2020 (12) TMI 619 - HC - Service Tax

Court clarifies limitation period for issuing Show Cause Notice under Finance Act

The Court disposed of the case by directing the exclusion of a specific period for computing the limitation for issuing a show cause notice under Section ... Validity of action of the DGCEI to initiate investigation against the Petitioner - non-payment of service tax - stand of NBCC is that the Respondent should inform the Petitioner as to what are PMC charges - Exclusion of period of stay from the period of limitation - HELD THAT:- Right from inception, the case of the Department has been that in the agreements entered into by NBCC, a percentage of the project cost called as PMC charges was collected by NBCC. No service tax was being paid in respect of these PMC charges which led to the issuance of the show cause notices. The said Show Cause Notices were challenged by NBCC in the present writ petition related to PMC charges. Thus, the NBCC is well aware as to what are PMC charges. The stand in the reply clearly shows that the NBCC is feigning ignorance. This Court had permitted Director General of Central Excise Intelligence (DGCEI) to investigate and enquire into the collection of these charges and liability, if any, for payment of service tax. NBCC is expected to co-operate in the investigation - the information sought by the DGCEI ought to be provided by NBCC and it should also fully co-operate with the investigation, both in letter and spirit. Computation of time limitation - HELD THAT:- The period between the 10th February, 2016 when the stay order was passed till the disposal of the review petition i.e. 4th December, 2020 would be excluded for the propose of computing limitation period for the issuance of Show Cause Notice under Section 73(1) of the Finance Act - It is made clear that this Court has not examined the merits of the allegations raised by the NBCC in its reply to this application as none of the said issues arise as part of the said application. Petition disposed off. Issues:1. Challenge to DGCEI's investigation for non-payment of service tax2. Review petition seeking to review the judgment3. Respondents' application for exclusion of time period during review for limitation computation4. Non-cooperation in investigation by the Petitioner5. Dispute over documents sought by Respondents6. Computation of limitation period for issuance of show cause noticeAnalysis:Issue 1: Challenge to DGCEI's investigationThe writ petition challenged DGCEI's investigation for non-payment of service tax. The judgment dated 16th November, 2018 disposed of the petition with directions, including the exclusion of a specific period for computing limitation for issuing show cause notice under Section 73(1) of the Finance Act. The judgment clarified the jurisdiction of Central Excise Officers of DGCEI and the validity of notices issued under Section 14 of the CE Act even if no proceedings under Section 73 of the Fin Act were pending.Issue 2: Review petitionA review petition was filed seeking a review of the judgment, which was dismissed on 4th December, 2020.Issue 3: Exclusion of time period for limitation computationRespondents filed an application seeking exclusion of the time period during the review for computing limitation. The application also requested the Petitioner's cooperation in the investigation and preponing the next hearing of the review petition.Issue 4: Non-cooperation in investigationThe Respondents alleged non-cooperation by the Petitioner in the investigation. The Petitioner argued that it was not stalling the investigation and raised concerns about the scope of documents sought beyond the original Show Cause Notice.Issue 5: Dispute over documentsThe Petitioner disputed the documents sought by the Respondents, claiming that the inquiry was limited to Project Management Consultancy charges and not all output services. The Court clarified that NBCC should cooperate with the investigation and provide the information sought.Issue 6: Computation of limitation periodThe Court clarified that the period between the stay order in February 2016 and the disposal of the review petition in December 2020 would be excluded for computing the limitation period for issuing a Show Cause Notice under Section 73(1) of the Finance Act.In conclusion, the Court emphasized the importance of cooperation in the investigation, clarified the scope of documents to be provided, and provided guidance on the computation of the limitation period for issuing a Show Cause Notice. The application was disposed of based on the above terms, without examining the merits of the allegations raised by the Petitioner.