M/S Akash Tour And Travel. vs. The Union Of INDIA

Held

The Court held that the order-in-original dated 23.09.2024, which determined the service tax liability, interest, and penalty, was liable to be set aside. The Court found that there was no dispute on the facts that the determination of liability was done after approximately three and a half years from the date of the show cause notice. Crucially, the Court noted that the counter affidavit filed by the revenue did not contain any averment to prima-facie satisfy the Court that it was not possible for the Taxing Authority to determine the tax liability within the prescribed period of one year. The Court relied on its previous judgments in M/s Kanak Automobiles Private Limited, Pawan Kumar Upmanyu, and M/s Power Spectrum, which dealt with similar issues regarding the time limit for determination under Section 73(4B) of the Finance Act, 1994. The ratio decidendi is that while the period prescribed in Section 73(4B) may not be absolute, the adjudicating authority must demonstrate that it was not possible to determine the liability within the stipulated time, especially when the delay is substantial and the counter affidavit is silent on this aspect. The Court set aside the impugned order and the consequent demand raised against the petitioner.

Facts

The petitioner, M/s Akash Tour and Travel, challenged an order-in-original dated 23.09.2024 passed by the Assistant Commissioner, CGST and Central Excise, Patna. This order determined a service tax liability of Rs. 5,27,684/- for the period October 2015 to June 2017 under Section 73(1) of the Finance Act, 1994, and also imposed interest and penalty. The petitioner argued that the order-in-original was passed after a delay of over three and a half years from the date of the show cause notice (16.04.2021), violating the prescribed time limit under Section 73(4B)(b) of the Act. The revenue contended that the period was not absolute and that the counter affidavit did not demonstrate it was impossible to determine the liability within the stipulated time.

Key Issues

1. Whether the determination of service tax liability under Section 73(4B)(b) of the Finance Act, 1994, is mandatory within the prescribed one-year period from the date of notice, especially when the extended period of limitation under the proviso to Section 73(1) is invoked? Petitioner's Arguments: The petitioner contended that the authority was bound to determine the tax liability either within the one-year period prescribed by Section 73(4B)(b) or demonstrate that it was not possible to do so. They relied on judgments from this Court in M/s Kanak Automobiles Private Limited, Pawan Kumar Upmanyu, and M/s Power Spectrum, noting that the Supreme Court refused to interfere with the Kanak Automobiles judgment due to the quantum involved, which was significantly higher than the present case's disputed amount. The petitioner emphasized that the delay of over three and a half years was excessive. Revenue's Arguments: The revenue argued that the period prescribed in Section 73(4B)(b) is not absolute. However, they conceded that the counter affidavit lacked any averment to prima-facie satisfy the Court that it was not possible to determine the liability within the prescribed period. The revenue also attempted to distinguish the Supreme Court's observation in the Kanak Automobiles case, suggesting it was specific to the Department's monetary appeal limits.