Supreme Court Directs PVR INOX to CESTAT in ₹17 Crore Service Tax Dispute

Last Updated on August 27, 2024 by Amit Patra

The Supreme Court of India has recently refused to interfere in a ₹17 crore service tax case pertaining to multiplex major PVR INOX and has instead asked the company to approach CESTAT for a remedy.

The facts and circumstances of the case M/S PVR Inox Limited vs Commissioner GST Delhi West Commissionerate deals with whether service tax is leviable on the income derived from the renting of immovable property during the pre-GST regime.On the first day of this year, PVR INOX received a notice from the Commissioner of Central GST, Delhi West stating that they are required to pay ₹17 crores, including tax, interest and penalties.

PVR INOX challenged this demand, arguing that:

1. It can be seen that the jurisdiction for such tax demands rested in Mumbai.
2. Certain notices were served on Satyam Cineplexes which was a company that was acquired by PVR.

However, when the Delhi High Court dismissed the petition to quash show-cause notices stating that an equally efficacious remedy under the provisions of the CEA was available to PVR INOX which was the statutory appeal to CESTAT, PVR INOX turned to the Supreme Court of India.

The Appeal No. 76 of 2017 as bench by Justices BV Nagarathna and N Kotiswar Singh affirmed the High Court’s view, rejecting PVR INOX’s appeal and ordering it to submitting to the CESTAT within 15 days.

This ruling underscores several key legal principles:

1. The role of exhausting all legal procedures within the statutory law before moving to the courts of appeal.
2. The position of specialized appellate body such as The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in dealing with complex tax cases.
3. The perceived unwillingness of the judiciary to circumvent standard legal procedures even when dealing with major corporate actors.

The case also exposes current issues of tax compliance that businesses still encounter due to changes in Indian taxation system especially the GST system on old taxes from before the implementation of the GST system.

Supreme Court’s direction to PVR INOX to approach CESTAT stands to further endorse tribunal as a forum for resolution of disputes under tax laws. This approach seeks to guarantee that specialized bodies address technical taxation issues before they are taken to other realms of appeal.

With businesses still trying to decipher the confusing tax issues, this case also shows that they have to adhere to legal processes and procedures when seeking a solution as well as the courts’ resolution to maintaining proper protocols.