Limitation and jurisdiction in service-tax demands: writ relief allowed where notice was time-barred and receipts had already suffered VAT.

Service-tax notices under Section 73(1) must be issued within thirty months from the relevant date, unless the extended five-year period is validly attracted by fraud, suppression, wilful misstatement or intentional contravention; on the stated facts, a notice issued beyond that period was treated as time-barred and without jurisdiction. The High Court also reiterated that a writ petition may be entertained despite an alternative statutory appeal where the proceedings are wholly without jurisdiction, and that service tax cannot be demanded again on receipts already subjected to VAT. The impugned adjudication was therefore quashed.

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Issues: (i) Whether the show-cause notice and consequential demand were barred by limitation under Section 73(1) of the Finance Act, 1994. (ii) Whether the writ petition was maintainable despite the statutory appeal remedy, and whether service tax could be demanded on receipts already subjected to VAT.

Issue (i): Whether the show-cause notice and consequential demand were barred by limitation under Section 73(1) of the Finance Act, 1994.

Analysis: Section 73(1) requires a notice for short-paid service tax to be served within thirty months from the relevant date, and the period expands to five years only where fraud, collusion, wilful misstatement, suppression of facts, or intentional contravention is established. The notice was issued beyond thirty months, and the invocation of the extended period was not sustained on the facts noted by the Court.

Conclusion: The demand was held to be time-barred and without jurisdiction.

Issue (ii): Whether the writ petition was maintainable despite the statutory appeal remedy, and whether service tax could be demanded on receipts already subjected to VAT.

Analysis: A writ court may entertain a petition despite an alternative remedy where the proceedings are wholly without jurisdiction. The Court applied the principle that VAT and service tax are mutually exclusive on the relevant factual matrix, and noted that the petitioner had already discharged VAT on the transactions in question. In those circumstances, the impugned proceedings were treated as lacking jurisdiction, making writ interference appropriate under Article 226 of the Constitution of India.

Conclusion: The writ petition was maintainable, and the service tax demand could not be sustained on the same receipts.

Final Conclusion: The impugned adjudication was quashed, and the petitioner obtained consequential relief.

Ratio Decidendi: Where a service-tax notice is issued beyond the statutory limitation and the proceedings are otherwise wholly without jurisdiction on account of the same receipts having already suffered VAT, the High Court may entertain a writ petition despite the availability of an appellate remedy and quash the demand.

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