'Levying defaulting service tax post-GST without jurisdiction'

HC bench sets a precedent on service tax in post-GST

BY A STAFF REPORTER

GUWAHATI, Dec 17: It is an unwritten law that no authority can levy a tax when the very Act which the tax was under is passé. Gauhati High Court has witnessed such a case on December 13 this year on service tax, first of its kind in the country, in post-GST.

Such unwritten laws do come sometime, as though to test the legal acumen of advocates and judges when they, as often as not, have to proceed on their own critical faculties. While doing that they sometimes set precedents for others in their fraternity to follow.

The bench of Justice Suman Shyam, a proficient judge, has stayed the notices that were issued to some dealers, who are defaulters of service tax before the GST coming into effect. It is matter different altogether that the stay order has made a number of service tax defaulters heave a sigh of relief.

Advocating for the petitioner dealer, Advocate Medha Lila Gope said that the Service Tax was omitted constitutiolly with effect from July 1, 2017. In the run-up to the Central Goods and Service Tax Act, 2017 all other related Acts were repealed, but the Service Tax Act was omitted. By ‘omission’ Gope means complete deletion from statue books. Other entries, according to her, were either substituted or amended so as to make them work in sync with the GST. “However, the Service Tax has been omitted constitutiolly with effect from July 1, 2017,” the advocate said, and added: “As such the Central Service Tax Authorities are no longer empowered to levy or demand service tax Constitutiolly. Even thereafter the Service Tax Department is issuing show-cause notices and demand orders to various dealers for the period prior to July 1, 2017 which, after omission from the Constitution, is no longer permissible.”

Gope and Nitu Hawelia, counsels for the dealer, said that this is the first case of its kind after the advent of GST. Hawelia said the Parliament provided almost a year from September 2016 to July 1, 2017 for the department to complete all pending procedures relating to Service Tax.

Staying the notices Justice Suman Shyam held that after the Constitutiol Omission of Service Tax the show-cause notices are prima-facie without jurisdiction.

Hawelia informed this reporter that the Service Tax Department has become very active recently and is issuing notices to various dealers after July 1, 2017. “Such notices are constitutiolly without jurisdiction,” the advocate said.