CHENNAI: The Madras High Court has declined to interfere with an Income Tax Department notice to the AVM Studio, directing it to pay service tax arrears of over Rs. 44 lakh.
Dismissing the writ petitions filed by the studio, which denied that it was a video production agency in terms of the provisions of the Finance Act, 1994, Justice K. Chandru said: “The court cannot convert itself into a fact-finding authority and take upon the task [of] analysing and sifting the evidence placed by the petitioner in the form of affidavit and supporting documents… Such an exercise is impermissible in a jurisdiction under Article 226 of the Constitution.”
In July 2007, the SIV Cell of the Commissionerate of Income Tax issued a letter directing the studio to furnish details of charges it had collected from clients and the service tax they paid.
When the studio denied that it was a video production agency, the department issued the show-cause notice, asking why it should not be charged Rs. 44,26,741 towards service tax. It was asked to reply within 30 days.
The judge said it was always open to the petitioner to challenge any adverse order against it, and the challenge at the stage of show-cause notice was misconceived.