Right of revenue protected by section 174 of the CGST Act, 2017 to recover service tax due to an assessee prior to introduction of GST.

Right of revenue protected by section 174 of the CGST Act, 2017 to recover service tax due to an assessee prior to introduction of GST.

Goods & Services Tax
ARAVALI MINERALS AND CHEMICAL INDUSTRIES PRIVATE LIMITED vs. UNION OF INDIA - (GST HC CASE)

Repeal and saving — Service tax liability before introduction of GST — Recovery proceedings after introduction of GST — Show cause notice issued to assessee demanding service tax after introduction of GST — Assessee filed instant writ challenging said notice on ground that with introduction of the CGST Act, 2017 w.e.f. 01.07.2017 levy of service tax was not legally valid — Held, post introduction of the CGST Act, 2017, the Finance Act, 1994 had been repealed — Nevertheless, section 174(2)(c) of the Central Goods and Services Tax Act, 2017 prima-facie seemed to preserve levy in so far as any liability to pay tax was incurred by individual or concern, prior to its enactment w.e.f. 1.7.2017 — Hence, instant writ petition could not be maintained — However, it was open to assessee to raise all contentions including levy and extent of levy of service tax before adjudicating officer — Petition dismissed.

1. The petitioner is impugning show cause notice issued to it on the ground that the proposed levy of service tax is not legally valid. In support of this argument, it is submitted that w.e.f. 01.07.2017, the legal regime has changed with the introduction of the Central Goods and Service Tax Act, 2017 which by Section 174 repealed the Finance Act, 1994. It is also submitted that the basis for show cause notice appears to be some audit comments or objections, which cannot be the valid premise for imposition of the levy and collection of tax.


2. This Court by its judgment in Udaipur Chambers of Commerce and Industry & Ors. vs. Union of India & Anr. (D.B. Civil Writ Petition No.14578/2016) decided on 24.10.2017, upheld the levy of service tax under the Finance Act, 1994. The service tax was introduced for the first time on minerals w.e.f. 1.4.2016.

The legality of that development, was the subject matter of decision in Udaipur Chambers (supra) when the levy and collection of service tax on that activity was upheld. Post the introduction of the Central Goods and Service Tax Act, the Finance Act has been repealed. Nevertheless, Section 174(2)(c) prima-facie seems to preserve the levy in so far as any liability to pay tax was incurred by the individual or concern, prior to its enactment w.e.f. 1.7.2017.


3. In these circumstances, this Court is of the opinion that the present writ petition cannot be maintained. It is, however, open to the writ petitioner to raise all contentions including the levy and extent of levy of service tax and other submissions which it wish to press before the concerned adjudicating officer. In that event, the said authority shall grant proper and reasonable opportunity and deal with each of such contention in a reasoned order to be made in accordance with law.


4. The writ petition is disposed of accordingly.



(DR. PUSHPENDRA SINGH BHATI),J (S. RAVINDRA BHAT),CJ

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