Samujjal Phukan vs. The Union Of INDIA And 2 Ors
Original PDF →Facts
The petitioner, Sri Samujjal Phukan, engaged in goods transportation, received a Show Cause Notice dated December 30, 2020, from the Additional Commissioner, Central Goods & Service Tax, Dibrugarh. The notice alleged suppression of services provided and non-disclosure of service tax liability for financial years 2014-15 to 2017-18, resulting in a short payment of Rs. 58,72,656/-. This was based on data from the Income Tax Department, indicating taxable services rendered and TDS deductions reflected in income tax returns, but not in service tax returns. The petitioner failed to file a reply within 30 days due to COVID-19 and other reasons. Despite subsequent personal hearing dates being fixed and adjourned, an Order-in-Original dated April 18, 2022, was passed by the Additional Commissioner, confirming the demand of Rs. 58,72,656/-, along with interest and an equal penalty.
Held
The Court held that the invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, was invalid and contrary to law. The Court reasoned that for the revenue authorities to invoke this extended period, there must be a conclusive finding that the petitioner willfully and deliberately evaded or neglected to pay GST. This conclusion was not apparent from the impugned Order-in-Original. The Court noted that the petitioner had responded to notices and that the ST-3 Returns were available, which should have been examined by the revenue authorities to determine if the services were taxable or exempted. The Court found that the revenue authorities assumed jurisdiction under Section 73(1) without fulfilling the mandatory pre-conditions. Consequently, the Court quashed the impugned demand-cum-show cause notice and the Order-in-Original, holding that the levy of service tax, penalty, surcharge, and interest was not leviable. The writ petition was allowed.
Key Issues
1. Whether the invocation of the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, was justified, considering the requirement for a conclusive finding of willful evasion by the revenue authorities? (Question of law) Petitioner's Arguments: - The petitioner argued that the entire receipts were exempted under Section 66D of the Finance Act, 1994, a fact not ascertained by the revenue authorities. - The petitioner contended that due to COVID-19 and other bonafide reasons, they could not file their reply within the stipulated time. - The petitioner asserted that the revenue authorities failed to arrive at a specific conclusion that the non-furnishing of documents leading to non-payment was a deliberate and willful attempt to evade taxes. - The petitioner argued that the ST-3 Returns filed were available and should have provided a complete picture, yet the revenue authorities did not examine this aspect. Respondents' Arguments: - The respondents relied on data from the Income Tax Department to establish suppression of taxable value and non-payment of service tax. - The respondents contended that the petitioner failed to obtain service tax registration and file ST-3 returns, indicating a willful suppression of facts with intent to evade tax. - The respondents argued that the extended period of limitation was rightly invoked as the non-declaration of taxable value only came to their knowledge through external sources.
Sections Cited
Section 66, Section 66B, Section 67, Section 68, Section 69, Section 70, Section 73, Section 75, Section 77, Section 78, Section 142(8)(a), Rule 6, Rule 7
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
Date of Pronouncement of Judgment : 21.04.2026 Whether the pronouncement is of the Operative Part of the Judgment
: No Whether the full Judgment has been Pronounced
: Yes
JUDGMENT AND ORDER (CAV) The petitioner is engaged in the business of transportation of goods by road in his individual capacity with his vehicles mostly within the District of Dibrugarh, Assam and its neighbouring district. A show cause notice was served upon the petitioner vide Show Case Notice under C. No. V915)70/ADJ/ST/COMMR/DIB/2020/7088 dated 30.12.2020 issued by the Additional Commissioner, Central Goods & Service Tax, Dibrugarh, wherein it was alleged that the petitioner namely had suppressed the actual value of services provided during the financial year 2014-15 to 2017-18 and did not disclose its liability of service tax by not obtaining the Service Tax Registration or by filing its ST-3 returns for the Financial Year 2014-15 to 2017-18 and had consequently short paid its service tax dues to the tune of Rs. 58,72,656/- in violation of Section 66, 66B, 67, 68, 69 and 70 of the Finance Act, 1994 read with Rule 6 and 7 of the Service Tax Rules, 1994. It was also alleged that from the third party data provided by the Income Tax Department, it appeared that the petitioner received consideration for providing taxable services and made required declarations under various sections of the Income Tax Act, 1961 related to provision of services and TDS deductions which were duly reflected in its Income Tax returns but did not declare those receipts against ‘services’ by obtaining service tax registration and by filing its periodic ST-3 returns for the year 2014-15 to 2017-18 which resulted in non-payment/short payment of service tax.
It was also alleged in the said Show Cause Notice dated 30.12.2020 that from the information received from the Income tax Department, it was found that during the Financial Year 2014-15 to 2017-18, the petitioner suppressed taxable value amounting to Rs.3,93,74,552/- and on such services, Service Tax amounting to Rs.58,72,656/-was required to be paid by the Petitioner to the Government exchequer which the Petitioner did not pay with intent to evade service tax and hence the same was required to be recovered under proviso to Section 73(1) of the Finance Act, 1994 by invoking extended period of limitation along with interest at appropriate rate under Section 75 of the Finance Act, 1994. Therefore, the petitioner was called upon to show cause as to why service tax amounting to Rs.58,72,756/-for the Period from 2014-15
to 2017-18 should not be demanded and recovered from it under proviso to Section73(1) of the Finance Act, 1994 read with Section 142(8)(a) of the Central GST Act, 2017 with applicable interest under Section 75 and imposition of penalty under Section 77 and 78 of the Act. Accordingly, the Petitioner was directed to show cause within 30 days from the date of receipt of the said Show Cause Notice dated 30.12.2020 failing which it was provided that the case will be decided ex-parte on the basis of evidence available on record.
