2016 (12) TMI 811 - HC - Service Tax

Court upholds show-cause notice validity, rejects time-barred argument, affirms jurisdiction, directs limitation examination. Audit materials admissible.

The court upheld the validity of the show-cause notice challenged by the petitioner, rejected the premature time-barred argument, affirmed the ... Validity of SCN - jurisdiction of authority - Rule 5A (2) of the Amended Service Rules was held to be ultra vires its parent statute - Held that: - so long as material is relevant, how it is sourced is immaterial and the courts would examine it provided it fulfils the test of relevance - the argument that the materials on the basis of which the impugned show-cause notice was issued could not have been used is rejected. No statute is deemed to be ultra vires or void - it is actually upon the court declaring it to be so, that it is void. As far as the issue of jurisdiction of the Principal Commissioner, the court notices that there is no denial of the fact that the official who issued the show cause notice holds the rank of Principal Commissioner of Central Excise as defined by the Central Excise Act, 1944 read along with the rules. That he was assigned audit task is a matter of convenience; it in no way inhibits the officer from issuing the show-cause notice in exercise of primary authority concerned by the statute. Consequently, the argument about lack of authority/jurisdiction fails. - Writ petition dismissed. Issues:1. Validity of the show-cause notice issued2. Time-barred nature of the show-cause notice3. Jurisdiction of the Principal Commissioner4. Examination of limitation issueAnalysis:1. Validity of Show-Cause Notice:The petitioner challenged the show-cause notice dated 21.04.2016, arguing it was untenable and issued without jurisdiction. Citing a Division Bench judgment in Travelite (India) vs. Union of India, the petitioner contended that the notice was invalid as the materials were obtained during an audit when the rule in question was considered ultra vires. However, the court held that mere procurement of materials in an unauthorized manner does not render them inadmissible in India, unlike in the United States. The court rejected the argument that the materials could not be used for issuing the notice.2. Time-Barred Show-Cause Notice:The petitioner also raised the issue of the show-cause notice being time-barred. The court found this issue premature for its examination and deemed it best left to the concerned authority to decide based on the facts presented, as it involves a mixed question of fact and law.3. Jurisdiction of the Principal Commissioner:Regarding the jurisdiction of the Principal Commissioner who issued the show-cause notice, the court noted that the official held the rank as defined by the Central Excise Act, 1944, and was authorized to issue the notice despite being assigned an audit task. The court ruled that the officer's rank and duties did not inhibit his authority to issue the notice, dismissing the argument of lack of jurisdiction.4. Examination of Limitation Issue:The court granted the petitioner one week to respond to the show-cause notice if not already done. The writ petition was ultimately dismissed, with the court directing the concerned authority to examine the limitation issue, considering it a mixed question of fact and law best left for the authority to decide based on the specific circumstances.In conclusion, the court upheld the validity of the show-cause notice, rejected the time-barred argument as premature, affirmed the jurisdiction of the Principal Commissioner to issue the notice, and left the examination of the limitation issue to the concerned authority.