Central Excise Officers of DGCEI have all India jurisdiction, can issue notices/enquire into service tax matters against any assessee even it is registered with one or multiple Commissionerates.
ABCAUS Case Law Citation:
ABCAUS 2630 (2018) (11) HC
Important Case Laws Cited/relied upon:
Sri Balaji Rice Company versus Commercial Tax Officer No. 1, Nallore and Others reported as (1984) 55 STC 292 (AP), Golak Patel Volkart Limited Vs. Collector of Central Excise, Belgaum (1987) 2 SCC 93 Commissioner of Central Excise Vs. Mehta & Co. (2011) 4 SCC 435, Union of India & Ors. Vs. Madhumilan Syntex Pvt. Ltd & Anr. (1988) 3 SCC 348, New Decent Footwear Industries Vs. Union of India (2002)150 ELT 71 (Del.) , L.M.L. Ltd. Vs. R.K. Sharma, 2000 (117) E.L.T. 34 (Del.), Mira Chemical Industries Ltd. Vs. D.P. Anand, Collector of Central Excise, Calcutta, 2000 (123) E.L.T. 147 (Cal.), Rainbow Trading Co. Vs. Assistant Collector of Customs, AIR 1963 Madras 434,, Barium Chemicals Ltd. and Ors. Vs. A.J. Rana and Ors., AIR 1972 SC 591
The petitioner, a Public Sector Undertaking (PSU) had filed a writ petition primarily challenging the letter issued by the Director General of Central Excise Intelligence (DGCEI) informing the permission given by it authorizing the Additional Director General, DGCEI, Zonal Unit to investigate service tax evasion cases of all the branches of the petitioner.
The petitioner also prayed for quashing of notice/summons for production of documents and details issued by the Asst. Director, Regional Unit on the ground that they were unwarranted and arbitrary
The petitioner had not opted for centralized registration for the purpose of service tax. The petitioner had multiple service tax registrations in different Commissionerates and used to file and submit separate service tax returns as per the multiple registrations.
One of the Petitioner’s unit was subjected to audit by Additional Commissioner (Audit), Central Excise. The main audit objection was with respect to alleged failure to pay service tax on the Project Management Consultancy Charge (PMC charge) also known as agency charge or NBCC charge.
According to the audit report, the PMC Charge including mobilization advance towards PMC Charge were not exempt from service tax under the exemption Notification No.25/12-ST, which was qualified and restricted to contract services for construction of government buildings.
Also, a demand-cum-show cause notice was raised for recovery of Service Tax, Education Cess and Secondary and Higher Education Cess on payments received by the petitioner for rendering service in the nature of advice and consultancy for technical assistance under the heading “Consultancy Engineer” service on the total project executed under the Pradhan Mantri Gram Sadak Yojana.
Accordingly, DGCEI had authorised the Additional Director General, Lucknow to investigate the case of service tax evasion by all branches of the petitioner.
According to the DGCEI, the centralised investigation was necessary and justified as multiple investigations all over the country on the same issue and question would result in inconvenience, harassment and wastage of time and resources.
The case of the Petitioner was that Chapter V of the Finance Act as amended from time to time relating to service tax does not permit centralized enquiry and investigation except where search has been conducted or arrest has been made under Section 90 of the Finance Act.
According to the Petitioner, section 14 of the Central Excise Act, 1944 (the CE Act) states that summons could be issued by an officer making an enquiry. Therefore, summons cannot be issued by an officer not permitted to conduct enquiry or where no enquiry is pending. Summons under Section 14 of the CE Act can be issued in pending proceedings but not to collect evidence and material to decide whether or not to initiate proceedings for adjudication and recovery.
The Hon’ble High Court observed that the contentions raised and to be decided were primarily two-fold. Firstly, whether the respondents can centralize investigation with DGCEI, Lucknow at one place with all India jurisdiction, though the petitioner has opted for multiple service tax registrations for different projects in different States. Secondly, whether an officer of DGCEI can act as the Central Excise Officer to issue summons for production of documents and papers and for recording of statements Section 14 of the CE Act even when no proceedings under Section 73 of the Fin Act or other provision are pending before the said officer.
In other words, whether summons to produce documents/papers and for recording of statements on oath can be issued by an officer of DGCEI under Section 14 of CE Act to investigate and enquire into allegations of non-payment and evasion of tax.
The Hon’ble High Court held that:
(i) Central Excise Officers of DGCEI have all India jurisdiction and can issue notices and enquire into the matters relating to service tax against any assessee/ person even if the said person or assessee is registered with one or multiple Commissionerates.
(ii) Notice under Section 14 of the CE Act i.e. Central Excise Act can be issued even if proceedings under Section 73 of the Finance Act (i.e. Finance Act, 1994) are not pending. However the notice should relate to matters and issues relating to provisions of services and imposition of service tax.
The petitioner was directed to comply with the notices issued/ to be issued with the question and issue of chargeability of service tax on PMC Charge etc. was left open.