Show Cause Notice under Finance Act –— Demand of Service Tax -- The petitioner challenged the demand notice dated 12.11.2021, whereby, the petitioner had been imposed a service tax amounting to Rs. 4,41,64,329/- along with a penalty of Rs. 10,000/- and a further equal penalty along with interest in terms of Section 78 of the Finance Act 1994. The petitioner submitted that they are exempted from payment of service tax in respect of some of such contractual works. The court observed that the authorities presumed that because the materials produced by the petitioner did not make it discernible for the authorities to arrive at such conclusion, therefore, the authorities were of the view that the petitioner is liable to pay the tax. The liability to pay a service tax is not upon a presumption nor can it be based upon a state of indeterminateness on the part of the authorities. The liability to pay a tax has to be conclusively determined that for the given transaction for which the tax is imposed the noticee is liable to pay such tax and such taxes are not being paid. But the said determination had not been made.

Held that:- The Hon’ble High Court remanded the matter back to the respondent for a fresh determination. In doing so, the petitioners be given an appropriate opportunity to produce any relevant material and the petitioners to also co-operate with the authorities so that they also can come to a conclusion on the aspect and produce any relevant material as may be desired. Till such final determination, no coercive action be taken against the petitioners.