High Court quashes service tax notices after 10 years, rules in favor of Petitioners.

In W.P.(C) No. 23950 of 2017, the High Court quashed the notice and letter issued by the Department regarding non-payment of service tax after a lapse of 10 years, citing dismissal of the Department's appeal by the Supreme Court and a favorable judgment from the CESTAT. The court ruled in favor of the Petitioner, staying further proceedings. Similarly, in W.P.(C) No. 21602 of 2017, the High Court quashed a notice and subsequent letters for non-payment of service tax, following the same rationale. Both petitions were allowed without costs.

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Issues:
1. Challenge to notice and letter issued by the Department regarding non-payment of service tax.
2. Petitioner's impression of dropped proceedings by the Department.
3. Impugned notice issued after a lapse of 10 years.
4. Reference to pending appeal in the Supreme Court.
5. Dismissal of appeal by the Supreme Court.
6. Reliance on judgment of CESTAT and Supreme Court's dismissal of appeal.
7. Quashing of impugned notices.
8. Challenge to another notice dated 18th October, 2006.
9. Quashing of the two notices.

Analysis:

In W.P.(C) No. 23950 of 2017, the Petitioner challenged a notice and letter issued by the Department regarding non-payment of service tax for the period 1st October, 2005 to 31st March, 2006. The Petitioner believed that the proceedings had been dropped as no action was taken after the initial Show Cause Notice (SCN) issued in April 2007. However, a subsequent notice was issued in October 2017, after a lapse of 10 years, requiring the Petitioner to appear for a hearing. The Petitioner expressed difficulty in collecting documents after such a long time, leading to the filing of the present petition. An interim order was passed staying further proceedings, and the Department filed a counter affidavit mentioning a pending appeal in the Supreme Court regarding a similar issue.

The Petitioner's counsel highlighted the dismissal of the Department's appeal by the Supreme Court in January 2023, along with another judgment favoring the assessee by the CESTAT, which was upheld by the Supreme Court. Based on these judgments, the High Court quashed the impugned notices dated April 2007 and October 2017, ruling in favor of the Petitioner.

In W.P.(C) No. 21602 of 2017, the challenge was to a notice dated October 2006 and subsequent letters for the period 16th July, 2001 to 30th September, 2005. Following the same reasoning as in the previous case, the High Court also quashed these two notices. Both petitions were allowed without any order as to costs, concluding the judgment.

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