The learned Senior counsel submits that in the said Show Cause Notice dated 30.12.2020, the Additional Commissioner proposed to be treat the entire receipts of the Petitioner to be taxable service provided by the Petitioner without ascertaining the fact that the entire receipts were exempted under Section 66D of the Finance Act, 1994. However due to the Covid-19 problems and other bonafide reasons, the Petitioner could not file his Reply to the said Show Cause Notice dated 30.12.2020 within the said 30 days as granted to the petitioner. Further due to the raising of Covid-19 cases, lockdown was imposed by the Authority and accordingly the instant proceeding was also kept in abeyance by the Additional Commissioner. Finally vide a communication No.V(15)70/ADJ/ST/COMMR/DIB/2020/4823 dated 13.12.2021 date was fixed for personal hearing of the matter on 23.12.2021 and for filing the relevant documents and Reply of the Petitioner to the impugned Show Cause Notice dated 30.12.2020. However upon a prayer made by the Petitioner, the Additional Commissioner vide his communication No. V(15)70/ADJ/ST/COMMR/DIB/2020/280 dated 21.01.2022 re-fixed the same again on 24.01.2022. Thereafter on 24.01.2022, the Petitioner filed an application before the Additional Commissioner seeking further 30 days time on the ground that the Petitioner has handed over the matter to his legal consultant and they were in the course of examining certain issues going to the root of the matter. Though no specific order was passed by the Respondent No.2 upon the said application of the petitioner seeking further time. The learned Senior counsel for the petitioner submits that while anticipating the communication regarding the date of personal hearing and for submission of documents, the Petitioner was received the impugned Order-in-Original/ADJ/AIZAWL- CGSTCOMNR/GST/NO.04 dated 18.04.2022 passed by the Additional Commissioner which was received by the Petitioner only in the second week of May, 2022. In the said impugned Order-in-Original/ADJ/AIZAWLCGST- COMNR/GST/NO.04 dated 18.04.2022, the Additional Commissioner assessed an amount of Rs.58,72,656/- as service tax payable by the Petitioner and also confirmed the demand of service tax of the said
amount of Rs. 58,72,656/- for the Financial Year 2014-15 to 2017-18 in terms of proviso to Section 73(2) of the Finance Act, 1994 and also imposed interest under Section 75 of the Act with an equal amount of penalty of Rs. 58,72,656/- under Section 77 of the Act. In the said impugned Order-in-Original, it was evident from Form 26AS that the Petitioner was providing taxable service in contravention of Section 66, 66B, 67, 68 and 70 of the Finance Act, 1994 read with Rules 6 and 7 of the Service Tax Rules, 1994 by willful suppression of fact with an intend to evade payment of service tax amounting Rs.58,72,656/- relating to the period F.Y. 2014-15 (Oct-Mar) to 2017-18 (April-June). The Additional Commissioner further observed that the petitioner had failed to obtain service tax registration nor filed the periodical ST -3 Returns for the relevant period it was observed that being a service tax assessee, it was the sole responsibility of the Petitioner to disclose the amount of taxable value rendered during the relevant period and claim exemption, if any, from payment of service tax under specific Service Tax notification applicable therein. Therefore, the Additional Commissioner hold that the Petitioner has failed to comply with the statutory obligations prescribed in the Service Tax Acts and Rules made thereunder and the allegations made in the Demand-cum- Show Cause Notice dated 30.12.2020 stand confirmed and the Petitioner was liable to pay the entire demanded amount of Service Tax and Cess of Rs.58,72,656/- for the period from 2014-15 (Oct — March) to 2017-18 (April-June). Regarding the invocation of extended period of limitation, it was observed by the said Additional Commissioner that the Petitioner suppressed the taxable value by not obtaining service tax registration and by filling the ST — 3 Returns and in the regime of self-assessment, since the onus lies on the party to declare the taxable value, applicable service tax in their periodical ST -3 Return, therefore the non-declaration of the taxable value by the Petitioner came to the knowledge of the Department only after receipt of information from other sources. It was further observed that had it not received the data from the Income Tax Department, the suppression of the taxable value by the Petitioner would not have been detected and therefore the Petitioner willfully suppressed the taxable value with an intent to evade payment of Service Tax.
Therefore it was held that the service tax not paid by the Petitioner was recoverable by invoking extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994. 3. Dr. A. Saraf, learned Senior counsel further submits that though the Show Cause Notice dated 30.12.2020 and various notices for personal hearing were issued by the Additional Commissioner, Dibrugarh, the Respondent No.2 herein however the impugned
Order-in-Original/ADJ/AIZWL-CGSTCOMNR/GST/NO.04 Dated 18.02.4022 was passed by The Additional Commissioner, Aizawl, the Respondent No.3 herein without issuing any notice of hearing or by granting any opportunity of hearing by the said Respondent No.3 to the Petitioner. Though it was mentioned in the impugned Order-in Original/ADJ/AIZAWL-CGST-COMNR/GST/No.04 dated 18.04.2022 that the Petitioner was allowed an opportunity to appear before the Additional Commissioner either on 8th 10th or 11th of March 2020 referring to a communication No.V(15)70/AD/ST/COMMR/DIB/2020/860 dated 23.02.2022, however neither such communication was served upon the Petitioner nor the Petitioner had any knowledge about the same. Being aggrieved by the aforesaid impugned Demand-Cum-Show Cause Notice dated 30.12.2020 issued by the Respondent No.2 and the impugned Order-in-Original dated 18.04.2022 passed by the Respondent No.3, the Petitioner approached this Court under Article 226 of the Constitution of India seeking relief from such illegal and arbitrary action of the said respondents levying service tax and imposing penalty with interest by acting contrary to the express provisions of law.
The learned senior counsel for the petitioner strenuously submits that it is a settled principle of law that a Show Cause Notice
is the foundation of very proceedings and that the same cannot be vague. He further submits that the Show Cause Notice is the foundation on which the department has to build up its case and if allegations in the show cause Notice are not specific and are on the contrary vague, lack details and/or unintelligible, the same are not sufficient to meet the allegations indicated in the Show Cause Notice and thereby the said show cause notice cannot be said to be a valid show cause notice.The Additional Commissioner while passing the impugned Order-in-Original dated 18.04.2022 in levying service tax, interest and penalty has failed to consider the very primary objective of ‘taxability of the services’ provided by the Petitioner. When the services provided by the petitioner of transportation of goods by roads was specifically excluded under Section 66 D of the Finance Act, 1994 which was the only services provided by the Petitioner Company during the relevant assessment year i.e 2014-15 to 2017- 18, the said Additional Commissioner completely misguided himself in treating the entire receipts of the Petitioner as receipts from taxable services. The Petitioner submits that by enacting the Finance Act, 1994, the Legislature imposed a levy of service tax upon such taxable services as defined under Section 66B of the Act. Therefore, the said Section 66B which is charging section which imposed a levy of service tax upon such services as provided there-under under the said Section 66 B. For a ready reference, the said Section 66 B is extracted below: ”Section 66 B. Charge of service tax on and after Finance Act, 2012. There shall be levied a tax (hereafter referred to as the service tax) at the rate of twelve percent on the value of all services, other than those services specified in the negative list, provided or deemed to have been provided in the taxable territory by one person to another and collected in such manner as may be provided.”
