TaxTMI 
TaxTMI 
2026 (2) TMI 20
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....ioner, GST & Central Excise Commissionerate alleging inter-alia that the petitioner had suppressed the actual value of services provided during the financial year 2015-16 and did not fully disclose its liability in its ST-3 returns for the Financial Year 2016-17 and had consequently short paid its service tax dues to the tune of Rs. 9,37,91,059/- in violation of Sections 66B, 67, 68 and 70 of the Finance Act, 1994 read with Rule 6 & 7 of the Service Tax Rules, 1994. 2. It is also alleged that from the third party data provided by the Income Tax Department, the petitioner had declared Rs. 63,62,45,475/- as sale of services in Income Tax Return but the petitioner had declared the gross value of services in ST-3 returns as Rs. 1,09,71,749/- only. The Principal Commissioner, GST & Central Excise Commisionerate alleged in the show cause notice that from the information received from the Income Tax Department that the during the Financial year 2016-17, the Petitioner suppressed taxable value amounting to Rs. 62,52,73,726/- and on such value of services, the Service Tax amounting to Rs. 9,37,91,059/- was required to be paid by the Petitioner to the Government exchequer which the Petiti....
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....titioner and without affording opportunity of being heard as the matter was supposed to be taken up for further hearing and an amount of Rs. 9,37,91,059/- was levied as service tax payable by the Petitioner. The said Order-in-Original, the Principal Commissioner of GST & Central Excise Commissionerate confirmed the demand of service tax of the said amount of Rs. 9,37,91,059/- for the Financial Year 2016-17 in terms of Section 73(2) of the Finance Act, 1994 and also imposed interest under section 75 of the Act with an equal amount of penalty of Rs. 9,37,91,059/- under section 78 of the Act. In the said order, it was observed that on scrutiny of the information received for the Financial year 2016-17, it was found that the Petitioner was engaged in providing taxable services and the services provided by the Petitioner neither fall under Negative List nor covered under the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. The Principal Commissioner of GST & Central Excise Commissionerate further observed that as per the third party data received from the Directorate General of Systems, New Delhi, it appeared that in the financial year 2016-17, the Petitioner rendered taxabl....
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....y No. 14(a) of the Mega Exemption Notification No. 25/2012 S.T. dated 20.06.2012 w.e.f. 01.07.2012 as amended. 6. It is strenuously urged by the learned senior counsel that there was absolutely no application of mind by the respondent authorities nor did they consider the materials which were placed before the authorities concerned before passing the impugned order in original imposing the demand of service tax and penalty. It is submitted that these information being placed before the authorities concerned pursuant to the summons issued itself, there was no case for suppression made out against the petitioner as sought to be alleged against the petitioner and thereby issuing the demand cum show cause notice by extending the prescribed period of time under Section 73 of the CGST Act. 7. The learned Senior counsel for the petitioner submits that for imposition of tax, there must be a declaration of liability under the statute and which the assessee is required to comply with. It is submitted that tax cannot be imposed on an analogy and inferences based on Form 26AS statement received from the Income Tax Department. In support of his contention, the learned Senior Counsel has p....
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....ability to pay the tax has to be conclusively determined for a given transaction for which the tax is imposed and for which the noticee has been held to be liable to pay tax as the same determination has not been made, the matter was remanded back to the Principal Commissioner, CGST for fresh determination and the assesses therein were given a opportunity to produce any relevant materials to show cause that the contract works for the service tax has been imposed for which the noticee is not liable to pay for such transaction. 10. It is submitted on behalf of the petitioner that by the said Judgment directed that after arriving at a conclusive determination reasoned order or a further demand notice as the case may be issued by the authorities. However, if on the other hand in the conclusion arrived at that the petitioner is not liable to pay service tax appropriate reason order is to be passed. It is submitted that the order has attained finality as no appeal has been preferred against the said Judgment. 11. The learned Senior Counsel for the petitioner also pressed into service Judgment rendered in Luit Developers Private Limited Vs. Commissioner of CGST & Central Excise, Dib....
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....not be imposed on the basis of Inferences and analogy. Since in the present case the entire Service Tax liability has been imposed any on inferences and analogy without coming to a finding that the said services were liable to Service Tax under the Finance Act of 1994 the impugned Adjudication Order is absolutely illegal, without jurisdiction, and the same is liable to be set aside and quashed. 13. It is further submitted by Dr. Saraf, learned Senior Counsel that in the present case the adjudicating authority has levied service tax without examining the facts and without coming to a finding that the said services were taxable and simply on the basis of the information available in Form 26AS statement of the Income Tax, has levied the service tax on the entire amount received, on pure inferences and analogy which is not permissible in law, and thereby the said order passed by the adjudicating authority is absolutely illegal, without jurisdiction and the same is liable to be set aside and quashed. 14. The impugned order in original is further assailed on the ground that the extended period of limitation is illegal as there was no suppression, fraud, collusion or willful misstat....
