M/S Ishwar And Co. Contract PVT. LTD vs. The Union Of INDIA
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The petitioner, M/s Ishwar and Co. Contract Pvt. Ltd, filed a writ petition challenging an order dated March 12, 2024, passed by the Assistant Commissioner, Central GST and Central Excise, Begusarai. This order demanded service tax, cess, interest, and penalties totaling ₹10,60,415/- for the financial years 2015-2016 and 2016-2017. The demand was raised under various sections of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017. The petitioner contended that they did not receive show cause notices and personal hearing notices, and that the issuance of such notices was contrary to a Circular dated November 5, 2019. The revenue argued that the petitioner had a statutory remedy of appeal and should exhaust it before approaching the High Court.
Held
The Court held that the petitioner's contention regarding non-service of notices was not tenable, as the impugned order itself indicated that the petitioner was represented by a Chartered Accountant for a personal hearing. The Court found that the petitioner's representative appeared for a personal hearing, thus refuting the claim of non-service of notices. Regarding the applicability of the Circular dated November 5, 2019, the Court stated that this aspect required examination by the Appellate Authority. Consequently, the Court deemed the writ petition premature. The Court relied on the Supreme Court's decision in State of Jammu and Kashmir Vs. R.K. Zalpuri, emphasizing that statutory remedies must be exhausted before approaching the Writ Court, unless there is a clear violation of natural justice or statutory provisions, which were not made out in this case. The petitioner was relegated to the Appellate Authority, with a direction to decide the appeal within six months. The Appellate Authority was also directed to consider Section 14 of the Limitation Act for condonation of delay, acknowledging the time spent by the petitioner in the High Court. The petitioner was permitted to file an interlocutory application for interim relief.
Key Issues
1. Whether the petitioner's contention of non-service of show cause notices and personal hearing notices is tenable, thereby violating principles of natural justice and statutory provisions, under the Finance Act, 1994, and CGST Act, 2017? 2. Whether the impugned order is liable to be set aside on the ground that the issuance of show cause notices is contrary to Circular dated November 5, 2019, paragraphs 2 and 4? Petitioner's Arguments: The petitioner argued that they did not receive the requisite show cause notices and personal hearing notices, making the demand order illegal. They also contended that the issuance of notices was contrary to the Circular dated November 5, 2019. Revenue's Arguments: The revenue contended that the petitioner had a statutory remedy of appeal before the Appellate Authority and should have exhausted this remedy before filing the writ petition. They further argued that the petitioner was represented by a Chartered Accountant for a personal hearing, contradicting the claim of non-receipt of notices.
Sections Cited
Section 73(2), Section 174, Section 75, Section 78, Section 77(1)(a), Section 69, Section 77(2), Section 70, Rule 7, Section 67, Section 68, Section 77(1)(c)(ii), Section 14
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL JUDGMENT (Per: HONOURABLE MR. JUSTICE P. B. BAJANTHRI) Date : 18-03-2025 In the instant writ petition, the petitioner has prayed for the following reliefs: “(i) For setting aside the order dated 12.03.2024 passed by respondent number 2 by which he has raised the demand of service tax including cess amounting to ₹10,60,415/- not paid by the petitioner during the period financial year 2015-2016 and 2016-17 under proviso to section 73(2) of the Finance act read with Section 174 of CGST act 2017. (ii) For setting aside the demand of interest at the applicable rate on the amount as 2/5 demanded under the provisions of section 75 of the Finance act 1994 read with section 174 of the CGST act. (iii) For setting aside the penalty of ₹ 10,60,415/- under the provisions of section 78 of the Finance act 1994 read with section 174 of the CGST act for wilful suppression of material facts with interest to evade payment to service tax. (iv) For setting aside the penalty of ₹ 5000/- under the provisions of section 77(1)(a) of the Finance act 1994 read with section 174 of CGST act for failure to take registration in accordance with the provisions of section 69 of the act. (v) For setting aside the penalty of ₹ 5000 under section 77(2) of the Finance act 1994. Read with section 174 of the CGST act for violation of the provision of section 70 of the act read with rule 7 of the rules. (vi) For setting aside the penalty of ₹5000 under Section 77(2) of the Finance act read with section 174 of the CGST for violation of the provision of section 67 and 68 of the act. (vii) For setting aside the penalty of ₹10,000/- under Section 77(1)(c)(ii) of the act read with section 174 of the CGST act for failure to produce document as called for by the Department. (viii) To issue an appropriate order/ direction in the nature of mandamus directing the respondent’s authority not to take any course of 3/5 action against the petitioner until the disposal of this writ petition. (ix) To any other relief or reliefs for which the petitioner may be found entitled to in the facts and circumstances of the case during its hearing.
Learned counsel for the petitioner submitted that petitioner is not in receipt of show cause notices and personal hearing notices and further submitted that issuance of show cause notices itself is contrary to Circular dated 5th November, 2019, in particularly, paragraphs-2 and 4. The counsel for Union of India, however submitted that the petitioner has statutory remedy of appeal before the Appellate Authority. Without exhausting statutory remedy of appeal, petitioner has rushed to this Court.
We could have interfered with the impugned order if the petitioner’s contention relating to non-service of notices, on the other hand, petitioner is represented by his representative as is evident from paragraph-8 relating to personal hearing in the impugned order. Petitioner is represented by Shri Balram Bharti, Chartered Accountant, an authorized representative of the petitioner. In the light of representative of the petitioner appeared before the Appellate Authority for personal hearing. The contention of the petitioner that notices have not been 4/5 served to the petitioner in the manner known to the law, is not tenable. Insofar as consideration of Circular dated 5th November, 2019, in particularly, paragraphs-2 and 4, is required to be examined by the Appellate Authority. Therefore, instant writ petition is premature. Accordingly, instant writ petition stands disposed of in the light of the decision of the Hon’ble Supreme Court in the case of State of Jammu and Kashmir Versus R.K. Zalpuri, reported in AIR 2016 Supreme Court 3006 (Para-20). The overall principle laid down in the aforesaid decision is that if a person is having statutory remedy of appeal before the Appellate Authority in that event he has to exhaust such remedy. Writ Court can interfere only if there is any violation of principles of natural justice and violation of any statutory provision of law. Both the ingredients have not been made out by the petitioner in the present case. Therefore, we relegate the petitioner to the Appellate Authority insofar as filing of appeal before the Appellate Authority. In the event of filing of appeal before the Appellate Authority, Appellate Authority is requested to decide the petitioner’s appeal within a reasonable period of time of six months from the date of receipt of such memorandum of appeal.
The Appellate Authority is hereby directed to take 5/5 note of Section 14 of the Limitation Act for the purpose of condonation of delay to the extent that petitioner has spent time in this Court. Petitioner is also permitted to submit Interlocutory Application seeking interim relief, if any.
P.S./- (P. B. Bajanthri, J) ( Alok Kumar Sinha, J) AFR/NAFR NAFR CAV DATE NA Uploading Date 21.03.2025. Transmission Date NA
Reproduced from the public record of the Patna High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.