Chirangilal vs The State of M.P.

Challenging an order of assessment passed by the respondent No.2 imposing and recovering from the petitioner establishment 10% service tax for the service rendered by them and further challenging the order dated 15.12.2015 passed by the Customs, Excise & Service Tax Tribunal, New Delhi, directing the petitioner to deposit 10% of the tax amount, this writ petition has been filed under Article 226 and 227 of the Constitution.

Petitioner has primarily challenged the action of imposing the liability on account of the fact that the petitioner establishment is treated to be an autonomous body incorporated by the statutory provision and functioning within the State of Madhya Pradesh. It is pointed out before us, on the bases of judgments rendered by this Court in the case Professional Examination Board vs. Bhopal Municipal Corporation Civil Revision No.1232/2002 decided on 23.07.2003 and a Division Bench judgment of this Court in the case of Pratibha Singh Ku. (Minor) vs. State of Madhya Pradesh reported in 2014 (3) MPJR 178 that even though the Madhya Pradesh Vyavshayik Pariksha Mandal Adhiniyam, 2007 was enacted by the State Government for constituting the Madhya Pradesh Professional Examination Board, but, as the notification under Section 3 of the Adhiniyam, 2007 was not issued. The Division Bench in the case of Pratibha Singh (supra) has been that the Professional Examination Board, namely the petitioner herein, is not constituted under the Adhiniyam, 2007 and, therefore, it continues to be constituted and function as a department of the State by virtue of the notification issued on 17.04.1982 and again on 22.01.2004.

This being the moot question for consideration, we are required to analyze as to whether in imposing liability on the Board for payment of Service Tax, the Revenue has proceeded correctly in the matter, whether we should invoke our extraordinary jurisdiction under Article 226 and 227 of the Constitution or we should relegate the petitioner to take recourse to the remedy of appeal before the Tribunal, wherein the matter is already pending and the only impediment of the petitioner is that the Tribunal is not hearing the appeal because they are required to deposit 10% of the demand made. The demand runs to more than 1,50,00,000/- in each of these cases, four of which have been filed and listed for hearing today.

Shri Rahul Diwaker, learned counsel appearing for the petitioner, submits that the legal question involved in the matter has not been properly considered and the matter will have to be remanded back to the Assessing Officer and, therefore, relegating the petitioner to take recourse to the remedy of prosecuting the appeal by depositing the 10% amount may be a futile exercise.

Shri Himanshu Shrivastava, learned counsel appearing for the Revenue argued that once the Tribunal is seized of the matter, this Court should not interfere at this stage.

Having heard learned counsel for the parties, we are of the considered view that in the peculiar facts and circumstances of this case as the matter has to be remanded back to the Assessing Officer for considering various legal and statutory provision which have not been taken note of properly, we proceed to deal with the matter in the present writ petition itself. A show cause notice (Annexure P-4) was issued to the petitioner on 18.08.2011 asking them as to why they be not held liable to pay service tax in accordance to Clause K to Section 65 (105) of the Finance Act, 1994 as their''s is an autonomous corporation/body created by the Government of Madhya Pradesh in view of Section 3(1) of the Madhya Pradesh Vyavshayik Pariksha Mandal Adhiniyam, 2007 under the assumption that the petitioner Board is a creation under aforesaid Adhiniyam, 2007, is a body corporate and an autonomous body liability has been imposed on the petitioner, however, while doing so, the two judgments of this Court as detailed in the second para have not been taken note of and by misconstruing the entire statutory provision the liability has been imposed.

In the case of Professional Examination Board in Civil Revision No.1232/2002 after evaluating the notification creating the Board issued on 17.04.1982, this Court has held that the Board is a part of the Government Department in the State of Madhya Pradesh and, therefore, it was not liable to pay property tax to the Municipal Corporation as it is not a statutory body or an autonomous corporation, but a department of the State. However, subsequently, in the year 2007 by virtue of the enactment of the Adhiniyam 2007, separate Board was proposed to be created and converted into an autonomous corporation, but while considering this aspect in the matter of Pratibha Singh (supra) from para 23 onwards the learned Bench found that after the Adhiniyam 2007 received assent of the Governor of Madhya Pradesh on 31st August, 2007. The Act was brought into force by issuing a notification under Section 1(3), but the Board would come into existence only after issuance of a formal notification under Section 3(1) of the Adhiniyam, 2007 and as a notification under Section 3(1) of the Adhiniyam, 2007 was not notified. In the case of Pratibha Singh (supra), it has been held in para 33 that the existing Board continues to function in terms of its original creation in the year 1982 by the State Government and it is not a Board created under the Act of 2007. It continues to function in exercise the notification issued by the State Government from time to time upto 22nd January 2004 and therefore, prima facie seems that the findings recorded in Revenue that it is not a department of the State but is an autonomous body seems to be incorrect, as the notification under Section 3(1) was issued only on 14.03.2016.

In the case of Pratibha Singh (supra) it has been held by this Court that the petitioner Board is not an autonomous body it has the status of only a Wing of the Government Department functioning under the Ministry of Technical Education, Department of Manpower Planning and, therefore, we are of the considered view that in treating the petitioner organization to be an autonomous corporation created under the Adhiniyam, 2007 and rejecting the objection that it is not a department of the State, the respondent No.2 has committed an error and this has been done without taking note of the legal aspect of the matter as indicated here-in-above. This question has not been decided properly with regard to various legal and factual aspect and, therefore, it is a fit case where the impugned assessment order dated 28.10.2013 should be quashed and the matter remanded back to the respondent No.2 for re-consideration and for proceeding with the show cause notice dated 18.08.2011 afresh in accordance with law.

It is informed us that the Board was notified by issuance of notification under Section 3(1) of the Adhiniyam, 2007 only on 14.03.2016 and, therefore, prior to that date the Board continue to be a Department of the State Government, this aspect of the matter required consideration by the enquiry officer.

Accordingly, we allow this petition and quash the order dated 28.10.2013 and remand the matter back to the respondent No.2 to proceed in the matter in accordance with law. The petitioner shall appear before respondent No. 2 along with a certified copy of this order on 02nd of March, 2017 and, thereafter, respondent No.2 shall proceed in the matter in accordance with law.

In view of the above, no further orders are necessary with regard to the order dated 15.12.2015 passed by the Custom, Excise and Service Tax, Tribunal as the proceeding before the Tribunal now would be rendered infructuous. In view of remanding the matter back to the respondent No.2.

The petition stands allowed and disposed of to the extent as indicated here-in-above.