MELOOR SERVICE CO Vs. UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE, NEW DELHI

JUDGEMENT

(1.) Since a common issue arises for consideration in these writ petitions, they are heard and decided together. In all these cases, petitioners, who are Societies registered under the Co-operative Societies Act, challenge the show cause notice issued by the Commissioner of Central Excise and Customs calling upon them to show cause why service tax shall not be imposed on them along with penalty and interest.

(2.) To understand the facts with a little more clarity, for easy reference, I am referring to the pleadings in WP(C) No. 17108/2016. Petitioner submits that they do not come under the purview of Service Tax Rules and is classified as Primary Agricultural Credit Society registered as per Sec. 2(oaa) of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as the KCS Act) and they do not belong to any of the organization mentioned in Sec. 65 (105)(zm) of the Finance Act, 1994 so as to attract service tax. It is stated that petitioner was forced to take service tax registration and was paying service tax from the year 2010 to 2015 from the income derived by the Bank. Later, the petitioner understood that they do not come under the service tax net. They submitted application to surrender the registration and also sought for refund of the service tax paid by mistake. Petitioner was therefore issued with a summons to provide records and file ST return for assessing service tax. Ext.P1 is one such notice dated 2/7/2015. Petitioner appeared and filed objection. A batch of writ petitions were filed before this Court challenging the aforesaid action. Ultimately, by a common judgment dated 5/2/2013 passed in a batch of writ petitions, it was held that the respondents will be free to call upon the Society to produce documents which are required to quantify the liability. Pursuant to the same, show cause notice dated 20/10/2015 had been issued.

(3.) The main contention urged by the petitioner is that the issue relating to taxability has not been decided by the 3rd respondent before issuing the show cause notice. Unless it is decided that there is an obligation on the part of the Society to pay service tax, there is no necessity to answer the show cause notice. Petitioner relies upon the judgment in WP(C) No. 6393/2012 and connected cases wherein a direction had been issued by this Court directing the respondents to enquire as to whether the activity carried on by it, viz., Group Deposit and Credit Scheme, attracts the provisions of the Finance Act, 1994, to fasten the liability of service tax. It was further held that, if the said issue is ultimately decided against the Society, the respondents will be free to call upon the Society to produce the documents. It is argued that no such decision was taken in the matter and therefore the show cause notice presently issued is illegal and arbitrary and not in compliance with the directions issued and, therefore, the said notice is liable to be quashed.