M/S Lmb Sons Through Its Partner Sanjeev Kumar Gupta vs. The Union Of INDIA Through The Secretary Ministry Of Finance

Held

The Court held that the Order-in-Original (OO) dated May 19, 2022, was passed in contravention of Clause 14.3 of the Master Circular dated March 10, 2017, and Clause 4.3 of the Instruction dated November 18, 2021, issued by the CBIC. The Court found that the last valid personal hearing for which notice was served to the petitioner was on December 23, 2021. The OO, communicated on May 27, 2022, was issued six months after this last valid personal hearing, violating the circulars which mandate communication of the adjudication order within one month from the conclusion of the personal hearing. The Court relied on the Bombay High Court's decision in Infra Dredge Services (P) Ltd. v. Union of India, which emphasized expeditious disposal and communication of orders. The Court noted that circulars are binding on the respondent department. Therefore, the Court remitted the case back to the respondent authority to pass a fresh order after providing an opportunity for a personal hearing, without going into the merits of other issues raised by the petitioner.

Facts

The petitioner, M/s LMB Sons, engaged in renting immovable property, challenged an Order-in-Original (OO) dated May 19, 2022, passed by the Additional Commissioner, Central Goods & Services Tax & Central Excise. This OO imposed a service tax liability of Rs. 1,23,52,604 for the period 2015-16 to June 2017, along with interest and penalties under the Finance Act, 1994. The petitioner also challenged a Demand-cum-Notice to Show Cause (SCN) dated October 23, 2019, issued by the Directorate General of Goods and Services Tax (Intelligence). The petitioner argued that the OO was passed beyond the prescribed limitation period and was against the provisions of the Finance Act, 1994, and Service Tax Rules, 1994. The SCN was issued after a search of the petitioner's premises on October 23, 2018.

Key Issues

1. Whether the Order-in-Original (OO) dated May 19, 2022, is bad in law as it was passed beyond the period of limitation prescribed under Section 73(4B) of the Finance Act, 1994, and relevant circulars? 2. Whether the OO is liable to be quashed for being passed beyond the prescribed period from the last date of personal hearing, in contravention of circulars issued by the Central Board of Indirect Taxes and Customs (CBIC)? Petitioner's Arguments: - The OO was passed beyond the limitation period prescribed under Section 73(4B) of the Finance Act, 1994. - The OO was passed approximately three years after the SCN was issued on October 23, 2019. - The OO was passed with a delay of over two months from the last date of personal hearing, violating circulars dated March 10, 2017, and November 18, 2021. - Reliance was placed on the Supreme Court case of Uniworth Textiles Limited Versus Commissioner of Central Excise, Raipur, and the Bombay High Court case of Infra Dredge Services (P) Ltd. v. Union of India. Revenue's Arguments: - Section 73(4B) of the Finance Act, 1994, does not prescribe a strict time limit for passing an adjudication order, citing the Gujarat High Court's decision in Yangir Properties and Trading vs. Union of India. - The petitioner was granted sufficient opportunities for personal hearing but failed to appear, requesting adjournments on medical grounds. - The petitioner had an alternative remedy of appeal but chose to file a writ application.