The Delhi High Court has ruled that the Central Excise Officers of Directorate General of Central Excise Intelligence (DGCEI) have jurisdiction all over India, and can issue notices and look into matters relating to service tax against any assessee.
A bench comprising Justice Sanjiv Khanna and Justice Pratibha M. Singh ruled, “Central Excise Officers of DGCEI have all India jurisdiction and can issue notices and enquire into the matters relating to service- tax against any assessee/ person even if the said person or assessee is registered with one or multiple Commissionerates.”
The court was hearing a petition filed by the National Building Construction Corporation Ltd. (NBCC), which is primarily engaged in carrying out civil work and construction for various departments of the government and public sector undertakings all over India. It has not opted for centralized registration for service tax purposes, and has 88 service tax registrations in different Commissionerates.
It had now challenged a 2015 letter from the DGCEI, according permission to its additional director general of Lucknow zone to probe tax evasion cases of all NBCC branches. NBCC has allegedly failed to pay service tax on the Project Management Consultancy Charge (PMC), also known as agency charge or NBCC charge.
It had also sought quashing of notice/summons issued to it in January this year, for production of documents and details, issued by DGCEI's assistant director of Meerut unit, contending that they were “unwarranted and arbitrary”.
The authorities, on the other hand, had submitted that centralised investigation is necessary and justified, as investigations all over the country on the same issue and question would result in inconvenience, harassment and wastage of time and resources.
While upholding DGCEI’s jurisdiction, the court expressed reservation on the language used in some of the notices/ summons issued by it, wherein it had asked for presence of managing director and senior officer of the NBCC with “threats or warning that they would be punished or prosecuted”.
The court ruled that the presence of a senior officer may not be necessary when legal issues arise for consideration and on such issues, the assessee relies on professional advice.
"The respondents (DGCEI) would be well advised to refrain and not use and give threats. The letters/ notices must be appropriately worded. In a given case they may refer to the penal or prosecution provisions to ensure compliance but they should not intimidate and be minatory,” it observed.
The court also ruled that the Finance Act, 1994 does not bar and prohibit different show cause notices on different issues, facts and subject matter. It, however, added that multiple show cause notices under Section 73(1) of the Act “can result in harassment and inconvenience, and also reflect on the governance and administration of the Fin Act”. It, therefore, opined that attempts should be made to issue consolidated show cause notices even on divergent issues and subject matters.
Section 73(1) states that the Central Excise Officer may, within thirty months from the relevant date, serve a notice on the person where service tax has not been levied, paid or short levied or short paid or is erroneously refunded.
The court also did not agree with NBCC’s assertion that centralisation of investigation would lead to harassment and inconvenience, observing, “Normally, it would be desirable that investigation are centralised when identical and similar issues in case of an assessee arise for consideration in different Commissionerates.”
The petition was therefore dismissed, with the court directing NBCC to comply with notices of the DGCEI to furnish evidence and documents pertaining to the PMC charge regarding commissionerate/ registration, except those which were subject matter of a show cause notice issued by the Commissionerate of Central Excise and Service Tax, Patna in March, 2015. This was because the court noted that the March 13 notice raised the same issued as raised by the Noida Commissionerate.