By TIOL News Service

NEW DELHI, JAN 02, 2014: NATIONAL Building Construction Corporation Limited has invoked the writ jurisdiction seeking quashing of demand-cum-show cause notice dated 19.12.2012. The primary contention in the writ petition is that the respondents have passed a best judgment assessment order under Section 72 of the Finance Act, 1994 despite neither circumstance existed for making of best judgment assessment order as there is no allegation that the petitioner failed to file service tax returns or tax paid in the service tax return filed is not in accordance with law. It is stated that the petitioner was never served with notice before best judgment assessment was made. The petitioner has made reference to Section 73 of the Act and pointed out that appeals to the Tribunal are maintainable against the order under Section 73 and not against an order under Section 72 of the Act.

The stand of the respondents is that no assessment order has been passed and the writ petition has been filed only against demand-cum-show cause notice.

Section 72 of the Act reads:

"Section 72: If any person, liable to pay service Tax,-

(a) Fails to furnish the return under section 70;

(b) Having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made thereunder, the Central Excise officer, may require the person to produce such accounts, documents or other evidence as he may deem necessary and after taking into account all the relevant material which is available or which he has gathered, shall by an order in writing after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment."

The High Court observed,

It would be difficult to call or treat section 72 per se as an ex parte assessment procedure as ordinarily understood under the Income Tax Act, 1961. The section mandates the assessee to appear and furnish books of accounts, documents and material and thereupon the assessing officer is required to pass an order. Thus, the best judgment assessment order under Section 72 may not be akin to an ex parte order. Such an order will be akin to an ex parte order, when the assessee fails to produce records and the assessing officer has to proceed on other information or data which may be available or part details produced. It is well settled law that the heading of the Section is not determinitative and conclusive as to the scope and ambit of a section when the language of provision is clear and free from any doubt.

High Court disposed of the writ petition granting the petitioner four weeks time to reply to the Show Cause Notice and the adjudicating authority to pass the order after hearing in accordance with law.

(See 2014-TIOL-08-HC-DEL-ST)