Judicial intervention at the show cause notice stage is not warranted unless exceptional circumstances such as jurisdictional issues arise; factual adjudication is necessary for exemption determinations.

ORDER :

1. Petitioner is before this Court seeking the following prayers:

“(a) Issue a writ in the nature of Certiorari or any other appropriate writ/s to quash Order-in-Original bearing No. BLR-SOUTH/JC/61/2021-22 [DIN 2022 0357 0000 0000 C712] dated 16.03.2022 passed by the First Respondent [Annexure - A];

(b) Issue a writ in the nature of Certiorari or any other appropriate writ/s to quash Order-in-Appeal No. 221/2022 [DIN 2022 0657 0000 0000 F416] dated 08.06.2022 passed by the Second Respondent [Annexure - B];

(c) Grant such other order or direction as deemed fit in the facts and circumstances of the case in the interest of justice.”

2. Heard Sri.Pradyumna Hejib, learned counsel appearing for the petitioner, Sri.Akash B. Shetty, learned counsel appearing for the respondents and have perused the material on record.

3. Learned counsel for the petitioner submits that the issue in the lis stands answered by the judgment rendered by the Coordinate Bench which reads as follows:

“…. …. …..

18. The Section 65-B (44) of the Finance Act 1994, defines the term ‘service’. Section 65-B (51) of the Finance Act , defines taxable service as – ‘taxable service’ means any service on which service tax is leviable under Section 66B. Section 66B of the Finance Act provides that there shall be levied a tax on the value of all services other than those specified in the Negative List.

19. Section 66D of Finance Act, 1994, provides for the negative list, while Section 93 of the Finance Act provides power to the Central Government to grant exemption for taxable service from service tax. Accordingly, unless the service is one that falls in the negative list or a notification of exemption, the same would fall within the service tax net.

20. As noticed, the earlier provision for exemption as contained in notification No.25/2012-ST dated 20.06.2012, provided for exemption from the whole of service tax as regards tax on services under Entry No.25 provided to Government, local authority by way of any activity “in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation, conservancy, solid waste management… are exempt from service tax”.

21. This has been amended vide notification No. 6/2014-ST dated 11.07.2014. By virtue of the said notification, in the Mega Exemption notification No.25/2012-ST, at Entry No.25 the words “carrying any activity in relation to any function ordinarily entrusted to a municipality in relation to” were omitted. Thus this alteration in the exemption notification effected by notification No.6/2014-ST is a matter that requires interpretation in light of the agreements executed / work order issued to the successful bidders, which is essentially a factual adjudication.

22. This Court in W.P. No.19205/2022 dated 22.08.2024, while considering setting aside of the show cause notice in an identical factual matrix had declined to issue a writ as sought for while observing that the relief sought for required interpretation of work order in the context of the exemption notification and accordingly, relegated the matter to the stage of post show cause notice. There is no reason that the present writ petitions seeking setting aside of show cause notice on the ground of exemption or non-chargability to service tax are to be disposed off on different grounds.

23. The court cannot at this stage in exercise of Writ Jurisdiction intervene at the stage of issuance of show cause notice. The interpretation of the work orders/ contracts would be necessary in order to arrive at a conclusion as regards non chargeability or as regards the application of exemption notification. It is relevant to note the observations made by the Apex Court in Union of India and another v. VICCO Laboratories, (2007) 13 SCC 270, wherein it is held that the Writ Courts could interfere at the stage of show cause notice only under exceptional circumstances and when factual adjudication is warranted, the interference by the Writ