M/S ASHOK KUMAR BACHAWAR (HUF) vs. UNION OF INDIA

: 1 : IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH Dated this the 23RD day of September, 2016 BEFORE THE HON’BLE MR.JUSTICE P.S.DINESH KUMAR Writ Petition No. 106714/2016 (T-TAR) & Writ Petition No.106796/2016 BETWEEN : M/S. ASHOK KUMAR BACHAWAT (HUF) PLOT NO.4, ADARSHA COLONY, RADIO PARK, BELLARY-583101, KARNATAKA (REPRESENTED BY MR.ASHOK KUMAR BACHAWAT S/O SHIR. BHIKARECHAND BACHAWAT KARTA OF HUF AGED ABOUT 58 YEARS). ... PETITIONER (BY SRI B. G. CHIDANANDA URS, ADVOCATE) AND : 1. UNION OF INDIA MINISTRY OF FINANCE REPRESENTED BY ITS SECRETARY, NORTH BLOCK, NEW DELHI-110001 2. THE COMMISSIONER OF CENTRAL EXCISE NO.71, CLUB ROAD, BELGAUM-590001 3. THE JOINT COMMISSIONER OF SERVICE TAX OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE NO.71, CLUB ROAD, BELGAUM-590001. ... RESPONDENTS THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE IMPUGNED ORDER DATED 29.02.2016/04.03.2016 IS ENCLOSED AS ANNEXURE-D, PASSED BY RESPONDENT NO.3.

: 2 : THESE WRIT PETITIONS HAVING BEEN HEARD AND RESERVED FOR ORDERS, THIS DAY, P.S.DINESH KUMAR. J., PRONOUNCED THE FOLLOWING:- ORDER These petitions are directed against an Order–In- Original issued on 04.03.2016 in Case No.OIO Sl.No.BEL- EXCUS-000-BLY-DIV-JC-SKM-36/15-16 (ST) Dated 29.02.2016/04.03.2016 passed by the Joint Commissioner of Customs, Central Excise and Service Tax, Belgaum, confirming a demand of Rs.35,43,585/- and imposing other penalties. 2. Petitioner is a Hindu Undivided Family (HUF) engaged in the business of mineral transportation. Petitioner is registered as a Goods Transport Agency (GTA) under the provisions of the Finance Act, 1994 (for brevity, ‘the Act’). 3. Based on intelligence gathered by the Central Excise Offices, a show cause notice dated 18.04.2013 was issued on the premise that the petitioner was providing mining related services classifiable under, ‘Mining of Mineral Oil or Gas Services’, to M/s. Bharat Mines and Minerals at Sandur, but not registered with

: 3 : Service Tax Authority. Accordingly, petitioner was called upon to show cause as to why the value of Rs.3,25,22,680/- collected by them should not be treated as taxable value in terms of Section 67 of the Act. Petitioner submitted a detailed reply dated 04.09.2013 through its Advocate. Petitioner also filed a written submission before the Adjudicating Authority and he was heard through his learned Advocate on 20.01.2016. After hearing, based on the material on record, the 3rd respondent has passed the impugned order holding that the services rendered by the petitioner is classifiable under ‘Mining of Mineral Oil or Gas Services’, and held that the sum of Rs.3,25,22,680/- collected by the petitioner as taxable value in terms of Section 67 of the Act. Further he confirmed the demand of Rs.35,43,585/- towards service tax ‘inclusive of education cess’, payable for the period 01.10.2007 to 31.03.2008 under Section 73(2) of the Act. In addition, he confirmed the demand of interest under Section 75 of the Act and imposed a penalty of Rs.10,000/- under Section 77(2) of the Act r/w. Rule 7C of Service Tax Rules, 1994 and imposed a further penalty of Rs.35,43,585/- under Section 78 of the

: 4 : Act. It was made clear that the penalty, under Section 78 of the Act, would be reduced to 25% of the service tax, provided the entire amount of service tax and the interest thereon and the reduced penalty are paid within 30 days from the date of receipt of the said order. The said Order-in-Original is challenged in this writ petition. 4. Sri B.G. Chidanand Urs, learned counsel appearing for the petitioner submitted that; ♦ the tax now demanded is required to be paid by the service provider; ♦ the Board Circular No.232/2/2006-CX4 dated 12.11.2007 relied upon by the Revenue is in fact in favour of the petitioner; ♦ the petitioner is only a Transporter and Revenue has wrongly classified the service under classification 1607; ♦ the CESTAT has given a finding in favour of the petitioner in Misc. Orders No.21222-21226/2014 as per Annexure-F;

: 5 : 5. With the above submissions learned counsel for the petitioner submitted that the respondent Revenue grossly erred in holding that the services rendered by the petitioner is liable to be classified under ‘Mining of Mineral Oil or Gas Services’. He placed reliance on a Division Bench judgment in the case of Phoenix Plasts Company vs. The Commissioner of Central Excise and Others, reported in 2016-TIOL-905-HC-KAR-CX and judgment of Hon’ble High Court of Gujarat in the case of Panoli Intermediate (India) Pvt. Ltd. vs. Union of India, reported in 2015 (326) E.L.T. 532 (Guj.) and argued that service tax demanded on the activity of transportation of mineral ore under the category of ‘Mining of Mineral Oil or Gas Services’, is not applicable to the facts of the case on hand. 6. In sum and substance, the case of the petitioner is that the 3rd respondent has misconstrued the classification, and therefore, the impugned order is based on wrong assumptions and hence unsustainable in law.

