M/S Sanjeev Shanker Urmila And Co. Through Its Managing Partner vs. Union Of INDIA Through The Secretary

Held

The Court held that the impugned order dated August 23, 2024, and the notice dated December 17, 2020, were set aside. The Court found merit in the petitioner's argument regarding the delay in proceedings by the respondents. The Court noted that the respondents remained silent from December 21, 2020, until January 18, 2024, for the personal hearing notice, and subsequently passed the final order on August 23, 2024. While the respondents attempted to justify the delay by citing the Covid-19 period, the Court observed that even considering this period, there was a significant delay of approximately 1 year and 11 months before the respondents took further action. The Court relied on the reasoning in the case of M/s Kanak Automobiles Private Limited Vs. Union of India & Others, which dealt with similar issues of delay in proceedings in conjunction with the Covid-19 period. The Court concluded that the petitioner had made out a case on the issue of delay. Consequently, the writ petition was allowed, and the impugned order and notice were quashed.

Facts

The petitioner, M/s Sanjeev Shanker Urmila and Co., filed a writ petition challenging a Final Order dated August 23, 2024, passed by the Assistant Commissioner, Central GST and Central Excise, Audit Circle, Bhagalpur (Respondent No. 3). This order imposed a Service Tax liability of Rs. 3,69,973/- along with interest and penalty under the Finance Act, 1994, read with Section 174 of the Central Goods and Services Tax Act, 2017. The petitioner also challenged a Demand cum Show Cause Notice dated December 17, 2020. The petitioner alleged tax evasion for the years 2015-2016 and 2016-2017. A notice under Section 73 of the Finance Act, 1994, was issued on December 21, 2020. The petitioner appeared and submitted a reply on January 31, 2024, after receiving a notice for personal hearing on January 18, 2024. The final order was passed on August 23, 2024. The petitioner also sought the return of amounts deposited.

Key Issues

1. Whether the initiation of proceedings and passing of the final order by the respondent authority, from the date of the initial notice (December 17, 2020) to the final order (August 23, 2024), falls within the jurisdiction of the concerned authority, considering the delay and the provisions of the Finance Act, 1994? Petitioner's Contention: The petitioner argued that the delay between the initial notice dated December 17, 2020, and the subsequent notice for personal hearing dated January 18, 2024, and the final order dated August 23, 2024, was beyond the jurisdiction of the concerned authority. They contended that the writ petition was maintainable on this ground. They also submitted that they had paid Rs. 2,55,715/- on February 5, 2021, and Rs. 93,606/- on March 21, 2020, leaving only Rs. 20,652/- due, which was not appreciated in the final order. Revenue's Contention: The respondents argued that the petitioner was not cooperating and was suppressing material information, which led to the delay. They also contended that the Covid-19 period, commencing in March 2020, should be considered. They argued that if proceedings were initiated during the Covid-19 period, there was no hurdle to proceed further. They claimed that even with Covid-19 period exclusion, the delay was approximately 1 year and 11 months, as they reopened proceedings on January 18, 2024, while the exclusion period could extend up to February 28, 2022. They relied on a coordinate bench's decision in M/s Kanak Automobiles Private Limited Vs. Union of India & Others.