CWP No. 22092 of 2011 -1- IN THE PUNJAB AND HARYANA HIGH COURT AT CHANDIGARH CWP No. 22092 of 2011 Date of Decision: 29.11.2011 M/s Dee Dee Securities (P) Ltd. ...Petitioner Versus Union of India and others ..Respondents CORAM: Hon'ble Mr. Justice Hemant Gupta Hon'ble Mr. Justice G.S. Sandhawalia Present: Mr. J.K. Mittal and Mr. S.K. Mukhi, Advocates for the petitioner. Hemant Gupta, J. Challenge in the present writ petition is to the show cause notice dated 24.10.2011 issued to the petitioner for non-payment of service tax in the category of “Stock Broker Services”. The petitioner claims to be a Non-Banking Financial Company (for short `NBFC') registered with Reserve Bank of India. The petitioner claims that in the discharge of his business as a NBFC, the petitioner has invested its own funds in the stocks and has realised the sale value of such stocks for its own business. Therefore, the petitioner can not be treated to be a Stock Broker. The petitioner had made a reference to the certain communications addressed to the authorities under the Service Tax Regime to the effect that he is not a Stock Broker/Sub Broker providing services to CWP No. 22092 of 2011 -2- any person. The petitioner has been served with a show cause notice (Annexure P-2) on 24.10.2011 wherein it is mentioned that the Accountant General (Audit) has observed on examining all the returns filed by the petitioner with the Registrars of the Companies that the Petitioner is engaged in providing taxable services falling under the category of “Stock Brokers Services” and that the petitioners have not got themselves registered with the Service Tax Department for rendering such services nor did they pay service tax levied thereon. In the show cause notice the petitioner has been called upon to produce all evidence documentary or otherwise in which he intend to file reply in support of their defence. Learned counsel for the petitioner has vehemently argued that the petitioner is not providing any service to third person and there is no bar to transact its own business and that he is not liable to pay service tax. Such question of payment of service tax does not arise if the person is investing with its own stocks. The question whether the petitioner is providing services and liable to pay service tax in the category of “Stock Broker Services”, is a question of fact. Such fact can be adjudicated upon only after the petitioner submits reply to the same. Without submitting reply to the show cause notice and without permitting the authorities to adjudicate upon such issue, we do not find that the petitioner can successfully challenge the show cause notice in the present writ petition. It is open to the petitioner to submit such evidence to prove that it is not dealing with the stock of the third person but its own stock. The petitioner also challenged instructions issued by Central CWP No. 22092 of 2011 -3- Board of Customs (Annexure P-1) dated 13.10.2010 in respect of the process to be adopted by the Adjudicating Authority after show cause notice is served. We need not to examine such question as Adjudicating Authority is yet to arrive at a conclusion in respect of liability of the petitioner to pay service tax. We do not find any lack of jurisdiction with the authority in issuing the show cause notice (Annexure P-2) to the petitioner. Dismissed. ( Hemant Gupta ) Judge (G.S. Sandhawalia) 29.11.2011 Judge Meenu