The learned senior counsel for the petitioner further submits that the Legislature while enacting the said Finance Act, 1994 excluded certain services from the zone of taxability of services tax by way of incorporating a negative list as provided Section 66D of the Finance Act, 1994. Services by way of transportation of goods were also included in the said negative list under Section 66D. Section 66D is extracted below: “Section 66 D. Negative list of Services. The negative list shall comprise of the following services, namely : ***** ***** (p) services by way of transportation of goods — (i) by road except the services of (A) a good transport agency or (B) a courier agency (ii) by an aircraft or a vessel from a place outside India up tothe customs station of clearance in India, or (iii) by inland waterways. ******”
The learned Senior counsel for the petitioner submits that from a combined reading of Section 66B and Section 66D, it is clear
that the Legislature while enacting the Finance Act, 1994 specifically excluded the transportation of goods by road services except by a goods transportation agency or a courier agency. The petitioner is neither a goods transport agency or a courier agency but engaged himself in the business of transportation of goods in his own personal capacity with his own vehicles. Therefore the business activities carried out by the Petitioner clearly falls within the purview of exemption granted under the negative list as provided under Section 66 D(i)(A) of the Finance Act, 1994 and therefore clearly falls outside the purview of ‘service tax ’ and as such the Respondent Authorities had no juri iction to issue the impugned show cause notice and the order in original levy of service tax as transportation of goods. The Petitioner respectfully submits that during the relevant year 2014-15 to 2017-18, the Petitioner was providing transportation of goods by road services as defined under the negative list contained in Section 66 D(i)(A) of the Finance Act, 1994 and therefore the receipts procured from such excluded services provided by the Petitioner are completely outside the purview of service tax and accordingly the Petitioner is not liable to pay service tax.
The learned Senior counsel for the Petitioner submits that the Service Tax Rules provides for Registration. The said Rule is quoted herein below for the sake of convenience:
“Rule 4. Registration (1) Every person liable for paying the service tax shall make an application to the concerned Superintendent of Central Excise in Form ST-1 for registration within a period of thirtydays from the date on which the service tax under Section 66B of the Finance Act, 1994 (32 of 1994) is levied; Provided that where a person commences the business of providing a taxable service after such service has been levied, he shall make an application for registration within a period of thirty days from the date of such commencement. Provided further that a parson liable for paying the service tax in the case of taxable services referred to in sub-section (4) or subsection (5) of Section 66 of the Finance Act, 1994 (32 of 1994) may make an application for registration on or before the 31% day of December, 1998. Provided also that a person liable for paying the service tax in the case of taxable services referred to in sub-clause (zzp) of clause (105) of Section 65 of the Act may make an application for registration on or before the 31% day of March, 2005. ***** ****” He therefore submits that Rule 4 (1) clearly provided that only the person liable for paying the service tax under Section 66 B of the Act, he shall have to apply for registration.
The learned senior counsel for the petitioner strenuously submits that in the present case since the Petitioner was not liable to pay service tax under Section 66 B of the Act by virtue of Section 66 D(i)(A) of the Act, the petitioner was not required to be registered under the provisions of the Service Tax Rules, 1994 since the services provided by the Petitioner were expressly excluded from the service tax net by way of Section 66 D(i)(A) of the finance Act, 1994. 9. The learned senor counsel further submits that under Section 70 of the Finance Act, 1994 provided for furnishing of returns. The said Section 70 is quoted herein below for the sake of convenience: “Section 70. Furnishing of Returns:(1) Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency and with such late fee not exceeding twenty thousand rupees, for delayed furnishing of return, as may be prescribed. (2) The person or class of persons notified under sub-section (2) of Section 69, shall furnish to the Superintendent of the Central Excise, a return in such form and in such manner and at such frequency as may be prescribed.” He submits that Section 70 of the Finance Act, 1994 provided for filing of return by every person liable to pay the service tax and not otherwise.
The learned Senior counsel for the petitioner submits that in the present case, the Petitioner was not liable to pay tax as the service provided by the Petitioner were under the category of negative list as contained in Section 66 D(i)(A) of the Finance Act 1994 itself, the Petitioner was not liable for file his return as contemplated under Section 70 of the Act. The learned senior counsel submits that the services provided by the Petitioner to the various corporate agencies are expressly excluded under the negative list contained under Section 66 D(i)(A) of the Finance Act 1994. However the Respondent No.3 has levied the service tax without considering the fact that the entire receipt of the Petitioner
was from his business of transportation of goods by roads which is an exempted service under Section 66(D)(i)(A) of the Act.
The impugned order in original is further assailed on the ground that the extended period of limitation is illegal as there was no suppression, fraud, collusion or willful misstatement or suppression of facts or contravention of any of the provisions of the Act. Dr. Saraf, learned Senior counsel submits that Section 73 specifies recovery of service tax not levied or paid or short-levied or short paid or erroneously refunded and in such an event, the extended period of five (5) years is applicable. It is submitted that a section itself prescribes that the provisions of the section would be applicable for recovery of Service Tax not levied or paid or short levied or short paid or erroneously refunded by reasons of –
(a) Fraud; or (b) Collusion; or (c) Willful misstatement; or (d) Suppression of facts; or (e) Contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax.
It is submitted that for initiating any proceeding under Section 73 of the Act, there must be tax levied or paid or short-levied or short paid or erroneously refunded. Further the Notice has to be issued within a period of eighteen (18) months from the relevant date on the person chargeable with the service tax which has not been levied or paid or erroneously refunded. The Proviso to the said sub-section (1) also specifies that such notice can be issued within such extended period of five years only if such short-levy or short- payment or erroneous refunds were by reasons of fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with the interest to evade payment of tax.
It is submitted by the learned Senior counsel that assuming though not admitting that there was a failure to furnish correct information, however, the same does not constitute suppression unless the failure/omission to furnish information or failure to pay mis-statement. The latter implies making of an incorrect statement with the knowledge that the statement made was not correct. It was further held therein that a mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment duty in order to evade duty.
Referring to the Judgment of Apex Court rendered in CCE Vs. Chemphar Drugs & Liniments, reported in (1989) 2 SCC 127 , the “contravention of an of the provisions of the Act or Rules” are qualified by the immediately following words “with intent to evade payment of duty”, and therefore it was not correct to say that there can be a suppression or misstatement of fact, which was not willful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. It is submitted that the law laid down by the Apex Court in this Judgment are squarely applicable in the present case inasmuch as there is no such finding the adjudicating authority while invoking the powers under Section 73 by invoking the extended period of limitation. It is submitted that the intent to evade payment of tax cannot be established by peering into the minds of the tax payer but has to be established through evaluation of the tax behavior.
