Dirt Mania Outdoor Adventures Pvt. Ltd. Vs Union of India (Karnataka High Court)
In Dirt Mania Outdoor Adventures Pvt Ltd vs Union of India Karnataka High Court, the petitioner challenged an Order-in-Original raising a service tax demand based on inputs received from CBDT and declarations made in income tax returns. The petitioner contended that similar matters had been remanded by the Court for reconsideration, including in W.P. No. 11154/2023, where demands based on such inputs were set aside. It was further submitted that the impugned order was passed ex parte without proper opportunity of hearing, and that the petitioner could demonstrate that the services were exempt under Notification No. 25/2012-ST and that the demand was barred by limitation.
The Court examined its earlier order dated 03.07.2024, which laid down key considerations for adjudication, including whether the activity qualifies as a service under Section 65B(44), whether it falls within the negative list or exemption notifications, tax liability under relevant provisions, and limitation issues. The Court reiterated that such matters must be reconsidered from the stage of reply to the show cause notice, without adjudicating merits at this stage.
Accordingly, the High Court set aside the Order-in-Original and remitted the matter back to the authorities for fresh consideration from the show cause notice stage. It directed the authorities to furnish a copy of the show cause notice to the petitioner and allow an opportunity to file a reply. The petitioner was directed to appear before the authority on 21.04.2026. All contentions of both parties were kept open.
