Judgment
Page No.# 1/9 GAHC010101892025
2026:GAU-AS:12824
THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C)/2607/2025 MONINOOR ISLAM S/O LT YAQUIB ALI R/O GOLAI NO 1 PO DIGBOI DIST TINSUKIA ASSAM PIN 786171 VERSUS THE UNION OF INDIA AND ORS REP BY THE SECRETARY OF GOVT OF INDIA MINISTRY OF FIANANCE NEW DELHI 11001 2:THE COMMISSIONER CENTRAL GOODS AND SERVICES TAX DIBRUGARH MILAN NAGAR F LANE PO CR BUILDING DIBRUGARH 786003 3:THE ASSISTANT COMMISSIONER CENTRAL GOODS AND SERVICES TAX TINSUKIA DURGABARI ROAD TINSUKIA 786123 4:THE ASSISTANT COMMISSIONER CENTRAL GST AND CENTRAL EXCISE DIVISION DIBURGARH CR BUILDING DIBRUGARH ASSAM 78600 Advocate for the Petitioner : MR. R S MISHRA, MS M NIROLA Advocate for the Respondent : DY.S.G.I., SC, GST
BEFORE HON’BLE MR JUSTICE ARUN DEV CHOUDHURY
Page No.# 2/9
For the Petitioner : Mr. R. S. Mishra, Advocate.
For the Respondents : Mr. S. C. Keyal, Standing Counsel, CGST assisted by Mr. K. Jain, Advocate.
Date on which Judgment is Reserved : NA
Date of pronouncement of Judgment : 03.09.2026
Whether the pronouncement is of the operative part of the Judgment : NA.
Whether the full Judgment has been pronounced : Yes.
JUDGMENT & ORDER (ORAL)
(A.D.Choudhury, J)
1. Head Mr. R. S. Mishra, learned counsel for the petitioner. Also heard Mr. S. C. Keyal, learned Standing Counsel, CGST, assisted by Mr. K. Jain, learned counsel for the respondent.
Page No.# 3/9 2. The petitioner has approached this court, assailing the Order-in- Original No. 70/ST/ADJ/ACD/2024-25 dated 28.06.2024, whereby the adjudicating authority has confirmed a demand of service tax amounting to Rs.17,64,358/- for the period from October 2014 to June 2017, together with interest and penalties under the Finance Act, 1994.
3. The case of the petitioner, in substance, is that the impugned demand has been arrived at substantially on the basis of figures reflected in Form- 26AS, by treating the gross receipt appearing therein as consideration for taxable services. According to the petitioner, such an approach is legally unsustainable, since the amounts received included amounts relating to the supply of materials and services rendered to Indian Oil Corporation Limited, which are covered by the reverse charge mechanism. The petitioner further asserts that he was registered under the Finance Act 1994, had filed ST3 returns, and had discharged the service tax liability, while IOCL had discharged the tax attributable to the recipient under the reverse charge mechanism.
4. At a belated stage, beyond the time prescribed in the notice, a detailed reply to the show cause notice was filed on 01.06.2023, contending that the show cause notice was not served upon him initially but only on his demand.
The aforesaid reply to the show-cause notice was also accompanied by documents, wherein the petitioner furnished a reconciliation of the receipts reflected in Form 26AS.
5. It was contended that, as per the said reconciliation, the total receipts of Rs. 1,22,09,987/- included material supplies of approximately Rs.
51,18,505, leaving a service component of approximately Rs. Rs.
Page No.# 4/9 70,91,482/-.
The petitioner further asserted that service tax amounting to approximately 10,000,07/- had been deposited by IOCL under the reverse charge mechanism and that he had deposited a further amount of approximately 21,170/-.
The petitioner accordingly disputed both the computation of taxable value and the allegations of non-payment of service tax.
6. The respondent revenue has opposed the writ petition primarily on the ground that an alternative statutory remedy of appeal under Section 85 of the Finance Act 1994 is available. It is also contended that the petitioner did not submit the relevant document in response to the investigation letters, that the proceedings were duly taken forward after notices of hearing, and that the adjudicating authority was justified in proceeding based on the materials available on record.
7. Countering the arguments on delay in initiating the process, the respondents sought to justify the delayed proceedings by contending that the show cause notice dated 31.12.2022 was issued under the proviso to Section 73(1) of the Finance Act, 1994, and that delay in adjudication does not, by itself, invalidate the order.
8. The petitioner, on the other hand, has specifically relied on Section 73(4)(B) and has also questioned the invocation of the extended period of limitation.
9. Having heard the learned counsel for the parties and having perused
Page No.# 5/9 the materials placed on record, this court is of the view that the controversy need not at this stage be examined primarily from the standpoint of delay in adjudication.
10. The more fundamental question is whether the impugned order could have lawfully confirmed the demand in the manner in which it was done, particularly when the petitioner had raised specific defenses regarding the very basis of the computation and the alleged discharge of tax liability but was not dealt with at all by the adjudicating authority in its order.
11. It is true that ordinarily a person aggrieved by an order of the adjudicating authority under Finance Act, 1994, is expected to pursue the statutory appellate remedy. The rule as to alternative remedy is, however, a rule of judicial restraint and not an absolute bar to the exercise of writ jurisdiction. Where the challenge discloses a failure to exercise jurisdiction in accordance with governing statute, violation of fundamental principles of natural justice, the existence of an appellate remedy, does not necessarily foreclose the jurisdiction under Article 226 of the Constitution of India.