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....tent to evade payment of duty. When the facts are known to both the parties, omission by one party would not constitute suppression. An incorrect statement cannot be equated with a willful mis-statement. The latter implies making of an incorrect statement with the knowledge that the statement made was not correct. It was further held therein that a mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment duty in order to evade duty. 17. Referring to the Judgment of Apex Court rendered in CCE Vs. Chemphar Drugs & Liniments, reported in (1989) 2 SCC 127, the learned Senior Counsel, Dr Saraf, submits that the Apex Court while interpreting the provisions of Section 11A of the Central Sales Tax Act, 1944 held that something positive other than mere inaction or failure on the part of the manufacture or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability of invoking the extended period of limitation. 18. Reliance is also placed upon the Judgment of the Apex Court rendered in Cosmic Dye Chemical Vs. CCE., reported in (1995) 6 S....
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....ation, then the Court, in the exercise of its supervisory function, may correct the error unless there is some provision preventing a review by a Court of law. In support of his contentions, the learned Senior counsel refers to the Judgment rendered in Anisminic Ltd. Vs. Foreign Compensation Commission and another, reported in (1969) 2 WLR 163. Referring to the said Judgment, it is submitted that lack of jurisdiction may also arise if the authority in the intervening stage, while engaged on a proper enquiry, departs from the roots of natural Justice, or ask itself a wrong questions or takes into accounts matters which it was not directed to take into account. In such a situation it would amounts to a steps outside it jurisdiction. 21. The further limb of argument of the learned Senior Counsel for the petitioner is that the levy of interest in the instant case is absolutely illegal and without jurisdiction inasmuch as where service tax itself is not payable by the petitioner as the Petitioner also informed that the contracts undertaken by the Petitioner was exempted from payment of service tax under Entry No. 14 (a) of the Mega Exemption Notification No. 25/2012 S.T. dated 20.06.....
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....of certiorari and in an appropriate case it may issue prerogative writs. The duty of the superior Court to issue a writ of certiorari to correct the errors of an inferior court or tribunal called upon to exercise judicial or quasi-judicial functions and not to relegate the petitioner to other legal remedies available to him and a Superior Court in a proper case exercise its jurisdiction in favour of a petitioner who has allowed the time to appeal to expire or has not preferred his appeal. It cannot then be laid down as an inflexible rule that the superior Court must deny the writ when an inferior Court or tribunal by discarding the principles of natural justice and all accepted principle of procedure arrive at a conclusion which shocks the sense of justice and fair play. 23. Referring to the Judgment of this Court rendered in Hardeodas Jagannath Vs. Income Tax Officer, reported in (1961) 47 ITR 56, it is submitted that there is no inflexible rule that the existence of an alternative remedy is a bar to the issue of a writ of certiorari. The issue of various writs or directions is in the discretion of the Court and the Court while exercising its jurisdiction may take into consider....
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....isdiction without first availing of the statutory prescribed remedies. The GST is a complete code in itself and elaborate provisions are prescribed for ventilating grievances of the assesses who are aggrieved by any orders passed by the GST authorities. Therefore the writ petition should be dismissed and the petitioner should be relegated to avail of the statutory alternative remedies prescribed. Unless the petitioner had availed of these remedies, there is no scope for entertaining the instant writ petition. Therefore, since the petitioners did not avail statutory remedy, the petition should be dismissed on this limited ground and the parties be relegated to the avail of the statutory remedy prescribed. In support of his contentions, the learned counsel for the respondent relies upon the following Judgments: 1. GNRC Limited Vs. Union of India, reported in 2024 0 Supreme (Gau) 973; 2. PHR Invent Educational Society Vs. UCO Bank and Ors, reported in 2024 0 Supreme SC 333; 3. Brahmaputra Television Network Vs. Union of India, reported in 2024 0 Supreme (Gau) 855 4. M/S Sailaja Commercial Construction Pvt. Ltd. Vs Union of India & Ors, (W.A. No. 188....