Referring to the Judgments pressed into service in support of his contention, Dr. Saraf urges that from the law laid down by the Apex Court and referred to by him, it is clear that without examining the fact as to whether there was any suppression, mis-statement, fraud, collusion, or contravention of any of the provisions if the Act and the rules with the intent to evade payment of any tax, the Adjudicating Authority simply on the basis of the tax behavior has invoked the extended period of limitation without fulfilling the preconditions laid down in proviso to Section 73(1) of the Act and thereby the impugned show cause notice is clearly barred by limitation and consequently the impugned order in original as well as the show cause notice are liable to be set aside and quashed.
The learned Senior counsel therefore submits that the order-in- original has been passed by invoking extended period of limitation of five (5) years without providing any tangible evidence to show that any material fact or information was willfully suppressed from the Revenue with the intent to evade payment of any tax and thereby the issuance of the show cause notice itself is barred by the limitation and consequently the impugned show cause as well the order in original are liable to be set aside and/or quashed.
The further limb of argument by the learned Senior counsel for the petitioner is that the only reason recorded by the Respondent No.3 in its impugned Order-in-Original/ADJ/ AIZAWL-CGST- COMN/GST/NO.04 dated 18.04.2022 passed by the Respondent No.3 in levying service tax upon the Petitioners was that it is evident from Form 26AS that the notice was providing taxable service in contravention of Section 66, 66B, 67, 68 and 70 of the Finance Act, 1994 read with Rules 6 & 7 of the Service Tax Rules, 1994 and by way of willful suppression of fact with an intend to evade payment of service tax amounting to Rs.58,72,756/-relating to the period 2014- 15 (Oct — Mar) to 2017-18 (Apr-Jun). In this regard the learned senior counsel for the Petitioners submits that the Form 26AS is the Certificate of Tax Deduction at Source issued by the Income Tax Department showing the total amount of tax deducted at source under the Income Tax Act, 1961 against the total receipts during the relevant assessment years. In the present case the relevant ‘Form 26AS’ issued by the Income Tax Department clearly shows the details of the Agencies which made payments to the Petitioner with the amount oftax deduct at source. In the said Form 26AS, out of various agencies made payment to the Petitioner during the year 2014-15 to 2017-18 and all are against the services specifically excluded under Section 66 D(p)(i) of the Finance Act, 1994. However, without having any evidence on record, the Respondent No.3 proceeded erroneously and levied service tax upon the entire receipts made out of service that are specifically excluded under Section 66 D(p)(i) of the Finance Act, 1994. Such action of the Respondent No.3 in levying service tax upon the entire receipts of the Petitioner without considering the fact that the entire receipts were from excluded services are absolutely illegal, without juri iction, not tenable in law and liable to be interfered with by this Court.
Mr. Saraf, learned senior counsel submits that invocation of extended period of limitation is not proper in the present case as pre- condition for such invocation was not existed so as to re-open and initiate the proceeding after the regular period of limitation is expired. In the present case there is no element of any fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the Act as the services provided by the Petitioner Company were excluded service as provided under the negative list contained in Section 66 D(i)(A) of Finance Act, 1994 in the relevant year 2014-15 to 2017-18 and therefore there was no short payment of service tax on account of any fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the Act and therefore in that view of the matter the extended period of limitation cannot be invoked in the present case only on the basis of documents like Form 26AS and therefore the impugned Order-in-Original/ADJ/AIZAWL-CGST-COMMNR/GST/NO.04 dated 18.04.2022 passed by the Respondent No.3 by Invoking the extended period of limitation in the present case is bad in law and liable to be set aside and quashed.
The learned senior counsel for the petitioner further submits that the respondent authorities committed manifest error in treating the entire receipts of the Petitioner Company during the relevant
year 2014-15 to 2017-18 as the receipts of the Petitioner as against taxable service and consequential assessment and confirmation of the demand treating the said amount to be receipts of the Petitioner without having any co-relation to the alleged ‘taxable service’ as the reported in (1987) 27 ELT 648 and M/S N.E Logistics &Anr. Vs. Union of India & 2 Ors. [W.P(C) No. 1870/2020]. It is submitted that in N.E Logistics (Supra) , similar show cause notice was issued based on information collected from the Income Tax Department through Form 26AS. It is submitted that the High Court remanded the matter back to the authorities on the ground that the department had proceeded on a presumption that the assessee therein was liable to pay tax. It was held that the liability to pay tax of a service tax is not based on presumption nor can it be based upon the State of indeterminateness on the part of the authorities. Liability to pay the tax has to be conclusively determined for a given transaction for which the tax is imposed and for which the noticee has been held to be liable to pay tax as the same determination has not been made, the matter was remanded back to the Principal Commissioner, CGST for fresh determination and the assesses therein were given a opportunity to produce any relevant materials to show cause that the contract
works for the service tax has been imposed for which the noticee is not liable to pay for such transaction.
It is submitted on behalf of the petitioner that by the said Judgment directed that after arriving at a conclusive determination reasoned order or a further demand notice as the case may be issued by the authorities. However, if on the other hand in the conclusion arrived at that the petitioner is not liable to pay service tax appropriate reason order is to be passed. It is submitted that the order has attained finality as no appeal has been preferred against the said Judgment.
The learned Senior Counsel for the petitioner also pressed into service Judgment rendered in Luit Developers Private Limited Vs. Commissioner of CGST & Central Excise, Dibrugarh (Service Tax Appeal No. 75792 of 2021) by the Customs, Excise & Service Tax Orissa, reported in (1972) 83 ITR 26; B.D Khaitan Vs. Income Tax be set aside and quashed. Such a non-speaking order is not upon to exercise judicial or quasi-judicial functions and not to Vs Assistant Commissioner, reported in AIR 1967 SC 1401; State of U.P. Vs. Mohd. Nooh, reported in 1958 SCR 595; Bhopal Sugar Industries Vs. D.P. Dubey, reported in AIR 1967 SC 549;Altafur of it’s powers to invoke the prerogative writs notwithstanding the reported in (1998) 8 SCC 1; Union of India Vs. Parashotam Dass, reported in 2023 SCCOnline SC 314; State of Tripura Vs. Monoranjan Chakraborty, reported in (2001) 10 SCC 740; Assistant Commissioner petition be allowed. The impugned order-in-original be interfered with and set aside interfering with the demand of service tax as well as the imposition of penalty imposed on the writ petitioner.
