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Judgment
K. Chandru, J.—Heard the arguments of Mr. A.R.L. Sundaresan, learned Senior Counsel leading Mr. J. Anandakumar, learned Counsel
appearing for the petitioner, Mr. G.R. Swaminathan, Mr. G. Prabhurajadurai, Mr. P. Arun Jayatram and Mr. B. Raveendran, counsel for
petitioners, Mr. R. Aravindan, learned Senior Standing Counsel, M/s. S. Annamalai, Vijaya Karthikeyan, Syed Basha, L.J. Soundararajan, V.
Ramakrishnan K. Ayyanar, V. Duraipandian G. Rengarajan, S. Sivasubramanian, S.R. Neelakandan, Paul Sukumaran, M. Koodalingam, A.
Akkbar Basha, Shiek Abdullah, S.V. Pugalendhi and J. Indra, learned Counsel appearing for respondents.
The petitioners have come up to challenge the summons issued by the respondents by the exercise of power u/s 14 of the Central Excise Act,
1944. The ground raised was that the summons were issued totally without jurisdiction. The petitioners claimed that they are not covered by the
provisions of the Service Tax in terms of the Finance Act, 1994. Even other wise, there is specific exemption under the charging provisions of the
Act. Further the Central Government itself has granted exemption in respect of activities carried on by exemption notification No. 24/2009, dated
27.7.2009 in terms of Section 93(1) of the Finance Act, 1994. The said exemption has retrospective effect. Since the petitioners do not have any
liability to pay service tax, the summons issued by the respondents are without jurisdiction.
Further, since summons were issued without jurisdiction, there is no necessity to wait for any actual order to be passed by the respondents so as
to avail remedy provided under the Act. The question of relegating the parties to alternative remedy is one of discretion. In some of the cases, it is
stated that the respondents not contended with the issuance of summons, even during pendency of the writ petitions, have issued show cause
notices to their clients.
Mr. G.R. Swaminathan, learned Counsel for the petitioners Association had stated that his clients are seeking for a declaratory relief. Therefore,
question of availing alternative remedies will not arise.
On notice from this Court, the respondents have filed counter affidavits, dated 11.6.2010 and an additional counter affidavit, dated 04.10.2010.
They have also raised objections regarding maintainability of writ petitions against mere summons issued by the respondents. With reference to
W.P.(MD) No. 6417 of 2010 filed by the association, it was additional contended that the association cannot maintain such writ petitions.
Mr. R. Aravindan, learned Senior Standing Counsel, appearing for the respondents also brought to the notice of this Court that in an identical
circumstance, the Principal Bench of this Court rejected the writ petitions filed by the similarly placed persons challenging the summons in
Karvembu and Co. v. The Under Secretary to Government of India Department of Revenue, New Delhi and Ors. reported in 2010 TIOL 676
HC MAD ST, dated 14.09.2010. In that judgment, the learned Judge in paragraphs 8 and 9 repelled the contentions raised by the petitioners,
which are as follows:
The issue to be decided in these writ petitions is, in the light of the notification issued on 27.7.2009 granting exemption from paying service tax
for the works in relation to management, maintenance or repair of roads, whether the said exemption can be taken advantage of by the petitioners
for the earlier period i.e. for the period from 16.6.2005 to 25.7.2009.
The facts in these cases are not in dispute. The contractors are doing road repair/maintenance works. The said works are awarded by the
Highways Department or Local Bodies. It is an admitted case that for laying new roads, widening narrow roads and for changing road surface, no
service tax is payable. Maintaining the already laid roads, viz., resurfacing, renovation, strengthening, relaying, filling potholes, etc., are carried on in
the already laid roads which are called road maintenance. The repair/maintaining of the existing roads are also carried out by the Highways
Department or Local Bodies through contractors. In the Notification dated 27.7.2009, the maintenance and repair of roads are exempted from
paying service tax. The said notification reads as follows:
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
New Delhi, the 27th July, 2009
Notification No. 24/2009-Service Tax
G.S.R.(E)- In exercise of the powers conferred by Sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to
as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable
service, referred to in Sub-clause (zzg) of Clause (105) of Section 65 of the Finance Act, 1994, provided to any person by any other person in
relation to management, maintenance or repair of roads, from the whole of the service tax leviable thereon u/s 66 of the said Finance Act.
Sd/- xxxxxxxxxxxxxxxxxx
Under Secretary to the Government of India
Thus, it is manifest that the Central Government on 27.7.2009 taking note of public interest granted exemption from paying service tax in relation to
works namely management, maintenance/repairs of roads u/s 66 of the Finance Act, 1994. The said notification nowhere states that the exemption
is granted with retrospective effect. It is well settled in law that unless a notification issued specifically stating ''with retrospective effect'', such
notification will operate only prospectively....
