M/S Sri Prasan Trading Company vs. Union Of INDIA And 3 Ors

Held

The Court held that the impugned Order-in-Original dated March 24, 2023, passed by the Joint Commissioner of Central Goods and Service Tax, Dibrugarh, could not be sustained in law. The primary reason for this decision was the respondents' complete failure to prove that the show cause notice dated October 7, 2021, was either issued to or served upon the petitioner. The Court noted that Section 73(1) of the Finance Act, 1994, mandates the issuance of a show cause notice before passing an order demanding service tax. Since the respondents could not discharge their burden of proving service, the order passed without such proof was deemed to be in violation of the statutory provision. The Court observed that the petitioner had assailed the order solely on the ground of non-receipt of the show cause notice, and there was no denial of the issuance of the notice itself. Consequently, the Court directed that the impugned order be set aside and quashed. However, to allow the revenue an opportunity to proceed correctly, the Court permitted the Central Excise Officer to issue a fresh show cause notice, granting the petitioner an opportunity to respond. The period from October 7, 2021, till the date of the judgment was to be excluded while computing the period of limitation for issuing a fresh show cause notice.

Facts

The petitioner, M/s Sri Prasanta Trading Company, a partnership firm, filed a writ petition challenging an Order-in-Original dated March 24, 2023, passed by the Joint Commissioner of Central Goods and Service Tax, Dibrugarh. The impugned order demanded service tax of Rs. 1,27,71,113/- for the financial year 2016-17, along with interest and penalties under various sections of the Finance Act, 1994. The petitioner's sole ground for challenge was that the order was passed without issuing a mandatory show cause notice as required under Section 73(1) of the Finance Act, 1994. The respondents claimed to have issued a show cause notice dated October 7, 2021, through speed post, but failed to provide any proof of service, such as tracking information or acknowledgement, nor did they produce the notice itself before the Court. The petitioner denied receiving any such notice.

Key Issues

1. Whether the impugned Order-in-Original dated March 24, 2023, passed by the Joint Commissioner of Central Goods and Service Tax, Dibrugarh, is liable to be set aside for non-issuance of a show cause notice as mandated by Section 73(1) of the Finance Act, 1994. Petitioner's contention: The petitioner argued that the impugned order was passed in violation of Section 73(1) of the Finance Act, 1994, as no show cause notice was ever served upon them. They contended that the order was passed "behind their back." They relied on the fact that the respondents failed to produce any evidence of service of the show cause notice or the notice itself before the Court, and the petitioner explicitly denied receiving it. Revenue's contention: The respondents, through their affidavit-in-opposition, stated that a show cause notice dated October 7, 2021, was issued to the petitioner and served through speed post. However, they failed to substantiate this claim with any supporting documents like tracking information, postal receipts, or acknowledgements. When questioned by the Court, the learned Senior Counsel for the respondents could not produce the show cause notice.