Mr. S.C Keyal, learned counsel appearing for the Respondents has strongly disputed the contentions made on behalf of the writ petitioner. On the question of maintainability of the writ petition, it issubmitted that where there is elaborately prescribed statutory provisions providing for alternative remedy, the petitioner assesseeshould not be permitted to invoke the writ juri iction without first availing of the statutory prescribed remedies. The GST is a complete code in itself and elaborate provisions are prescribed for ventilating grievances of the assesses who are aggrieved by any orders passed by the GST authorities. Therefore the writ petition should be dismissed and the petitioner should be relegated to avail of the statutory alternative remedies prescribed. Unless the petitioner had availed of these remedies, there is no scope for entertaining the instant writ petition. Therefore, since the petitioners did not avail statutory remedy, the petition should be dismissed on this limited
ground and the parties be relegated to the avail of the statutory remedy prescribed. In support of his contentions, the learned counsel for the respondent relies upon the following Judgments:
GNRC Limited Vs. Union of India, reported in 2024 0 Supreme (Gau) 973;
PHR Invent Educational Society Vs. UCO Bank and Ors, reported in 2024 0 Supreme SC 333;
Brahmaputra Television Network Vs. Union of India, reported in 2024 0 Supreme (Gau) 855
M/S Sailaja Commercial Construction Pvt. Ltd. Vs Union of India & Ors, (W.A. No. 188/2022) 5.Bekem Infra Projects Ltd Vs. Deputy Commissioner of State Tax, [SLP(C) No. 27712/2024];
Sanjib Das Vs. Union of India, reported in 2022 0 Supreme (Gau) 284;
Sunil Gulati Vs. Additional Commissioner, CGST, Delhi South Commissioner &Anr. [W.P(C) No. 4383/2025];
M/S Vishwanath Traders Vs. Union of India and Ors [SLP(C) No. 15594/2023];
Union of India and Ors. Vs. Coastal Container Transpiration Association Judgments are extracted below: “As has been pointed out by the Federal Court in Chatturam Vs. Commissioner of Income-tax, Bihar [(1947) F.C.R. 116 at 126; 15 ITR 302, at 302] (quoting from the judgment of Lord Dunedin in Whitney Vs. Commissioners of Inland Revenue [(1926) A.C. 37] ‘there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex-hypothesi, has already been fixed. But assessment particularses the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay”
Again in A.V Fernandez Vs. State of Kerala, reported in (1957) 8 STC 561, the Apex Court held that the three stages in the imposition of tax which are laid down predicate, in the first instance, a declaration of liability as the starting point. If there is a liability to pay tax which is imposed in terms of the taxing statute, then the provisions with regard to the assessment of such liability is to be followed. If there is no liability to tax there cannot be any assessment either. Sales or purchases in respect of which there is no liability to tax imposed by the statute cannot at all be included in the calculation of turnover for the purpose of assessment and the exact sum which the dealer is liable to pay must be ascertained without any reference whatever to the same.
It was further held that if under the statute, it is found that the assessee is not liable to tax, no tax can be levied or imposed on them and they do not come under the purview of such a statute. The Apex Court went on to hold that no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. It was held that regard must be had to the actual provision of the Act and the Rules made thereunder before any conclusion can be arrived at that the assessee is liable to assessment as contended by the revenue authorities. The relevant provisions this Act are extracted below: “The three stages in the imposition of a tax which are laid down here predicate, in the first instance, a declaration of liability as the starting point. If there is a liability to tax, imposed under the terms of the taxing statute, then follow the provisions in regard to the assessment of such liability. If there is no liability to tax there cannot be any assessment either. Sales or purchases in respect of which there is no liability to tax imposed by the statute cannot at all be included in the calculation of turnover for the purpose of assessment and the exact sum which the dealer is liable to pay must be ascertained without any reference whatever to the same. The legislature cannot enact a law imposing or authorizing the imposition of a tax thereupon and they are not liable to any such imposition of tax. If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the Act at all. The very fact of their non-liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed. It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter. We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come to the conclusion that the appellant was liable to assessment as contended by the Sales Tax Authorities.”
Coming to the facts of the present case, in the absence of any specific averments made before this Court, it is seen that in the impugned order-in-original, the respondent authorities had held that the assessee had failed to the reply to the show cause notice within the stipulated period.
Therefore, under such circumstances, this Court is of the considered view that the determination made by the respondent authorities by issuing the demand cum show cause notice and the confirmation in the impugned order-in-original is contrary to the provisions of the Act and the law declared by the Apex Court as well as by the High Court. The impugned order-in-original is therefore is bad and the same is liable to set aside.
Coming to the question of the invocation of the extended period of limitation, it is necessary to refer to the provisions of Section 73 of the Finance Act, the same is extracted below: Section 73: - Recovery of Service tax not levied or paid or short- levied or short-paid or erroneously refunded.-
73 (1) where any service tax has not been levied or paid or short -levied or short-paid or erroneously refunded, the Central Excise Officer may, within eighteen months from the relevant date serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the persons to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) willful misstatement ;or (d) suppression of facts; or (e) contravention of any of the provisions of this chapter or of the rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax or his agent the provisions of this sub-section shall have effect, as if for the words eighteen months, the words “five years” had been substituted. Explanation-where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of eighteen months or five years as the case may be. (1A) Notwithstanding anything contained in sub-section (1), the Central Excise Officer may serve, subsequent to any notice or notices served under that sub-section, a statement, containing the details of service tax not levied or paid or short levied or short paid or erroneously refunded for the subsequent period, on the person chargeable to service tax, then, service of such statement shall be deemed to be service of notice on such person, subject to the condition that the grounds relied upon for the subsequent period are same as are mentioned in the earlier notices (2) The Central Excise Officer shall after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. (3) ...................
A perusal of the Section 73 of the Finance Act reveals that the extended period in respect of recovery of service tax not levied or paid or short levied or short paid or erroneously refunded can be invoked only when any or more of the conditions prescribed under the proviso to the said section is present. Under the proviso to the said section, there are five situations when the extended period of limitation can be invoked. These are: (a) Fraud; or (b) Collusion; or (c) Willful misstatement; or (d) Suppression of facts; or (e) Contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax.
