Prompt service tax adjudication required; belated orders after unexplained delay are arbitrary and unsustainable.

Service tax adjudication under Section 73(4B) of the Finance Act, 1994 cannot be kept pending for an inordinate, unexplained period after issuance of show cause notices. The Court held that the provision reflects a legislative mandate for prompt disposal, and dormant proceedings cannot be revived years later merely because related matters remain pending or the case was kept in the call book. Each notice is an independent proceeding, and prolonged inaction is arbitrary and prejudicial. The belated adjudication order was therefore time-barred and unsustainable, and the writ petitions were allowed. The merits of whether fabrication falls within the taxable entry were left open.

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Issues: Whether the common adjudication order confirming service tax demands after an inordinate delay of about nine years from the show cause notices was sustainable under Section 73(4B) of the Finance Act, 1994.

Analysis: The show cause notices were issued in 2010 and 2011, but the common order was passed only in 2019. Section 73(4B) of the Finance Act, 1994 requires adjudication within six months in normal cases and within one year where the extended period applies, where it is possible to do so. The provision reflects a legislative mandate for expeditious disposal and does not permit dormant proceedings to be revived after an unexplained and excessive lapse of time. The Department could not justify keeping the matters in the call book and awaiting the outcome of other proceedings, because each show cause notice is an independent proceeding and nothing prevented timely adjudication. The prolonged inaction resulted in arbitrariness and prejudice to the assessee.

Conclusion: The impugned adjudication order was time-barred and unsustainable, and the writ petitions were allowed by setting it aside. The merits of whether fabrication falls within the taxable entry were left open.

Ratio Decidendi: Even where the statutory time limit under Section 73(4B) is treated as directory, service tax adjudication cannot be deferred for an inordinate and unexplained period, and a belated order passed after years of departmental inaction is liable to be struck down as arbitrary and contrary to the legislative scheme of prompt determination.

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