Surya Transformers vs Union of India (UOI)

Heard Sri Praveen Kumar, learned Counsel for the petitioner, Sri S.P. Kesarwani, learned Counsel appearing on behalf of respondent Nos. 2 to 5 and Sri Rajes Tripathi, learned Counsel appearing on behalf of Respondent No. 6.

By means of the present writ petition, the petitioner is challenging the show cause notice dated 14-7-2009 issued by the respondent No. 3. It appears that the petitioner had entered into a contract with the respondent No. 6 for repairing and testing of Aluminium Wound damaged distribution transformers of 25 to 250 KVA capacities. The petitioner is paying the service tax on the labour charges on the ground that in the contract, prices are separately charged in respect of the labour charges and the material replaced in the execution of such contract. The show cause notice was issued on the ground that the contract is composite contract for repair and maintenance and therefore, on the composite price of such contract, service tax is payable. The petitioner has filed the reply to the show cause notice. It appears that for further clarification, other notices have been issued, which the petitioner has replied. In the present writ petition, the petitioner is challenging the show cause notice on the ground that the petitioner is liable for service tax only on the labour charges and show cause notice issued with the view to levy service charges on the composite price is wholly unjustified and without jurisdiction.

Learned Counsel for the petitioner submitted that in the show cause notice, the respondent No. 3 has expressed his opinion and therefore, writ petition is maintainable and the notice is to be examined on its merit by this Court. Learned Counsel for the petitioner placed reliance on the decision of the Apex Court in the case of Siemens Ltd. v. State of Maharashtra and Ors. reported in (2006) 12 SCC 33.

Sri S.P. Kesarwani, learned Counsel appearing on behalf of respondent Nos. 2 to 5 submitted that whether the contract is composite contract or divisible contract is to be examined by the authorities below on the basis of the terms and conditions of the contract. He submitted that by the show cause notice, the petitioner has been asked to give the reply, which the petitioner replied and. therefore, the matter is to be finally adjudicated by the respondent No. 3. He submitted that the writ petition is not maintainable against the show cause notice. Reliance is placed on the decisions of the Apex Court in the case of Dr. Shashank Bhalchandra Subhedar v. Commissioner of Customs reported in 2001 (132) E.L.T. 268 (S.C.) and in the case of The Special Director and Another Vs. Mohd. Ghulam Ghouse and Another, He submitted that the present is not the case where the authority has no jurisdiction to issue the show cause notice, therefore, the writ petition is not maintainable.

On the facts and circumstances, we are of the view that certain facts arc to be examined by the authority concerned to adjudicate the matter. On the terms and conditions of the contract, the authority has to decide whether the contract is composite contract and service tax is leviable on the entire amount or only on the labour charges. It is not a case where the authority has no jurisdiction to issue show cause notice.

We have considered the decision cited by learned Counsel for the petitioner, we are of the view that in the present case, no jurisdictional error has been shown. The show cause notice does not reveal that the authority has adjudicated the matter finally. He has stated the facts of the case and is also prima facie view and sought the reply of the petitioner. Therefore, the case cited by learned Counsel for the petitioner is not applicable to the present case. Though the petitioner has already filed reply to the show cause notice, still it is open to the petitioner to file the comprehensive reply, if so advised.

In this view of the matter, we decline to interfere in the matter. However, the authority concerned is directed to decide the matter expeditiously as early as possible on the consideration of the reply of the petitioner in accordance to law.

With the aforesaid observation, the writ petition stand disposed of.