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....ounsel for the petitioner before this Court is imposition of tax on solely on the basis of data available in Form 26AS which is obtained from the Income Tax Department. In Chatturam Holiram Ltd (Supra), the Apex Court held that there are three stages in the imposition of tax. There has to be a declaration of liability, which is the part of the statute which determines what persons in respect of what property are liable to pay the tax. Then there has to the assessment. The liability to pay taxes does not depend on the assessment which has already been fixed by the statute. But the assessment specifies the exact sum which a person is found to be liable to pay and finally the modes of recovery of taxes which are assessed in the event the assessee refuses to pay voluntarily. The relevant paragraphs of this Judgments are extracted below: "As has been pointed out by the Federal Court in Chatturam Vs. Commissioner of Income-tax, Bihar [(1947) F.C.R. 116 at 126; 15 ITR 302, at 302] (quoting from the judgment of Lord Dunedin in Whitney Vs. Commissioners of Inland Revenue [(1926) A.C. 37] 'there are three stages in the imposition of a tax. There is the declaration of liability, that....
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....sessment and the exact sum which the dealer is liable to pay must be ascertained without any reference whatever to the same. The legislature cannot enact a law imposing or authorizing the imposition of a tax thereupon and they are not liable to any such imposition of tax. If they are thus not liable to tax, no tax can be levied or imposed on them and they do not come within the purview of the Act at all. The very fact of their non-liability to tax is sufficient to exclude them from the calculation of the gross turnover as well as the net turnover on which sales tax can be levied or imposed. It is no doubt true that in construing fiscal statutes and in determining the liability of a subject to tax one must have regard to the strict letter of the law and not merely to the spirit of the statute or the substance of the law. If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed. If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and ....
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....facts; or (e) contravention of any of the provisions of this chapter or of the rules made there under with intent to evade payment of service tax, by the person chargeable with the service tax or his agent the provisions of this sub-section shall have effect, as if for the words eighteen months, the words "five years" had been substituted. Explanation-where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of eighteen months or five years as the case may be. (1A) Notwithstanding anything contained in sub-section (1), the Central Excise Officer may serve, subsequent to any notice or notices served under that sub-section, a statement, containing the details of service tax not levied or paid or short levied or short paid or erroneously refunded for the subsequent period, on the person chargeable to service tax, then, service of such statement shall be deemed to be service of notice on such person, subject to the condition that the grounds relied upon for the subsequent period are same as are mentioned in the earlier notices (2) The Central Excise Officer s....
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...."suppression" has been used in the proviso to Section 11-A of the Act accompanied by very strong words as "fraud" or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop (sic evade) the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. 43. In CEE Vs Chemphar Drugs & Liniments (Supra), while interpreting provisions of Section 11A of the Act of 1944, the Apex Court held that something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise is required, befo....
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.... on the differential taxable value of Rs. 62,52,73,726/-. Therefore, assessing authority found that the petitioner did not declare the correct value of taxable service in the ST-3 returns as per their book of accounts. 46. Such conclusions as have been discussed above are contrary to the facts which are evident from the pleadings. In any view of the matter for invocation of the provisions of Section 73 for extension of the period of limitation, it must necessarily be a case which falls under any or all the conditions specified under the proviso to Section 73(1) of the CGST Act. From a plain reading of the impugned Order-in-Original and the relevant portions of which have been extracted above, it is evident that there is no finding by the Adjudicating Authority that the case of the petitioner can be considered to be a case which falls under the conditions specified in proviso to Section 73(1). Under such circumstances, the impugned Order-in-Original appears to the Court to have been assumption of jurisdiction by the revenue authorities which was not otherwise vested on the said authority. For the revenue authorities to invoke powers under Section 73(1), there must be a finding an....
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....any court of law". If so forbidden it could not then even hear argument which suggested that error of law had been made. It could, however, still consider whether the determination was within "the area of the inferior jurisdiction. By referring to Reg. Vs. Cotham, reported in (1898) 1 Q.B. 802, 808, it was noted that the distinction between, on the one hand, disregarding the provisions of a statute and considering matters which ought not to be considered and, on the other hand, what is called "a mere misconstruction of an Act of Parliament". This perhaps illustrates the clear distinction which exists between an error when in the exercise of jurisdiction and an error in deciding whether jurisdiction can be assumed: in the latter case an error may have the consequence that jurisdiction was lacking and was wrongly assumed and the result would be that any purported decision would have no validity. The Court held that lack of jurisdiction may arise in various ways. There may be an absence of those formalities or things which are conditions precedent to the tribunal having any jurisdiction to embark on an inquiry. Or the tribunal may at the end make an order that it has no jurisdic....
