Shafiqahmed Dongarkhe Vs Principal Commissioner of Central Tax (Karnataka High Court)
The petitioner approached the Karnataka High Court seeking quashing of three actions by the tax authorities: a show cause notice dated 27.12.2020, an Order-in-Original dated 31.08.2023/03.10.2023, and an Order-in-Appeal dated 27.11.2024/28.11.2024. Alternatively, the petitioner sought condonation of delay in filing the statutory appeal and a direction to the appellate authority to hear the matter on merits.
The petitioner’s counsel argued that the legal position governing the dispute had already been settled by a co-ordinate bench of the High Court in Karnataka Chinmaya Seva Trust v. Joint Commissioner of Central Tax, decided on 03.07.2024. In that decision, the Court had examined the framework applicable to similar service tax matters and issued comprehensive directions concerning how authorities must reconsider pending proceedings. These directions required the tax officers to examine specific issues, including whether the petitioners’ activities fell within the definition of “service” under Section 65B(44) of the Finance Act, 1994; whether they were covered under the negative list or exemption notifications such as Notification No. 25/2012-ST; whether liability arose under Rule 2(1)(d) and relevant notifications; and whether the claims were barred by limitation as per Supreme Court precedent.
The co-ordinate bench had also clarified that the disposal of those petitions should not be treated as an adjudication on merits or jurisdiction, and all contentions remained open. It further directed that petitions challenging show cause notices and Orders-in-Original be remitted to the authorities for reconsideration from the stage of reply to the show cause notice. Where appeals were pending, petitioners were permitted to withdraw them so that the Orders-in-Original would also stand set aside under the same arrangement. The bench also held that any recovery proceedings based on the impugned orders were to be set aside.
