M/S. Sree Laxmi Constructions vs. The Commissioner Of Central Tax
Original PDF →Facts
The petitioner, M/s. Sree Laxmi Constructions, filed a writ petition challenging a show cause notice dated September 25, 2020, issued by the Deputy Assistant Commissioner of Central Tax. The notice, which invoked an extended period of limitation, pertained to the recovery of Rs. 7,20,969 towards service tax for the period April 2014 to March 2015. The petitioner argued that the notice was barred by limitation, as the normal period of one year and even the extended period of five years had expired. The petitioner also contended that proceedings should have been concluded within one year of the notice's issuance. The respondents, represented by the Commissioner of Central Tax and others, argued that the COVID-19 pandemic led to extensions in limitation periods, making the notice valid.
Held
The Court noted that the show cause notice was issued on September 25, 2020, and the writ petition was filed in December 2023, over three years later. While acknowledging the petitioner's arguments regarding limitation, the Court found it more appropriate to dispose of the writ petition by directing the respondent No. 2 (Deputy Assistant Commissioner) to take an appropriate decision in accordance with the law on the show cause notice proceedings. The Court specifically directed that the respondent should first address the aspect of limitation raised by the petitioner. If the limitation aspect is decided in favor of the department, only then should the respondent proceed to decide the case on merits. The petitioner was granted liberty to supplement their submissions, particularly concerning the objection of limitation, before the authorities. The ratio decidendi is that when a show cause notice is challenged on grounds of limitation, the adjudicating authority must first decide the limitation issue before proceeding to the merits of the case. The operative direction was to dispose of the writ petition with a direction to the respondent to decide the show cause notice proceedings, prioritizing the limitation aspect.
Key Issues
1. Whether the show cause notice dated September 25, 2020, issued for the period April 2014 to March 2015, is barred by limitation under the relevant provisions of the Finance Act, 1994, considering both the normal and extended periods of limitation? Petitioner's contention: The petitioner argued that the normal period of limitation for issuing a show cause notice was one year. Even considering the extended period of five years, the same would have concluded on April 25, 2020. The impugned notice, issued on September 25, 2020, is therefore beyond the extended period. Furthermore, the petitioner contended that proceedings should have been concluded within one year from the date of the show cause notice, i.e., by September 24, 2021, which has also passed without further development. Revenue's contention: The revenue contended that due to the impact of the COVID-19 pandemic, the government had extended the period of limitation for initiating proceedings, and therefore, the impugned show cause notice was within the period of limitation.
Sections Cited
Finance Act, 1994
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Cause title — parties, addresses and appearances
The Court made the following: ORDER 2nd Respondent i lA NO: 1 OF 2023 I
THE HON'BLE SRI JT]STICE P.SAM KOSEY AND TIIE HON'BLE SRI WSTICE N.TUXARAMJI WRIT oNNo.3 400l,of.2o23 ORDER: per rio n'ble Si Justice P'sAttr KosHY) HeardMr.M.VenkatramReddy,learnedcor:nselforthe petitioner and Mr Dominic Fernandes, learned Standing Counsel appearing on behalf of respondent Nos' 1 to 3' Perused the material available on record'
The challenge in the present Writ Petition is to the show cause notice dated 25 'O9 '2020 passed by respondent No'2'
The primary challenge to the show cause notice by the petitioner in the present case is that the show cause notice is hopelessly barred by limitation' According to the learned counsel for the petitioner, the show cause notice is for the assessment period from April, 201a to Ma-rch' 2015' Under the normal period' the show cause notice ought to have been issued within a period of one year and even if the extended period of hve years is considered' the same stands concluded ot 25'O4'2O2O' In the instant case' the impugned show cause notice has been issued on 25'O9'202O that is beyond the extended Period' III!i i
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Learned counsel for the Department, on the other hand, submits that because of the impact of Covid- 19, pandemic, the Government itself had extended the period of limitation for initiating the proceedings. Therefore, the impugrred show cause notice is within the period of limitation.
The contention of the learned counsel for the petitioner is that the petitioner had submitted its response on 26.10.2022 to the impugned show cause notice and the matter is since then seized by the authorities concerned. He further submits that as per the statue, even from the date of issuance of show cause notice, the proceedings had to be concluded within one year i.e., by 24.O9.2021 which also has been completed u,ithout there being any further development. For this reason also, the proceedings need to be dropped. 2
Having heard the contentions of either side, and having perusal of records, pima facie it is apparent that the impugrred show cause notice is one which has been issued on 25.O9.2O2O and the present Writ Petition has been filed after more than three years and four months that is in December, 2023. 7 . Be that as it may, considering the fact that the show. cause notice is dated 25.O9.2O2O and the putftioner had already submitted their response, which is pending consideration bl the 1! iiItIt 'll lti
authorities concerned, we are of the considered opinion that it would be more appropriate if the Writ Petition is disposed of directing respondent No.2 to take an appropriate decision in accord.ance with law on the show cause notice proceedings' While deciding the same, respondent No.2 shall frrst deal with the aspect of limitation that the petitioner has raised, and if the limitation aspect stands decided in favour of the Department, then only respondent No.2 shall proceed further to decide the case on merits' The petitioner would be at liberty to supplement any submissions that he intends to make, particularly in respect of objection of limitation that he intends to raise before the authorities concerned which shal1 also be considered while deciding the show cause notice proceedings.
Accordingly, the Writ Petition is disposed of' No costs' //// . P. PADMANABHA REDDY ASSISTANT RE9ISTRAR t/\F-- sEcfloN drrtceR l.TheCommissionerofCentralTax,RangaReddyCommissionerate,D'No'1- gbTB/20; $"vi Vamuna Pride, Krithika Lavout, Hi-Tech City, Madhapur, Hvderabad - 500081 z. ifr" OeorWnGslint Commissioner of Central Tax, Gachibowli CGST - oiir"i.i.ii iiingi Reddycesr commissionerate, 2 nd Floor, Room No 202' O.i.io.r-bA/e/Zdj Sanvi Yamuna Pride, Krithika Layout' Hi-Tech City, Madhapur, HYderabad - 500081 : i'fr. Subeiint6ndent of Cenkal Tax, Gachbibowli GST Range' Ranga Reddy . - cs-r-c.irril.io"6.i" b.tto.r_salgtzo, Sanvi yamuna pride, Krithika Layout, Hi-Tech Citv. Madhapur, Hvderabad - 500081 ' 4 ct;; CC io''Sni. Veurnr(AM REDDY MANTUR Advocate IoPUCI - -. ^. 5. o;; cc io snr. DoMtNtc FERNANDES (senior standing counset for cBlc) toPUcl
Two CD BM GJP To, cop S 3 I Ii E i I : : : i , i i ; : I Miscellaneous Petitions pending if any shal1 stand closed' \
; I HIGH COURT DATED:0510112024 DISPOSING OF THE WRIT PETITION WITHOUT COSTS 16: A T S E { a o I I tFq 20?{ ,',:'' )n))1 I : I ! I, i I I : l l ORDER WP.No.34000 of 2023 I
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.