M/S. Shaurya And Company vs. The Union Of INDIA

Held

The Court held that the impugned Order-In-Original dated June 14, 2024, is liable to be set aside. The Court noted that there was no contest to the submission that the order-in-original was passed after five years from the date of issuance of the SCN. Both the counter affidavit and the additional counter affidavit were silent, providing no reasons for the delay in passing the order-in-original within the prescribed period. The Court referred to its previous judgment in M/s Power Spectrum Sarbidipur (supra) and the judgments of the Delhi High Court in L.R. Sharma & Co. vs. Union of India and Sunder System Pvt. Ltd. v. Union of India, which discussed Section 73(4B) of the Finance Act, 1994. While Section 73(4B) does not prescribe a mandatory period, the Court reiterated its view that the time frame mentioned therein cannot be extended for an inordinate period. The Court found that the present case was covered by the afore-mentioned judgments, particularly the principle that when a matter is kept in cold storage for years, it is not due to the impossibility of decision but for extraneous reasons. Consequently, the impugned order-in-original and the consequential demand were set aside.

Facts

The petitioner, M/s. Shaurya and Company, a proprietorship firm, filed a writ petition challenging an Order-In-Original dated June 14, 2024, passed by Respondent No. 6. This order levied Service Tax amounting to Rs. 30,35,207/- for the Financial Years 2013-14 and 2014-15, along with interest, penalties, and late fees. The challenge also extended to the Demand-Cum Show Cause Notice (SCN) dated May 10, 2019, issued by Respondent No. 7. The petitioner argued that the SCN was issued for the periods 2013-14 and 2014-15, to which they responded on May 30, 2019. However, no action was taken for approximately five years until subsequent notices were issued in 2024, leading to an ex-parte assessment. The petitioner contended that the proceedings were conducted beyond the mandates of Section 73(4B) of the Finance Act, 1994, and that the case was transferred to an authority without jurisdiction.

Key Issues

1. Whether the Order-In-Original dated 14.06.2024, passed by Respondent No. 6, is bad in law as it was conducted beyond the mandates of Section 73(4B) of the Finance Act, 1994, considering the significant delay between the issuance of the SCN (10.05.2019) and the final order (14.06.2024)? 2. Whether the proceedings initiated by the SCN dated 10.05.2019, and subsequent notices in 2024, leading to an ex-parte order, are in violation of Section 74 of the Finance Act, 1994, due to the inordinate delay and lack of action by the revenue authorities? 3. Whether the assessment process suffers from an inherent jurisdictional error, given that the SCN was issued by Respondent No. 7 in Patna Division, but the case was transferred to Respondent No. 6 in Bhagalpur Division without justifiable reasons, and the authority issuing the SCN did not issue the Order-In-Original? Petitioner's Contentions: The petitioner argued that the delay of approximately five years between the SCN and the final order, without any justification from the respondents, renders the proceedings illegal and in violation of Section 73(4B) and Section 74 of the Finance Act, 1994. They relied on the judgment in CWJC No.18398/2023 - M/s Kanak Automobiles Pvt. Ltd. Vs. Union of India & Ors. They also contended that the transfer of the case to an authority without jurisdiction and the failure to follow principles of natural justice vitiated the assessment. The petitioner asserted that the respondents possessed data of filed returns, yet inflated the turnover by claiming non-filing. Revenue's Contentions: The judgment does not explicitly record arguments made by the revenue or state.