Case Law Details
Pepper Square Software Services Pvt. Ltd. Vs Deputy Commissioner of Central Tax (Karnataka High Court)
The Karnataka High Court considered a writ petition challenging an Order-in-Original dated 09.08.2021 passed under the Finance Act, 1994. Although the order was appealable under Section 107 of the Act, the petitioner invoked the writ jurisdiction of the High Court relying on an earlier decision of a co-ordinate Bench in similar matters.
The petitioner contended that the impugned order had been passed ex parte without due service of notice or an adequate opportunity of hearing. It also submitted that the order was based on information furnished by the Income Tax Department under an agreement between the Central Board of Direct Taxes and the Central Board of Indirect Taxes. The petitioner relied on the earlier High Court decision, where proceedings in similar circumstances had been restored for reconsideration after granting due opportunity.
The respondents submitted that, while the earlier undertaking recorded before the Court was intended to ensure consideration of similar complaints, the jurisdictional officers were now empowered to provide an opportunity of hearing and decide such matters on their merits.
The High Court observed that, despite the writ petition having been filed nearly four years after the impugned order, the petitioner asserted that no notice had been served and no opportunity had been granted. The Court also noted that the petitioner intended to rely upon statutory provisions to contend that the transaction did not attract the tax liability in question. It held that these circumstances required consideration before fastening any liability on the petitioner.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner is aggrieved by the Order-in-Original dated 09.08.2021 under the Finance Act, 1994 [for short, ‘the Actl. The petitioner cannot dispute that this is an order that could be appealed under Section 107 of the Act, but the petitioner has invoked this Court’s jurisdiction relying upon the judgment of a Co-ordinate Bench of this Court in M/s. Karnataka Chinmaya Seva Trust Vs. Joint Commissioner of Central Tax in W.P. No.11154/2023 and connected matters dated 03.07.2024.
2. Mr. Prakash D, the learned counsel for the petitioner, submits that the impugned Order-in-Original is an ex parte order without due service of notice and is based on an information furnished by the Income Tax Department acting under an agreement signed between the Central Board for Direct Taxes and the Central Board for Indirect Taxes but without due opportunity. The learned counsel argues that in very similar circumstances based on an undertaking given by the concerned from the department, a Co-ordinate Bench of this Court has disposed of the writ petition in W.P.No.11154/2023 and other matters [such as in W.P.No.20351/2024] restoring the proceedings for reconsideration with due opportunity.
3. Mr. Aravind V. Chavan, a learned Standing counsel who is called upon to accept notice for the respondents, is heard and when queried, the learned counsel submits that the undertaking as recorded in W.P.No.11154/2023 was to ensure that the designated officers looked into complaints of similar nature but with march of time, the jurisdictional Officers, such as the respondents in the present case, are empowered to extend an opportunity and decide on the merits of the cause that could be shown.
4. This Court finds that the outcome in the writ petition must turn in the light of the afore circumstances notwithstanding the fact that the petition is filed almost after four years from the date of the impugned order because the petitioner asserts that it has not been served with notice or been extended an opportunity othwerwise, and more importantly, the petitioner proposes to rely upon the statutory provisions to contend that the subject transaction does not result in any consequence to pay certain taxes. This Court finds that all these circumstances must be considered before a liability is fastened on the petitioner. Hence the following:
ORDER
[A] The petition is allowed-in-part and the impugned Order-in-Original dated 09.08.2021 [Annexure – B] is quashed restoring the proceedings to the first respondent for reconsideration.
[B] The petitioner shall, without further notice, file response, if any, with the first respondent by 02.07.2026 even without waiting for a certified copy of this order.
[C] The first respondent shall consider all the circumstances without non-suiting the petitioner on the ground of delay.
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