Post-GST Service Tax Enquiry / Audit against the assessee: Jharkhand High Court directs to maintain Status-Quo [Read Order]

Show-Cause Notice - Service Tax - Jharkhand High Court - GST - Taxscan

In an interim order, Jharkhand High Court has directed to maintain status quo on Service Tax Enquiry / Audit against the assessee post implementation of Goods and Services Tax ( GST ).

The Petitioner submitted that We find from the text of the said notice that this was in relation to an enquiry or audit as envisaged in Rule 5A of the Service Tax Rules, 1994. The specific provision under which the aforesaid notice was issued, however, has not been spelt out therein.

The said notice has been followed by other reminders and summons. Advocate J.K. Mittal, learned counsel appearing for the petitioner, that the officers appointed under the 2017 Act have already visited the premises of the writ petitioner on 23rd March 2019 and have collected several documents. The legality of such notices and summons, as well as the visit of the said officers in the premises of the writ petitioner, have been questioned in the writ petition. The main ground on which the writ petition is founded is that the saving clause which we have reproduced above does not protect the Service Tax Rules and hence any action taken in pursuance of the said Rules would be without the authority of law. On this count, a Constitutional Bench judgment of the Hon’ble Supreme Court in the case of Kolhapur Canesugar Works Ltd. and another Vs. Union of India and others reported in (2000) 2 SCC 536 has been relied upon by Mr. Mittal. The other authority on the same point relied upon by him is an earlier judgment of the Hon’ble Supreme Court in the case of Air India Vs. Union of India and others reported in (1995) 4 SCC 734.

The division bench comprising of Chief Justice Anirudha Bose and Justice Ratnaker Bhengra said that, “At the interim stage, we have to examine if any fresh proceeding under the 1994 Act for scrutiny, inspection or audit, if commenced after omission of the said Act is primafacie legally valid or not. Though Mr. Mittal has submitted that the action complained against in this writ petition has been undertaken in pursuance of the power under Rule 5A of the 1994 Rules, as we have already observed, the legality of the instruments challenged in this writ petition do not specify the provisions under which such actions have been taken by the revenue authorities. The saving clause itself after omission of the statute does not refer to any particular provision of the Rules. Sub-clause (e) which we have quoted in the preceding part of this order gives a list of actions which are saved

The Court also observed that, “In our prima facie view, the expression “instituted” in sub-clause(e) would imply the proceeding which stood already instituted at the time of repeal or omission of the 1994 Act. In such circumstances, we choose to follow the course taken by the Hon’ble High Courts of Gujarat and Delhi and direct status quo to be maintained till the next date of hearing so far as the proceeding which form the subject matter of the present writ petition is concerned”.

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