It is only in the event that any or more of these conditions are found to be applicable in the facts and circumstances of the case that the provisions for extension of limitation under Section 73 can be invoked. In the event, it is invoked a notice has to be issued within a period of 18 months from the relevant date on the person chargeable with service tax.
In this context, it is necessary to refer to the case laws cited before this Court. In Continental Foundation Joint Venture Holding (Supra), the extended period of limitation under Section 11A of the Central Excise and Salt Act, 1944 was under consideration. The Apex Court held that mere omission to give correct information did not constitute suppression unless that omission was made willfully in order to evade duty. The Apex Court held that suppression would mean failure to disclose full and true information with the intent to evade payment of duty. When the facts are known to both the parties, omissions by one party would not constitute suppression. It was held that an incorrect statement cannot be equated with a willful mis-statement. The latter implies making of an incorrect statement with the knowledge that the statement made was not correct. The relevant paragraphs of the Judgment are extracted below:
The expression “suppression” has been used in the proviso to Section 11-A of the Act accompanied by very strong words as “fraud” or “collusion” and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop (sic evade) the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct.
In CEE Vs Chemphar Drugs & Liniments (Supra), while interpreting provisions of Section 11A of the Act of 1944, the Apex Court held that something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise is required, before it is saddled with any liability, before (sic beyond) the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or willful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case.
In Cosmic Dye Chemical (Supra), the Apex Court again while examining Section 11 A of the Act of 1944 held that the emphasis is on the requisite intent i.e the intent to evade payment of duty which is built into the very works of section. The Apex Court held that even misstatement or suppression of fact are clearly qualified by the words “willful” preceeding the words “misstatement or suppression of facts” which means with intent to evade duty. The Apex Court therefore held that it will not be correct to say that there can be a suppression or misstatement of fact, which is not willful and yet constitutes a permissible ground for the purpose of the provisio to Section 11-A.
Misstatement or suppression of fact must be willful. The relevant paragraph is extracted below:
“6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word ‘wilful’ preceding the words “misstatement or suppression of facts” which means with intent to evade duty. The next set of words “contravention of any of the provisions of this Act or rules” are again qualified by the immediately following words “with intent to evade payment of duty”. It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11-A. Misstatement or suppression of fact must be wilful.
Coming to the fact and the present proceedings from the recital of the impugned order-in-original, it is seen that Form 26AS mentioned, the petitioner suppressed taxable value amounting to Rs.3,93,74,552/- and on such services, Service Tax amounting to Rs.58,72,656/- including Ed. Cess. S&HE Cess, Krishi Kalyan Cell and Swachh Bharat Cess was required to be paid by the Petitioner. Therefore, assessing authority found that the petitioner did not obtain the registration and suppressed the material fact to the Department willfully by way of providing taxable services without discharging service tax liabilities with the intent to evade payment of service tax and therefore the extended period under Section 73(1) of the Finance Act, 1994 is invocable. The petitioner also violated the provisions of Sections 66, 66B, 67, 68, 69 and 70 of the Finance Act,
1994 read with Rules 4, 6 and 7 of the Service Tax Rule, 1994 and thus evaded payment of Service Tax amounting Rs. 58,72,656/- including Ed. Cess, S&SE Cess, Krishi Kalyan Cess and Swachh Bharat Cess against the taxable services provided by the petitioner along with interest as applicable under Section 75 ibid. The petitioner was also liable for penal action under Section 78 of the Finance Act, 1994 for suppression of facts with the intent to evade payment of service tax.
Such conclusions as have been discussed above are contrary to the facts which are evident from the pleadings. In any view of the matter for invocation of the provisions of Section 73 for extension of the period of limitation, it must necessarily be a case which falls under any or all the conditions specified under the proviso to Section 73(1) of the CGST Act. From a plain reading of the impugned Order- in-Original and the relevant portions of which have been extracted above, it is evident that there is no finding by the Adjudicating Authority that the case of the petitioner can be considered to be a case which falls under the conditions specified in proviso to Section 73(1). Under such circumstances, the impugned Order-in-Original appears to the Court to have been assumption of juri iction by the revenue authorities which was not otherwise vested on the said authority. For the revenue authorities to invoke powers under Section 73(1), there must be a finding and a conclusion arrived at based on the facts of the case that the petitioner assessee had willfully and deliberately resorted to fraud, collusion, willful misstatement, suppression of facts of contravention of any of the provision thereunder with the intent to evade payment of service tax. Therefore, for invocation of the powers proviso to Section 73(1), there must be a conclusive finding arrived at by the Revenue authorities that the petitioner assessee had resorted to any or all for these acts or omissions with the sole intention to evade payment of service tax. Such finding is not discernable from the impugned Order- in-Original passed by the Revenue Authorities. Therefore, the assumption of juri iction of the Revenue under the proviso to Section 73(1) has to be concluded to be a juri iction assumed by the Revenue authorities not vested on it by the statute. Such assumption of juri iction therefore, being contrary to the provisions of the statute itself, the same is colourable and therefore it is held to be unauthorized.
Where a subordinate Tribunal and an authority is found to have assumed juri iction not vested on it a superior Court may invoke its extraordinary juri iction to correct such errors which were exercises by the authorities. The powers of a superior Court to examine the authority assumed by a Tribunal was the issue in Anisminic Ltd
(Supra). It was held therein that the juri iction of the superior Court is to see that the inferior court has not exceeded its own, and for that very reason it is bound not to interfere in what has been done within that juri iction, for in so doing it would itself, in turn, transgress the limits within which its own juri iction of supervision, not of review, is confined. That supervision goes to two points: one is the area of the inferior juri iction and the qualification and conditions of its exercise; the other is the observance of the law in the course of its exercise. If, therefore, a tribunal while within the area of its juri iction committed some error of law and if such error was made apparent in the determination itself (or, as it is often expressed, on the face of the record) then the superior court would certainly be competent correct that error unless it was otherwise forbidden to do so under the statute. It would be so forbidden if the determination was “not to be called in question in any court of law”. If so forbidden it could not then even hear argument which suggested that error of law had been made. It could, however, still consider whether the determination was within “the area of the called “a mere misconstruction of an Act of Parliament”. This perhaps illustrates the clear distinction which exists between an error when in the exercise of juri iction and an error in deciding whether juri iction can be assumed: in the latter case an error may have the consequence that juri iction was lacking and was wrongly assumed and the result would be that any purported decision would have no validity.
