed for enforcement of fundamental rights; (ii) where there has been a violation of the principles of natural justice; (iii) where the order or the proceedings are wholly without jurisdiction; (iv) or when the vires of an Act is challenged. A Single Judge Bench of the Gauhati High Court comprising Justice Kalyan Rai Surana observed that “The Court is inclined to restrain itself from entertaining this writ petition in view of alternative and efficacious remedy available to the petitioners under the Goods and Services Tax Act, 2017 before the Customs, Central Excise and Service Tax Appellate Tribunal, Kolkata.”

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