Tax authority's determination set aside for failing to consider PWD payment certificates and rejecting government documents

The HC set aside the tax authority's determination regarding the petitioner's tax liability under a show cause notice. The court found that the authorized officer erred by not considering payment certificates from PWD dated 1st September, 2016, and improperly rejected government-issued payment certificates merely because original work orders weren't disclosed. The matter was remanded to the adjudicating authority for fresh consideration within eight weeks, with directions to provide personal hearing opportunity and consider the Mega Exemption Notification dated 20th June, 2012, subject to Rs. 5,00,000 payment.

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Issues involved:
Challenge to tax liability determination under the Finance Act, 1994; Barred show cause notice; Benefit of Mega Exemption Notification; Irregularity in procedure; Jurisdictional error; Extended period for show cause notice; Mismatch in reporting values; Non-submission of original work order; Perverse finding by authorized officer.

Analysis:
The petitioner challenged the tax liability determination under the Finance Act, 1994, based on a show cause notice issued by the Additional Commissioner, Headquarter, Central Tax CGST. The petitioner argued that the show cause notice was barred by limitation and claimed entitlement to the benefit of Mega Exemption Notification dated 20th June, 2012. The petitioner contended that despite confirmation of payments made by governmental authorities, the authorized officer overlooked the evidence presented. It was highlighted that in cases like this, bills are usually prepared by the Public Works Department (PWD), and the petitioner is required to sign them.

The petitioner further raised concerns about the irregularity in the procedure followed, as the show cause notice was issued by one authority but the final order was passed by a different authority. On the other hand, the CGST authority argued that the order was appealable and the petitioner had been given ample opportunity to present their case. The CGST authority emphasized that the Additional Commissioner had the jurisdiction to pass the adjudication order, and there was no jurisdictional error in the process.

The Court examined the show cause notice issued invoking the extended period under the Finance Act, 1994, based on information received from the Central Board of Direct Taxes. The petitioner provided clarifications, including details of services provided to the West Bengal Government. The Court noted discrepancies in reporting values and the non-submission of original work orders by the petitioner. Despite payment certificates issued by governmental authorities, the authorized officer refused to accept the contractual price due to the lack of original work orders. The Court found this decision to be perverse and ordered a reconsideration of the matter by the adjudicating authority.

Consequently, the petitioner was remanded back to the adjudicating authority for a fresh consideration of the show cause notice, with an opportunity for a personal hearing. The petitioner was directed to make a specified payment, subject to further decisions by the respondents. The Court allowed the petitioner to submit additional documents and kept all points open for further review. The writ petition was disposed of with these directions, and no costs were awarded.

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