HIGH COURT OF MADRAS
TVL Mayajal Entertainment Ltd.
Commissioner of Service Tax, Chennai
Writ Petition No. 11345 of 2012
W.P. No. 8720 of 2012
M.P. Nos. 1 & 1 of 2012
August 28, 2012
1. Since, the facts and the circumstances arising for consideration in the above writ petitions are the same, a common order is passed.
2. Heard the learned counsel appearing for the petitioner, as well as the learned counsels appearing for the respondents.
3. It has been stated that the petitioner is a company registered under the provisions of the Indian Companies Act, 1956. The petitioner is engaged in the business of running a Multiplex. It is also engaged in certain other activities, which are liable to tax, under the provisions of the Tamilnadu Entertainments Tax Act, 1939. The Multiplex run by the petitioner has a number of outlets, wherein third parties are engaged in the sale of food and bewerage items and other goods, on a revenue sharing basis.
4. It has been further stated that the petitioner has been filing regular returns of income, in terms of the provisions of the Finance Act, 1994, and the Service Tax Rules. While so, the petitioner had received a notice, dated 20.10.2010, from the office of the third respondent, stating that the respondents had visited the premises of the petitioner in the year, 2008, and had obtained certain records and documents relating to its activities. It had been stated, in the said notice, that the respondents were of the opinion that the petitioner was engaged in providing taxable services, without paying the service tax due to be paid thereon. By the notice, dated 20.10.2010, the petitioner had been called upon to provide details relating to the period 1.5.2006 to 30.9.2009, in respect of certain services rendered by the petitioner, like the business support services, the renting of immovable property, the provision of space for advertisements and hoardings, the membership for the club or association and the mandap keeper services. The notice in question had contained an annexure proposing to bring to tax the income earned by the petitioner, from the rendering of business auxiliary services.
5. It has been further stated that the liability of the petitioner to pay tax has to be computed, on the basis of actual receipts, as per the books of accounts of the petitioner. However, the impugned show cause notice proposes to bring to tax, erroneously, the amounts, as per the figures in the balance sheet of the petitioner, as such figures do not reflect the actual position in terms of receipts. In fact the actual amounts received on account of the services relating to the renting of immovable property, the sale of space for advertisement, membership of club and association and mandap keeper services are less than the figures set out in the balance sheet of the petitioner.
6. It has been further stated that, in respect of the business auxiliary services, business support services, the members of club or association services, no service had been rendered in respect of the said accounts. However, a substantial amount of credit, on account of Central Value Added Tax, is available for set off against the liability said to be arising in respect of the said services.
7. It has been further stated that the petitioner had submitted a detailed reply, relying on various records, to substantiate the claims made on behalf of the petitioner, including the instructions issued by the Central Board of Excise and Customs. However, an assessment order, dated 27.3.2012, had been passed, by the third respondent, confirming the proposals contained in the show cause notice, dated 20.10.2010, without considering the detailed submissions made by the petitioner, in its reply, and in violation of the order passed by this Court, on 30.3.2012, in W.P.Nos.8719 and 8720 of 2012. In the impugned order, dated 27.3.2012, the third respondent had confirmed the demand of service tax liability of Rs. 1,49,56,824/-, relating to the period from April, 2005 to September, 2009, under the proviso to Section 73(1) of the Finance Act, 1994. Further, an order had also been passed appropriating the sum of Rs. 42,51,670/- paid by the petitioner in challan and the Input Service Tax Credit. Further, the petitioner had been asked to pay the interest at the applicable rates, under Section 75 of the Finance Act, 1994. Further, a penalty of Rs. 1,49,56,824/- had also been imposed, under Section 78 of the said Act, and a further sum of Rs. 5,000/-had been imposed, as penalty, under Section 77 of the said Act.
8. The learned counsel appearing on behalf of the petitioner had further submitted that detailed written submissions, dated 12.1.2012, had been filed before the Commissioner of Central Excise, Chennai-IV Commissionerate, the third respondent herein. In the said reply it had also been stated that further details were being collected by the petitioner to file a comprehensive reply, with regard to the demand of service tax, under the head business auxiliary services and therefore, the petitioner had requested for further time to be granted, by the third respondent, to file the said reply. However, the third respondent had stated in the impugned order, dated 27.3.2012, that the assessee had been requested to submit additional documents, from its clients, to substantiate the claim of non-realisation. Despite further time having been granted the assessee had failed to produce the relevant supporting documents to substantiate its claim that the other income earned are not taxable. Thus, it is clear that the third respondent had passed the impugned order, dated 27.3.2012, without going into the additional information furnished by the petitioner, on 27.3.2012, and the detailed reply submitted on 12.1.2012. As such, the impugned order of the third respondent, dated 27.3.2012, is liable to be set aside.
9. In the counter affidavit filed on behalf of the respondents 1 to 3 it had been stated that the averments and allegations made by the petitioner, in the affidavit filed in support of the writ petition, cannot be accepted. It had been further stated that, based on the intelligence gathered by the officers attached to the survey, intelligence and research wing of the Service Tax Commissionerate, Chennai, it had been found that the petitioner had not disclosed the services rendered under the various categories, as per Section 65 of the Finance Act, 1994. The third respondent had passed the impugned order, dated 27.3.2012, after considering the detailed reply submitted by the petitioner, as well as the other relevant records and therefore, it is not open to the petitioner to state that the said order had been passed, illegally. All the relevant factors had been taken into account, while passing the impugned order, on 27.3.2012. Further, the additional details said to have been submitted by the petitioner, on 21.3.2012, had not been supported by the relevant documents. The petitioner had been given sufficient opportunity to produce the relevant documents in support of its claims. However, the petitioner had failed to produce the documents in spite of sufficient time having been granted.
10. It had been further stated that an appellate remedy is available to the petitioner against the impugned order of the third respondent, dated 27.3.2012, under Section 86 of the Finance Act, 1994. Further, it would be open to the petitioner to file additional documents, if any, at the appellate stage to substantiate the claims made on behalf of the petitioner. Therefore, the present writ petition filed by the petitioner is devoid of merits and therefore, it is liable to be dismissed.
11. In view of the submissions made by the learned counsels appearing on behalf of the petitioner, as well as the respondents, and on a perusal of the records available, it is noted that an appellate remedy is available to the petitioner to challenge the impugned order passed by the third respondent, on 27.3.2012, under Section 86 of the Finance Act, 1994. It would be open to the petitioner to raise all the grounds available to it, as per law, including the grounds raised in the present writ petition. Further, it would also be open to the petitioner to submit additional documents, if any, in support of its claims. Therefore, without going into the merits of the matter, this Court finds it appropriate to pass an order, dismissing the writ petition, in W.P.No.11345 of 2012. It is made clear that it would be open to the petitioner to file an appeal before the appropriate authority, as per the provisions of the Finance Act, 1994, within a period of four weeks from the date of receipt of a copy of this order. On such appeal being filed the appellate authority concerned shall consider the same and pass appropriate orders thereon, on merits and in accordance with law, as expeditiously as possible.
12. In view of the dismissal of the writ petition, in W.P.No.11345 of 2012, on the ground that an appellate remedy is available to the petitioner, under Section 86 of the Finance Act, 1994, to challenge the impugned order, dated 27.3.2012, the present writ petition filed by the petitioner, in W.P.No.8720 of 2012, has become infructuous. Accordingly, it is dismissed, as infructuous. No costs.