In paragraphs 12 to 14, the learned Judge dealt with the merits of the contentions, which are as follows:
12.The Government of India, Ministry of Finance, having issued exemption Notification No. 24/2009 on 27.7.2009, it is beyond doubt that prior
to the said date, the items of works namely maintenance and repair of roads was covered for the payment of service tax. The provision of the Act
is not challenged by the petitioners in these writ petitions. Hence, I am unable to uphold the contentions of the petitioners challenging the validity of
the circular dated 13.2.2009 as it is a clarification of the Finance Act, 2005 and the circular dated 1.6.2005. If the Finance Act do not empower
the respondents to levy service tax for maintenance of roads, repair works, the petitioners can raise the said plea, if any demand is made. At this
stage the said issue is premature. If the petitioners are able to establish that there was any ambiguity in the Finance Act, definitely they will get
benefit.
13.As far as the summons issued for the production of documents for the period from 16.6.2005 to 26.7.2009 are concerned, the petitioners are
bound to produce the same before the authority concerned. The authorities are bound to consider all aspects and decide the matter in the light of
the Finance Act, 1994 and 2005, particularly whether road maintenance and repair is coming within the taxing statute without reference to the
circulars issued while adjudicating the matter. Even after the adjudicating authority''s order, the petitioners can very well agitate their non-liability
before the appellate authority or appropriate forum and finally before this Court as held by the Supreme Court in the decision reported in Raj
Kumar Shivhare Vs. Assistant Director, Directorate of Enforcement and Another, . Thus the writ petitions are not maintainable as contended by
the respondents in the counter affidavit.
14.It is made clear that any finding given in this order need not be construed as giving any finding on the merits of the matter and the Department is
bound to decide the issue in accordance with law, particularly Finance Act, 1994 and 2005. The time limit given to the petitioners to produce the
records is over and therefore the concerned respondent is permitted to issue fresh summons and call for records and proceed further in
accordance with law.
In the light of the above, this Court is not persuaded to take a different view than the view taken by this Court in the batch of writ petitions filed
before the Principal Bench. Further, the petitioners have not suffered any legal injury so as to rush to this Court even at the stage of summons
issued by the authority. Even after furnishing information if the respondents erroneously taxed the petitioner, there is remedy provided by way of
appeal u/s 85 to the appellate authority and further appeal to the appellate Tribunal u/s 86. When the Act itself is self contained Code provided for
hierarchy of appeals, it is unnecessary to entertain the writ petitions at the stage of summons.
In this context, it is necessary to refer to the recent judgment of the Supreme Court in Raj Kumar Shivhare Vs. Assistant Director, Directorate
of Enforcement and Another, . The following passages found in paragraphs 30, 31 and 35 may be usefully extracted below:
The argument that writ jurisdiction of the High Court under Article 226 of the Constitution is a basic feature of the Constitution and cannot be
ousted by parliamentary legislation is far too fundamental to be questioned especially after the judgment of the Constitution Bench of this Court in
L. Chandra Kumar v. Union of India7. However, that does not answer the question of maintainability of a writ petition which seeks to impugn an
order declining dispensation of pre-deposit of penalty by the Appellate Tribunal.
When a statutory forum is created by law for redressal of grievance and that too in a fiscal statute, a writ petition should not be entertained
ignoring the statutory dispensation. In this case the High Court is a statutory forum of appeal on a question of law. That should not be abdicated
and given a go-by by a litigant for invoking the forum of judicial review of the High Court under writ jurisdiction. The High Court, with great
respect, fell into a manifest error by not appreciating this aspect of the matter. It has however dismissed the writ petition on the ground of lack of
territorial jurisdiction.
.....
In this case, liability of the appellant is not created under any common law principle but, it is clearly a statutory liability and for which the
statutory remedy is an appeal u/s 35 of FEMA, subject to the limitations contained therein. A writ petition in the facts of this case is therefore
clearly not maintainable.
Though the learned Senior Counsel elaborately made submissions on the merits of the case, since this Court is not entertaining the writ petitions
on the ground they were premature, it is not inclined to go into the merits of such contentions and any findings rendered will prejudice the case of
the petitioners before the respondents as well as before the appellate authority and the Tribunal.
In the light of the same, all writ petitions will stand dismissed. No costs. Consequently, connected miscellaneous petitions stand closed.