The Court held that lack of juri iction may arise in various ways. There may be an absence of those formalities or things which are conditions precedent to the tribunal having any juri iction to embark on an inquiry. Or the tribunal may at the end make an order that it has no juri iction to make. Or in the intervening stage, while engaged on a proper inquiry, the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may merits of the case upon which the limit to its juri iction depends; question of the existence or extent of such Juri iction: such question is always subject to review by the High Court, which does not permit the inferior tribunal either to usurp a juri iction which it does not possess, whether at all or to the extent claimed, or to refuse to exercise a juri iction which it has and ought to exercise. Subjection in this respect to the High Court is a necessary and inseparable incident to all tribunals of limited juri iction; for the existence of the limit necessitates an authority to determine and enforce it: it is a contradiction in terms to create a tribunal with limited Juri iction and unlimited power to determine such limit at its own will and pleasure — such a tribunal would be autocratic,not limited — and it is immaterial whether the decision of the inferior
In Jt. Reg., Co-operative Societies Vs. Rajagopal, reported in law, constitutional and administrative, that whenever a decision- making function is entrusted to the subjective satisfaction of a statutory functionary, there is an implicit obligation to apply his mind to pertinent and proximate matters only, eschewing the irrelevant and the remote. Applying this principle in CIT Vs Mahindra & Mahindra, reported in (1983) 4 SCC 392, the Supreme Court quashed a decision under Section 72-A of the Income Tax Act, as the government was “clearly influenced by irrelevant and extraneous promoted by a mistaken belief in the existence of a non-existing fact or circumstance.
From a careful analysis of the judicial pronouncements as discussed above, it is clear that if an authority while making the inquiry rejects a consideration which is relevant and/or takes into consideration materials and other information which are not relevant, the said decision can be said to be a decision in excess or without juri iction. In the present case the adjudicating authority took into consideration the information available in form 26AS of the Income Tax Act, the sole basis for the purpose of levy of service tax. The authority did not consider the services rendered by the petitioner were exempted from levy of service tax or the liability to pay the service tax on the said services was on the recipient on the services. Since the adjudicating authority did not take into consideration those relevant materials which it was bound to take into consideration and on the other hand it had taken into consideration factors and materials, which if not irrelevant and not germane for deciding the liability of the service tax, cannot establish the liability of the assessee, then the said actions of the adjudicating authority is certainly without juri iction and/or is in excess of juri iction and thereby the impugned actions, orders and notices issued by the adjudicating authority are liable to interfered with by this Court in exercise of its extra ordinary juri iction under Article 226 of the Constitution of India.
Coming to the question of maintainability of the writ petition in view of the availability of statutory alternative remedy, the respondents have raised objections that whatever issues have been urged by the petitioner before this Court canvery well be looked into by the appellate authority prescribed under the statute. Therefore, the question of exercise of prerogative writs by this court is not called for and the writ petition should be dismissed and the petitioners should be relegated to avail the statutory remedy. That 60. While the respondents are within their rights to raise their objections, time and again the question of issuance of prerogative writs even where statutory alternative remedies are available and/or The High Court at Paragraph 42 held as under: ”42 No Tribunal and no Officer can confer juri iction or authority or competence upon itself or himself by misconstruing a section. An authority cannot claim to exercise juri iction by construing a section erroneously and thereby contending that the section so wrongly construed gives him the necessary power. In such a case, if the section has been wrongly construed, it would be a clear case of absence of juri iction apparent on the face of the record because the Court has got to look at the section and to decide whether the officer construing the section was in the right or in the wrong.”
The Apex Court in TELCO Vs. Assistant Commissioner, reported document by the Apex Court were as under : (i) where the writ petition seeks enforcement of any of the fundamental rights.
(ii) where there is violation of principles of natural justice; (iii) Where the order or the proceedings are wholly without juri iction; or (iv) Where the vires of an Act is challenged
In Godrej Sara Lee Ltd (Supra), the Apex Court held that mere availability of an alternative remedy of appeal or revision, which the party invoking the juri iction of the High Court under Article 226 has not pursued, would not oust the juri iction of the High Court and render a writ petition “not maintainable”. The Court made it clear that availability of an alternative remedy does not operate as an absolute bar to the “maintainability” of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law. The Apex Court in further held that dismissal of a writ petition by a high court on the ground that the petitioner has not availed the alternative remedy without, however, examining whether an exceptional case has been made out for such entertainment would not be proper. The Apex Court further held that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition
on the ground of an alternative remedy being available. The relevant paragraph is extracted below:
“9. Now, reverting to the facts of this appeal, we find that the appellant had claimed before the High Court that the suo motu revisional power could not have been exercised by the Revisional Authority in view of the existing facts and circumstances leading to the only conclusion that the assessment orders were legally correct and that the final orders impugned in the writ petition were passed upon assuming a juri iction which the Revisional Authority did not possess. In fine, the orders impugned were passed wholly without juri iction. Since a juri ictional issue was raised by the appellant in the writ petition questioning the very competence of the Revisional Authority to exercise suo motu power, being a pure question of law, we are of the considered view that the plea raised in the writ petition did deserve a consideration on merits and the appellants writ petition ought not to have been thrown out at the threshold.”
Again in Union of India Vs. Parashtom Dass, reported in 2023 SCCOnline SC 314, the Apex Court held that the provision of Article 226 of the Constitution forming part of the basic structure of the Constitution and that the self-restraint of the High Court under Article 226 of the Constitution is distinct from putting an embargo on the High Court in exercising this juri iction under Article 226 of the Constitution while judicially reviewing a decision arising from an order of the Tribunal. The relevant Paragraphs are extracted below: “A High Court Judge has immense experience. In any exercise of juri iction under Article 226, the High Courts are quite conscious of the scope and nature of juri iction, which in turn would depend on the nature of the matter. We believe that there is no necessity to carve out certain case from the scope of judicial review under Article 226 of the Constitution, as was suggested by the learned Additional Solicitor General. It was enunciated in the Constitution Bench Judgment in S.N. Mukherjee case that even in respect of courts-martial, the High Court could grant appropriate relief in a certain scenario as envisaged therein, i.e., “if the said proceedings have resulted in denial of the fundamental rights guaranteed under Part III of the Constitution or if the said proceedings suffer from a juri ictional error or any error of law apparent on the face of the record.” There appears to be a misconception that the High Court would re- appreciate the evidence, thereby making it into a second appeal, etc. WE believe that the High Courts are quite conscious of the parameters within which the juri iction is to be exercised, and those principles, in turn, are also already enunciated by this Court.”
