Gauhati HC dismisses Petition challenging Service Tax Demand Post-GST [Read Judgment]

The Gauhati High Court, on Friday dismissed a number of petitions challenging the service tax demand after the GST– rollout on 1^st July 2017.

Earlier, the Court granted interim relief to the petitioner M/s Mascot Entrade Pvt Ltd and stayed a show cause notice issued by the department demanding service tax for want of jurisdiction after the implementation of the new tax regime.

Before the High Court, the counsels for the petitioner, Medha Lila Gope and Nitu Hawelia pleaded that the implementation of the Central Goods and Services Tax (CGST) and omission of Entry 92C of the Constitution, the Service Tax department has no jurisdiction to levy Service Tax.

For the State, it was argued that an omission of the provisions of a statue do not render any proceeding initiated under it to be not maintainable any fufther, relies upon the provisions of Section 6 A of the General Clauses Act.

After hearing both the sides, Justice Achintya Malla Bujor Barua observed that a reading of Section 6-A of the General Clauses Act clearly shows that even if an enactment stands omitted by a subsequent amendment, a proceeding initiated under the omitted enactment on its own does not come to an end upon omission and further continuance cannot be said to be impermissible under the law.

“In view of such conclusion, we find the writ petition to be devoid of any merit and the relief sought for interfering with the demand-cum-show cause notices of various dates issued by the Assistant Commissioner Central Goods and Service Tax of the different districts would have to stand rejected. Accordingly, the writ petitions stand dismissed,” the Judge said.

Before concluding, the Court added that “Although the claim of the petitioners for interfering with the demand-cum-show cause notices had been refused but it is clarified that the respondents, if desire, may proceed ahead with the said demand-cum-show cause notices, and the same be done strictly in accordance with law, but from the point of view that the demand-cum-show cause notices came into effect from the date of this judgment.”

“We are infact happy with the judgment. The  judgment, have not considered the Omission of service tax from Constitution which was our main ground of challenge, and on the basis of which interim was given, therefore this ground is still open and can be raised in reply to show cause notice which have been revived and considered to be issued from the date of judgment.

Further, the Court have dealt with only one issue which is whether 174 have saved 173, and informs that a judgment and theory of larger bench earlier squarely covering the issue ( Rayala Corporation case ) can be overruled by a later judgment of smaller bench. It’s not a loss , all grounds are open. So it is not a dismissal per se,” Advocate Nitu Hawelia, Counsel for Mascot case said”.