IMPORTANT POINT
There is no bar as such for entertaining writ petitions at stage of show cause notice.

JUDGMENT :

R. Subhash Reddy, J.

Leave granted.

2. This civil appeal is filed by Union of India and others, respondents in Special Civil Application No. 6679 of 2016 filed before the High Court of Gujarat at Ahmedabad, aggrieved by the judgment and order dated 18.12.2017. By the aforesaid order, the High Court has quashed the show cause notices dated 08.10.2015 and 30.09.2015 issued by the appellants, in exercise of power under Section 73(1) of the Finance Act, 1994 (for short, 'the Act').

3. The first respondent is Coastal Container Transporters Association and the second and third respondents are, Yamuna Shipping Logistics Pvt. Ltd. and Pushpak Logistics Pvt. Ltd. who are engaged in the transport business. They have filed the aforesaid writ petition under Article 226 of the Constitution of India before the High Court. Though show cause notices dated 08.10.2015 and 30.09.2015 were issued to respondent nos.2 and 3, in anticipation of similar notices to its members, the first respondent-association also joined respondent nos.2 and 3 in the writ petition. In the aforesaid writ petition, the appellants herein have filed Civil Application No. 2952 of 2017 raising preliminary objection with regard to maintainability of the writ petition itself. While allowing the Special Civil Application, the said civil application is also rejected by the High Court, by impugned order.

4. Necessary facts, in brief, are as under :

First respondent is an association, whose members are transport operators engaged in the business of transportation of goods entrusted by the customers. By way of impugned show cause notices, the appellants have proposed to demand service tax from the respondents under the category of “cargo handling service”, while it is the case of the respondents that the service which is being provided by them, falls under the taxable category of “goods transport agency”. The respondents, to bolster their case, have placed reliance upon circulars dated 06.08.2008 and 05.10.2015 issued by the Central Board of Excise and Customs (CBEC).

Based upon the intelligence gathered by the officers of Rajkot Regional Unit, which revealed that several business entities including respondent nos.2 and 3 who are engaged in doing the business of cargo handling in west coastal region but had got themselves registered under “good transport agency”, by taking approval from the competent authorities, searches were conducted in the premises of respondent nos.2 and 3. It is alleged that during such searches several incriminating documents, including the quotations submitted by the respondent-companies to their customers were seized and statements of the Directors were recorded as per the provisions of Central Excise Act, 1944 read with the provisions under Finance Act, 1994. Subsequently, the show cause notices dated 08.10.2015 and 30.09.2015, were issued to respondent nos.2 and 3, which are impugned in the writ petition filed before the High Court.

5. It is the case of the appellants that the respondents, with a view to evade payment of service tax, have split the whole transactions into three parts, i.e., from the place of consignor to Kandla/Mundra Port by road, from Kandla/Mundra Port in Gujarat to Kochi/Tuticorin Ports in South India by sea route and from Kochi/Tuticorin Ports in South India to the place of the consignee by road. It is the further case of the appellants that if the respondents are registered under the category of “cargo handling service”, no abatement would have been admissible and whole of the transaction from the consignor to consignee would be covered under the taxable services which attract higher rate of service tax.

6. On the other hand, it is the case of the respondent - original petitioners in the writ petition that the show cause notices, impugned in the writ petition, have been issued contrary to the provisions of Finance Act, 1994 and also contrary to the circulars issued by the CBEC itself from time to time. It is the further case of