From a careful analysis of the judgments discussed above, it is clear that the writ Court can interfere any arbitrary action notwithstanding the availability of alternative remedy when the authorities acts within juri iction or in exercise of juri iction or there is a procedural irregularity or were the order is high handed and is palpably illegal order in as much the same would amount to violation of Article 14 of the Constitution of India.
Although ordinarily it is the law enunciated by this court as well as by the Apex Court that an aggrieved assessee ought to avail of statutory remedies ascribed or prescribed under the statute, there is no quarrel on this principle of law. The GST is a complete code in itself providing for filing of returns, assessments, recovery as well as for appeals before the appropriate appellate authority. The facts involved in the present proceedings are however peculiar in essence that this show cause notice and the consequential confirmation of demand by the impugned order in original was a proceeding initiated by the respondent authority after invoking the extended period of limitation under Section 73(1). Therefore, in an ordinary course of proceedings seeking recovery of tax demanded, the normal course would be to avail of the statutory remedies. However, before the authorities invoke their juri iction under section 73(1), it is the mandate of the statute that the authorities must come to a specific
conclusion that the juri iction conferred on the revenue authorities under Section 73 (1) can be invoked in the facts and circumstances of the present case. As have been elaborately discussed in the preceeding paragraphs that for invocation of juri iction under section 73(1), the respondent authorities must come to a conclusion that the invocation of the powers under section 73 (1) is necessary as the petitioner’s case falls under any of the conditions mentioned in the proviso to section 73(1) of the CGST Act. However, from the recital of the order impugned, it is seen that the primary reason for invoking the juri iction under section 73(1) is non furnishing of the required documents by the petitioner assessee to be full satisfaction of the respondent authorities. This mere non furnishing of documents or information in itself cannot be construed to have given rise to a situation under any or all of these five conditions under proviso to section 73(1) in order to levy service tax by extending
limitation by the revenue authorities who have invoked this powers under section 73(1). Under such circumstances, ordinarily the revenue authorities could not have issued the impugned notice in demand followed by the order in original as it would have been hit by limitation. It is only by invocation of Section 73(1) under the GST Act that the revenue authorities have assumed powers for issuance of the show cause and the consequential confirmation by the impugned order in original by extension of the limitation. Therefore, the parameters prescribed under the proviso to section 73 (1) are to be scrupulously and diligently followed by the revenue authorities. It does not depend on the ipse dixit of the revenue authorities. They must certainly arrive at a specific conclusion that the non-furnishing of documents leading to non-payment of GST is a deliberate and willful attempt by the petitioner assessee to evade from payment of the taxes due. The revenue authorities were within their rights to issue appropriate notices and carry out proceedings within the ordinary period of limitation prescribed, if it was their conclusion on due examination of the materials before them that there was any shortfall in the payment of GST and the same was required to be recovered. However, this process for demand and recovery was not initiated within the period of limitation ordinarily prescribed under the provisions of the Act. Therefore, the revenue authorities invoked the provisions under Section 73(1) to issue the demand cum show cause notice and the consequential impugned order in original confirming the demand and imposition of penalty and interest. It is the view of this Court that while demand and recovery of taxes as ordinarily prescribed under the provisions of the Act requires careful consideration of the facts and circumstances and satisfaction of all the parameters prescribed upon, the demand and recovery under the extended period of limitation under section 73(1) being an exception to the General Rule, requires a higher degree of responsibility and diligence on the part of the revenue authorities before they can proceed to invoke the powers conferred under section 73(1).
It is a trite law that greater the power prescribed under the statute greater will be the responsibility on the authorities on whom it has been bestowed to ensure that no infraction of the provisions of the Act and the Rules are made and no injustice is caused to the assessee during the process of demand and recovery. This Court while examining the facts and circumstances in minute detail and the exposition of the law laid down by various Courts including this Court as well as the Apex court of the country has held that for the Revenue authorities to invoke the powers under section 73(1), there must be a conclusive finding by the Revenue authorities that the petitioner assessee under the facts and circumstances, hadwilfully
and deliberately evaded or neglected to pay the GST. This conclusion by the Revenue authorities is not apparent and discernible from a plain reading of the impugned order in original. It is not a case that the petitioner assessee never responded to the notices. It is not a case that the documents which were called for required to be submitted were not furnished. The ST-3 Returns filed by the petitioner assessee were available in the records of the revenue authorities and which would have given a complete picture of the services rendered by petitioner assessee and/or whether such services come within the ambit of service taxes or are excluded by any circular or notification issue. However, there is no finding by the revenue authorities as to why this aspect was not examined. There is no conclusion of the revenue authorities in this aspect of the matter as is evident from the impugned order in original.
Therefore, under such circumstances the invocation of extended period of limitation under section 73(1) has been held by this Court to be invalid and contrary to the prescriptions mandated by law. This being a position, it is a clear case of assumption of juri iction by the Revenue authorities where the statutes did not confer them such juri iction by default. A Writ Court while exercising its powers under Article 226 can certainly examine whether the Tribunal or the quasi-judicial authority by exercising its juri iction mandated under the statute has fulfilled the necessary pre-conditions prescribed by the statute itself.
In the facts and circumstances of the case, it is the conclusion arrived at by this Court that such preconditions mandated by law under section 73(1) having not been fulfilled by the Revenue authorities, their assumption of juri iction under section 73(1) of the GST Act was completely unwarranted and revenue authorities could not have assumed the juri iction under section 73(1) unless these pre-conditions mandated and a conclusion thereto has been arrived at by the Revenue authorities before assumption of such juri iction. It is under these circumstances that notwithstanding the availability of statutory alternative remedy, this Court considers it an appropriate case to invoke its juri iction under Article 226 to interfere with the impugned order in original and to set aside and quash the order-in-original. Under these circumstances, the case laws referred to by the respondents will have no bearing in the facts and circumstances of the present proceedings. There is also no quarrel with the general proposition of law that in the face of statutory alternative remedy being available, a Writ Court would ordinarily not invoke its power of issuance of prerogative Writs. Since this Court has held that the levy of service tax on the petitioner by extending the limitation is contrary to the provisions of law, the natural corollary that would follow is that the levy of all penalty, surcharge and interest are also not leviable on the petitioner, this Court therefore issues a writ of certiorari setting aside the impugned demand cum show cause notices and impugned order in original and it is ordered accordingly.
Therefore the writ petition stands accordingly allowed. However no order as to cost. Pending I.A.s are also dismissed and the interim order if any stands merged. JUDGE Comparing Assistant
Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.