2026-VIL-493-GAU-ST
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SERVICE TAX High Court Cases

Service Tax - Taxability of transportation services under the Finance Act, 1994 - The petitioner was engaged in the business of transportation of goods by road, which was specifically excluded from the definition of 'taxable service' under Section 66D of the Finance Act, 1994 – Dept treated the entire receipts of the petitioner as receipts from 'taxable service' and proceeded to demand service tax along with interest and penalty – HELD - The demand of service tax, interest and penalty imposed on the petitioner is found to be contrary to the provisions of the Finance Act, 1994. The Adjudicating authority failed to consider that the services provided by the petitioner were specifically excluded from the levy of service tax under Section 66D(i)(A) of the Finance Act, 1994. The Adjudicating authority could not have treated the entire receipts of the petitioner as receipts from 'taxable service' without any evidence that the services provided were not covered under the exclusion provided in Section 66D(i)(A) – Further, the invocation of the extended period of limitation under Section 73(1) is also invalid as there was no finding by the Addl. Commissioner that the case of the petitioner fell under any of the conditions specified in the proviso to Section 73(1), which is a pre-requisite for invoking the extended period of limitation – For the Revenue to invoke the extended period of limitation under Section 73(1), there must be a conclusive finding that the petitioner had wilfully and deliberately evaded or neglected to pay the service tax, which was not evident from the impugned order. The revenue authorities had assumed jurisdiction under Section 73(1) without fulfilling the necessary pre-conditions prescribed by the statute, and therefore, their assumption of jurisdiction was contrary to the provisions of the law - The demand of service tax, interest and penalty imposed on the petitioner is set aside and the writ petition is allowed - Maintainability of writ petition - The Writ Court can interfere any arbitrary action notwithstanding the availability of alternative remedy when the authorities acts within jurisdiction or in exercise of jurisdiction or there is a procedural irregularity or were the order is high handed and is palpably illegal order in as much the same would amount to violation of Article 14 of the Constitution of India - In an ordinary course of proceedings seeking recovery of tax demanded, the normal course would be to avail of the statutory remedies. However, before the authorities invoke their jurisdiction under section 73(1), it is the mandate of the statute that the authorities must come to a specific conclusion that the jurisdiction conferred on the revenue authorities under Section 73(1) can be invoked in the facts and circumstances of the present case - While demand and recovery of taxes as ordinarily prescribed under the provisions of the Act requires careful consideration of the facts and circumstances and satisfaction of all the parameters prescribed upon, the demand and recovery under the extended period of limitation under section 73(1) being an exception to the General Rule, requires a higher degree of responsibility and diligence on the part of the revenue authorities before they can proceed to invoke the powers conferred under section 73(1) - It is under these circumstances that notwithstanding the availability of statutory alternative remedy, this Court considers it an appropriate case to invoke its jurisdiction under Article 226 to interfere with the impugned order in original and to set aside and quash the order-in-original.
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