Case Law Details
North Western Carrying Corporation Vs Union of India (Gujarat High Court)
The Gujarat High Court dismissed a writ petition challenging a Show Cause Notice dated 13.03.2018 issued under Section 73(1) of the Finance Act, 1994. At the outset, the petitioner’s counsel fairly submitted that the issue raised in the petition had already been decided by a Coordinate Bench of the High Court in Sahitya Mudranalaya Pvt. Ltd. Vs. Additional Director General. In light of that decision, the petitioner requested that it be relegated to participate in the adjudication proceedings.
The petitioner had sought quashing of the Show Cause Notice issued under Section 73(1) of the Finance Act, 1994, contending that the notice lacked jurisdiction because the service tax provisions contained in Chapter V of the Finance Act, 1994 had been repealed by Section 173 of the Central Goods and Services Tax Act, 2017 (CGST Act).
The High Court referred to the findings of the Coordinate Bench in Sahitya Mudranalaya Pvt. Ltd., which had examined Sections 173 and 174 of the CGST Act. The earlier judgment held that although Chapter V of the Finance Act, 1994 stood omitted by virtue of Section 173, Section 174(2)(e) of the CGST Act expressly preserves investigations, inquiries, verifications, assessments, adjudication proceedings, other legal proceedings, recovery of arrears, and remedies relating to duties, taxes, penalties, interest, and liabilities under the repealed law. It further provides that such proceedings may be instituted, continued, or enforced as if the Finance Act, 1994 had not been amended or repealed.
Relying on the Coordinate Bench decision, the High Court observed that the respondent authorities continue to possess the jurisdiction to institute and continue legal proceedings under the Finance Act, 1994 despite the enactment of the CGST Act. Therefore, the contention that fresh proceedings could not be initiated after the omission of Chapter V of the Finance Act, 1994 did not merit acceptance.
In view of the binding precedent, the High Court held that the present writ petition did not merit consideration and dismissed it. However, the Court clarified that the dismissal of the writ petition should not prejudice the petitioner’s case during adjudication. It directed the respondent authorities to complete the adjudication proceedings independently and in accordance with law without treating the dismissal of the writ petition as adverse to the petitioner’s interests.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. At the outset, learned advocate Mr.Anand Nainawati, appearing for the petitioner, has very fairly submitted that the issue raised in the present writ petition i.e. the challenge to the impugned Show Cause Notice dated 13.03.2018 issued under Section 73(1) of the Finance Act, 1994 (for short, “the Act”), already stands concluded by the judgment and order dated 29.01.2020 passed by a Coordinate Bench of this Court in Special Civil Application No.20748 of 2018 and allied matters in the case of Sahitya Mudranalaya Pvt. Ltd. Vs. Additional Director General, 2021 (46) G.S.T.L. 245 (Guj.). It is submitted that the petitioner may be relegated to face the adjudication proceedings.
2. In the present writ petition, the petitioner has prayed for the following relief:-
“17. (a) that this Hon’ble Court be pleased to issue appropriate writ, order or direction to quash Show Cause Notice dated 13.03.2018 issued under F. No. XIV/108/2017 by Respondent No. 2, whereby the Petitioner has been asked to Show Cause as to why the specified amount of Service Tax, interest and penalties should not be demanded and recovered from it.”
3. The petitioner has assailed the show cause notice dated 13.03.2018 issued under Section 73(1) of the Act.
4. While issuing notice in the present matter, vide order dated 18.01.2019, this Court had recorded the submission that, since the provisions relating to service tax contained in the Finance Act, 1994 have been repealed by virtue of Section 173 of the Central Goods and Services Tax Act, 2017 (for short, “the CGST Act”), hence, the impugned show cause notice is without jurisdiction.
5. At this stage, it would be apposite to refer to the observations made by the Coordinate Bench in the case of Sahitya Mudranalaya Pvt. Ltd. (supra), which read thus:—
“7.7 Thus, by virtue of Section 173 of the CGST Act, Chapter V of the Finance Act, 1994 stands omitted. Sub-section (2) of Section 174 of the CGST Act provides that the amendment of Finance Act, 1994 shall not “(e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed.
7.8 Thus, clause (e) of sub-section (2) of Section 174 of the CGST Act provides for institution of investigation, inquiry, verification, assessment proceedings, adjudication and other legal proceedings as if the Finance Act, 1994 has not been so amended. Therefore, even after the omission of Chapter V of the Finance Act, 1994, by virtue of clause (e) of sub-section (2) of Section 174 of the CGST Act, the authority is authorised to institute any legal proceeding under the said Act. The contention that the authority does not have authority to initiate fresh proceedings after the omission of Chapter V of the Finance Act, therefore, does not merit acceptance.”
6. Thus, the Coordinate Bench, after examining the provisions of Sections 173 and 174 of the CGST Act, categorically held that the respondent-authorities are duly empowered to institute and continue legal proceedings notwithstanding the enactment of the CGST Act, and rejected the contention raised on behalf of the assessee regarding lack of jurisdiction.
7. In view of the aforesaid judgment and order passed by the Coordinate Bench, the present writ petition does not merit consideration and is accordingly dismissed. It is, however, clarified that the respondent-authorities shall not treat the dismissal of the present writ petition, as detrimental to the interests of the petitioner and shall complete the adjudication proceedings independently in accordance with law. Rule is discharged.
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