Ramesh Kumar Buddanaboina vs. The Assistant Commissioner Of Central Tax

Facts

The petitioner, Ramesh Kumar Buddanaboina, proprietor of BR Marketing, challenged an Order-in-Original No. 58/2023-24/Adjn (AC) ST-FN-HYD, dated 20.09.2023, passed by the Assistant Commissioner of Central Tax. This order pertained to the tax period 2015-16 under the Service Tax regime as per the Finance Act 1994. The petitioner contended that the order was passed arbitrarily, without considering their objections filed on 09.02.2021, without providing sufficient opportunity for personal hearing, and without granting exemption on incentives. They also argued that the tax was levied at 14.50 percent without proper inquiry and that the demand was ex-facie barred by limitation. The petitioner further claimed the order violated principles of natural justice and the rule of law.

Held

The Court held that the period of limitation was satisfactorily explained by the counsel for the department. The Court noted that Section 73(4B)(d) of the Service Tax Act suggests the one-year limitation period is directory, not mandatory, and can be extended if circumstances prevent timely conclusion of proceedings. The Court acknowledged that the show cause notice was issued during the pandemic period (22.12.2020), and multiple notices for personal hearing were issued, with the petitioner citing the pandemic as a reason for non-appearance. The Court reasoned that the department also faced similar challenges due to the pandemic, justifying the delay. Consequently, the Court was not inclined to entertain the writ petition on its merits. The petitioner's right to challenge the order by way of an appeal was expressly reserved and protected. The Court also directed that the period spent litigating in the writ petition would be excluded for the purpose of calculating the limitation period for any appeal filed by the petitioner. The writ petition was rejected.

Key Issues

1. Whether the Order-in-Original No. 58/2023-24/Adjn (AC) ST-FN-HYD, dated 20.09.2023, passed by the Assistant Commissioner of Central Tax for the tax period 2015-16, is arbitrary, contrary to law, and violative of principles of natural justice and the rule of law, as contended by the petitioner? Petitioner's Arguments: The petitioner argued that the order was passed without considering their detailed objections, without providing sufficient opportunity for personal hearing, and without granting exemption on incentives. They also contended that the tax was levied at 14.50 percent without proper inquiry and that the demand was barred by limitation. The petitioner relied on the principles of natural justice and the rule of law. Revenue's Arguments: The revenue, represented by the Standing Counsel, argued that the provisions of Section 73(4B)(d) of the Service Tax Act indicate that the one-year period of limitation from the date of notice is directory, not mandatory. They contended that where it is not possible to conclude proceedings within one year, the period can extend beyond one year if justifiable reasons exist. The revenue pointed out that the show cause notice was issued during the pandemic period (22.12.2020) and that notices for personal hearing were issued multiple times, with the petitioner not appearing initially due to the pandemic. The revenue argued that the same pandemic conditions affected the department, justifying the delay in concluding proceedings.