2013 (2) TMI 676 - HC - Service Tax

Court sets aside show cause notice for being time-barred and not meeting conditions for extended limitation.

NARESH KUMAR & CO. PVT. LTD. Versus UNION OF INDIA

NARESH KUMAR & CO. PVT. LTD. Versus UNION OF INDIA - 2015 (37) S.T.R. 451 (Cal.) , [2014] 73 VST 409 (Cal) Issues Involved:1. Validity of the show cause notice issued after the period of limitation.2. Conditions for invoking the extended period of limitation under Section 73(1) of the Finance Act, 1994.3. Jurisdiction of the authority to issue the show cause notice.4. Availability of alternative remedy and maintainability of the writ petition.5. Specificity and sufficiency of particulars in the show cause notice.Issue-wise Detailed Analysis:1. Validity of the show cause notice issued after the period of limitation:The petitioner challenged the show cause notice dated 23rd April, 2010, which demanded Service Tax for the period from 1st April, 2004 to 9th September, 2004. The court noted that under Section 73(1) of the Finance Act, 1994, the limitation period for issuing a notice was one year from the relevant date, extendable to five years in cases of fraud, collusion, wilful misstatement, suppression of facts, or contravention of provisions with intent to evade tax. The court held that the entire demand in the impugned notice was ex facie barred by limitation as more than five years had elapsed from the relevant date.2. Conditions for invoking the extended period of limitation under Section 73(1) of the Finance Act, 1994:The court emphasized that the extended period of limitation could only be invoked if there was evidence of fraud, collusion, wilful misstatement, suppression of facts, or contravention of provisions with intent to evade tax. The court found that the impugned notice did not provide sufficient particulars of any such acts. It was held that mere failure to declare does not amount to wilful suppression, and there must be a positive act on the part of the assessee. The court concluded that the conditions precedent for invoking the extended period were absent.3. Jurisdiction of the authority to issue the show cause notice:The court reiterated that the question of limitation is a jurisdictional issue. It held that an authority has no jurisdiction to issue a show cause notice barred by limitation. The court noted that the jurisdiction to issue a notice after the expiry of one year but within five years requires a finding of fraud, collusion, wilful misstatement, suppression of facts, or contravention of provisions with intent to evade tax. Since the impugned notice did not meet these criteria, it was held to be without jurisdiction.4. Availability of alternative remedy and maintainability of the writ petition:The respondents contended that the petitioner had an alternative remedy of adjudication before the Adjudicating Authority. However, the court held that the existence of an alternative remedy does not bar the maintainability of a writ petition, especially when the impugned notice is without jurisdiction or barred by law. The court cited several precedents, including Whirlpool Corporation v. Registrar of Trade Marks and State of Punjab v. Bhatinda District Cooperative Milk P. Union Ltd., to support its position.5. Specificity and sufficiency of particulars in the show cause notice:The court held that a show cause notice must be specific and provide sufficient particulars to enable the assessee to give a meaningful and effective reply. The impugned notice was found to be vague and lacking in material particulars, thereby violating the principles of natural justice. The court concluded that the notice did not fulfil the statutory conditions for issuance and was incapable of effective reply.Conclusion:The court set aside the impugned show cause notice dated 23rd April, 2010, as it was barred by limitation and did not meet the conditions for invoking the extended period of limitation. The writ application was disposed of accordingly.