Jahanvi Agarwal
On 27th August 2024, the Supreme Court declined to overturn a decision by the Delhi High Court, which had directed the multiplex chain PVR INOX to approach the relevant appellate tribunal if it wished to contest a service tax demand amounting to Rs.17 crores. This amount was sought by the Commissioner of Central GST, Delhi West, and included interest and penalties.
The Bench, comprising Justices BV Nagarathna and N Kotiswar Singh, instructed PVR INOX to file their appeal with the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) within 15 days, rejecting their plea to bypass the tribunal and approach the Supreme Court directly. This decision came as the Supreme Court upheld the Delhi High Court’s earlier order from August 5, which had similarly denied PVR INOX immediate relief.
The core issue in the case revolves around the applicability of service tax on income generated from renting out immovable properties during the period before the implementation of the Goods and Services Tax (GST). On April 1, PVR INOX received a notice from the Commissioner of Central GST, Delhi West, demanding Rs.17 crores. The company contested this, arguing that the jurisdiction for issuing such demands should be in Mumbai, not Delhi. Additionally, PVR INOX pointed out that part of the tax demand involved Satyam Cineplexes, a company it had previously acquired.
Despite these arguments, the Delhi High Court ruled that PVR INOX had an adequate and appropriate legal remedy available through an appeal to the CESTAT. Consequently, the High Court refused to quash the show-cause notices issued to the company. PVR INOX subsequently sought intervention from the Supreme Court, which, however, agreed with the High Court’s assessment, advising the multiplex chain to seek relief from the CESTAT first.
In its ruling, the Supreme Court emphasized the importance of following due process: “The petitioner must exhaust all available remedies before seeking higher judicial intervention.” The Court’s decision reinforces the necessity for entities to approach statutory appellate bodies before escalating matters to higher courts.
Case Name: M/S PVR Inox Limited v. Commissioner GST Delhi West Commissionerate
Dairy Number: 36036/2024
Bench: Justices BV Nagarathna and N Kotiswar Singh