12. The present case, therefore, cannot be disposed of merely by directing the petitioner to avail of the appellate remedy without examining the foundational objections raised by the petitioner.
13. This court is not determining the correctness of the quantum determined by the adjudicating authority. However, the question in the background of the petitioner's specific reply remains whether the material relied upon by the petitioner was duly considered by the adjudicating authority or was legally sufficient to establish taxable service receipt, and whether the
Page No.# 6/9 specific defense raised by the petitioner was considered before the demand was confirmed.
14. There is no dispute that a substantial part of the demand is founded upon the figures appearing in Form 26AS. Form 26AS is a statement generated for the purpose of the Income Tax Act and essentially reflects information, inter alia, relating to tax deducted at source. The mere appearance of a receipt in such a statement does not by itself establish that the receipt represents consideration for a taxable service under the Finance Act 1924. Therefore, the nature of the transaction must be examined independently with reference to the provision of the taxing statute.
15. It is now well settled that, in substance, Form 26AS cannot be mechanically treated as determinative of service tax liability and that the authority must examine the nature of the underlying services, the applicability of statutory provisions, and the claim of exemption or reverse charge, wherever raised. The liability to tax must flow from the statute and cannot be founded merely upon an inference from income tax data.
16. The aforesaid settled principle is significant in the present case because the petitioner did not merely deny the figures in Form 26AS; he presented a specific reconciliation to the adjudicating authority and asserted that gross receipts included a substantial amount towards the supply of materials. He also asserted in his reply that services rendered through IOCL were subject to the reverse charge mechanism and that service tax had already been discharged by IOCL to the extent applicable.
17. Such an objection, in the opinion of this court, cannot be treated as
Page No.# 7/9 peripheral or collateral but goes to the root of the existence and quantum of alleged service tax liability. It is also significant that the petitioner, in his reply, specifically stated that he was a registered assessee under the Finance Act 1994 and had filed ST3 returns. He also relied upon the relevant contracts with IOCL, the correspondence of IOCL, the particulars of the amount paid under reverse charge, and the reconciliation in the receipt.
18. Whether every part of the aforesaid defense is ultimately capable of acceptance at the hands of the authorities is a different matter, but such a defense required consideration at the hands of the adjudicating authority before it confirmed the demand.
This Court must also record here that adjudicating authority is not required to accept every assertion made by an assessee. However, it is required to apply its mind to the material defense raised and to record the reasons for accepting or rejecting the same.
An order of adjudication confirming the demand without dealing with the material defense touching the root of the taxability cannot be sustained only on the ground that an opportunity of hearing was given to the assessee.
19. At this stage, as a note of caution, this Court records that, in the present proceeding, it is not making a final finding that every amount claimed by the petitioner as having been paid under reverse charge stands conclusively established. Such a factual determination is for the competent authority.
What is material is that the petitioner has raised a specific defense supported by certain documents, taking the plea that the alleged liability had already been discharged in whole or in part under a statutory mechanism. Such a
Page No.# 8/9 defense must be adjudicated by the adjudicating authority.
20. It is true that the assessee can raise the issues before the appellate court too. However, the appellate remedy, amongst others, is intended to examine a legally made adjudication based on all the material available, thereby facilitating the appellate authority in exercising its power properly, which is not available in the present case.
21. For the reasons aforesaid and in the peculiar facts of the present case, this court is satisfied that the impugned Order-in-Original is required to be interfered for a fresh adjudication based on the reply already filed by the petitioner, inasmuch as such reply was not considered by the adjudicating authority and the order had proceeded upon a broad treatment of Form 26 AS figures and was not dealt in a legally satisfactory manner with the petitioner’s substantive defence concerning the nature of receipt and the discharge of service tax under reverse charge.
22.
Accordingly,
the
impugned
Order-in-Original
No.
70/ST/ADJ/ACD/2024-25 dated 28.06.2024 passed by the respondent No. 4 i.e., the Assistant Commissioner, Central GST and Central Excise Division, Dibrugarh, is set aside and quashed together with the consequential demand of service tax, interest, and penalties arising therefrom.
23. Accordingly, for ends of justice, while reversing the clock back to the date of furnishing of the reply, it is provided that the adjudicating authority shall undertake the adjudication independently and in accordance with the Finance Act, 1994, and the applicable provisions. In doing so, the authority shall consider the petitioner’s reply and documents relied upon by him.
Page No.# 9/9 24. While parting with the record, it is made clear that this Court has not expressed any final opinion on the merits of the petitioner’s claim regarding the precise amount of service tax already paid, the exact taxable value, the applicability of any exemption or reverse charge provision to any particular transaction. All such questions are left open to be considered by the adjudicating authority in accordance with the law.
25. Such exercise shall be carried out by the competent authority, i.e., the Assistant Commissioner, CGST, Dibrugarh, within a period of 2 (two) months from the date of receipt of the certified copy of this order to be furnished by the petitioner.
26. It is made clear that the petitioner shall furnish a certified copy of this order within a period of 15 (fifteen) days from today.
27. Accordingly, this writ petition stands disposed of.
JUDGE Comparing Assistant