: 6 : 7. The facts in this case, as stated above, are not in dispute. Admittedly, the order impugned herein is an Order-in-Original and appealable to the Commissioner (Appeals), Central Excise, Customs and Service Tax. Without exhausting a statutory remedy, the petitioner has challenged the impugned order invoking the jurisdiction of this Court under Article 226 of the Constitution of India. 8. The Anchor sheet of the petitioner’s argument is that the original Adjudicating Authority has misconstrued the classification while adjudicating the matter, and therefore, the order impugned is liable to be set aside by exercising power under Article 226 of the Constitution of India. 9. I have carefully considered the submissions of the learned counsel for the petitioner and perused the rulings relied upon by him. In the case of Phoenix, supra, this Court has held that power under Article 226 of the Constitution of India may be exercised under limited circumstances. It is precisely stated as follows by the Division Bench-

: 7 : “10. However, on the second facet, though writ may not lie for condonation of delay in filing the appeal, since in exercise of the power under Article 226 of the Constitution, this Court would not compel the authority to exercise power otherwise than provided under the statute, but the power under Article 226 of the Constitution can be invoked for challenging the order passed by the original authority, under the aforesaid stipulated circumstances namely, as that of the other passed without jurisdiction or by assuming the jurisdiction which is not possessed or the exercise of power in excess of the jurisdiction or by crossing the limits of the jurisdiction or that there is flagrant disregard to the law or the rules of procedure or violation of principles of natural justice or there is failure of justice or the order has resulted into gross injustice.

Therefore, while considering the second aspect, the writ power under Article 226 of the Constitution could be exercised subject to the aforesaid self imposed restriction in exercise of the power under Article 226 of the Constitution on a well guided principle.” (emphasis supplied) 10. It is to be noted that the appellant in Phoenix case had sought to challenge the Order-in-Original before the First Appellate Authority after more than five months, whereas the time prescribed to present appeal

: 8 : was 30 days. Hence, the appeal was returned to the appellant. The appellant resubmitted the appeal along with an application for condonation of delay. The Appellate Authority communicated to the appellant therein that it had already conveyed the decision at an earlier point of time meaning thereby that the Appellate Authority did not consider the application for condonation of delay filed subsequently. 11. It is under such circumstances that the appellant therein had challenged the order passed by the Appellate Authority in a writ petition and the same was dismissed. The Division Bench of this Court directed the First Appellate Authority therein to consider the matter again after giving an opportunity of hearing. The Division Bench has also noted in paragraph 13 of the said order that even if it becomes a case for exercise of power under Article 226 of the Constitution of India, the Court may ensure that no litigant or assessee takes any undue benefit of power under Article 226 of the Constitution of India. Thus, on facts, the said judgment

: 9 : of the Division Bench of this Court is not applicable to the case on hand. 12. The other ruling relied upon by the petitioner in the case of Panoli Intermediate (India) Pvt. Ltd. (supra), it is to be noted that the same has been referred to in the case of Phoenix Plasts Company (supra). 13. It is fairly well settled that in cases where there exists an appellate remedy by way of a statutory appeal, unless a specific case is made out as noted in the case of Phoenix Plasts Company (supra), it is not desirable to exercise power under Article 226 of the Constitution of India . It may be profitable to note the following passage in the case of Commissioner of Income Tax and Others v. Chhabil Dass Agarwal, reported in (2014) 1 SCC 603 wherein it is held as follows: “15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or

: 10 : when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case [AIR 1964 SC 1419] , Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. v. State of Orissa, (1983) 2 SCC 433 : 1983 SCC (Tax) 131] and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.” (emphasis is by me) 14. Thus, in the case on hand, the order impugned in this writ petition is an Order-in-Original passed by the 3rd respondent which is appealable before Commissioner (Appeals). The 3rd respondent had jurisdiction to adjudicate the show cause notice and the order clearly indicates that sufficient opportunity to file written submissions and oral hearing was granted to the petitioner. Hence, there is no violation of principles of natural justice.

: 11 : 15. In the circumstances, respectfully following the judgment of Hon’ble Supreme Court in the case of CIT v. Chhabil Dass Agarwal (supra), I am of the view that this petition does not merit consideration as there exists an alternative and efficacious remedy by way of a statutory appeal. 16. Resultantly, these writ petitions fail and the same are accordingly dismissed. Sd/- JUDGE hnm/