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....e Urban District Council, reported in (1950) 1KB 636, it was held that where a duty to determine a question is conferred on a authority which state their reason for the decision and the reasons which they state show that they have taken into account matters which they ought not to have taken into account or that they have failed to take matters into account which they ought to have taken into account, the court to which an appeal lies can and ought to adjudicate on the matter. 51. Similar views have been expressed by Courts in India and followed in several cases in the context of examination of jurisdiction vested on Tribunals and Court of limited jurisdiction. In Dhirajlal Girdharilal Vs. CIT, Bombay, reported in AIR 1955 SC 271, the Apex Court held that when a Court of fact acts on materials partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the Court was affected by the irrelevant materials used by it in arriving at its finding and such a finding is vitiated because of use of inadmissible material and thereby a question of law arises. 52. In Ram Avtar Sharma Vs. State of Haryana, reported in AIR 1985 SC 915, the Apex Court held that d....
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....ic body is promoted by a mistaken belief in the existence of a non-existing fact or circumstance. 57. From a careful analysis of the judicial pronouncements as discussed above, it is clear that if an authority while making the inquiry rejects a consideration which is relevant and/or takes into consideration materials and other information which are not relevant, the said decision can be said to be a decision in excess or without jurisdiction. In the present case the adjudicating authority took into consideration the information available in form 26AS of the Income Tax Act, the sole basis for the purpose of levy of service tax. The authority did not consider the services rendered by the petitioner were exempted from levy of service tax or the liability to pay the service tax on the said services was on the recipient on the services. Since the adjudicating authority did not take into consideration those relevant materials which it was bound to take into consideration and on the other hand it had taken into consideration factors and materials, which if not irrelevant and not germane for deciding the liability of the service tax, cannot establish the liability of the assessee, then ....
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....or in the wrong." 60. The Apex Court in TELCO Vs. Assistant Commissioner, reported in AIR 1967 SC 1 401 held that though ordinarily High Court leaves an aggrieved party to take recourse to the remedies available under the ordinary law, if they are equally efficacious, yet there are certain exceptions and one of such exceptions pointed out is where action is being taken arbitrarily and without the sanction of law. 61. In State of U.P Vs. Mohd. Nooh, reported in 1958 SCR 595, the Apex Court held that the rule requiring the exhaustion of statutory remedies before the writ is granted is a rule of policy, convenience and discretion rather than rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. 62. In Bhopal Sugar Industries Vs. D.P Dubey, reported in AIR 1967 SC 549, the Apex Court held that the High Court has undoubted jurisdiction to decide the writ application whether the taxing authority has arrogated to itself, powers which it does not posses or has committed serious errors of procedure which has affected the validity of the decision or where the taxing authority....
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....ting to the facts of this appeal, we find that the appellant had claimed before the High Court that the suo motu revisional power could not have been exercised by the Revisional Authority in view of the existing facts and circumstances leading to the only conclusion that the assessment orders were legally correct and that the final orders impugned in the writ petition were passed upon assuming a jurisdiction which the Revisional Authority did not possess. In fine, the orders impugned were passed wholly without jurisdiction. Since a jurisdictional issue was raised by the appellant in the writ petition questioning the very competence of the Revisional Authority to exercise suo motu power, being a pure question of law, we are of the considered view that the plea raised in the writ petition did deserve a consideration on merits and the appellants writ petition ought not to have been thrown out at the threshold." 66. Again in Union of India Vs. Parashtom Dass, reported in 2023 SCCOnline SC 314, the Apex Court held that the provision of Article 226 of the Constitution forming part of the basic structure of the Constitution and that the self-restraint of the High Court under Article 22....
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....roceedings are however peculiar in essence that this show cause notice and the consequential confirmation of demand by the impugned order in original was a proceeding initiated by the respondent authority after invoking the extended period of limitation under Section 73(1). Therefore, in an ordinary course of proceedings seeking recovery of tax demanded, the normal course would be to avail of the statutory remedies. However, before the authorities invoke their jurisdiction under section 73(1), it is the mandate of the statute that the authorities must come to a specific conclusion that the jurisdiction conferred on the revenue authorities under Section 73 (1) can be invoked in the facts and circumstances of the present case. As have been elaborately discussed in the preceeding paragraphs that for invocation of jurisdiction under section 73(1), the respondent authorities must come to a conclusion that the invocation of the powers under section 73 (1) is necessary as the petitioner's case falls under any of the conditions mentioned in the proviso to section 73(1) of the CGST Act. However, from the recital of the order impugned, it is seen that the primary reason for invoking the juri....
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.... General Rule, requires a higher degree of responsibility and diligence on the part of the revenue authorities before they can proceed to invoke the powers conferred under section 73(1). 69. It is a trite law that greater the power prescribed under the statute greater will be the responsibility on the authorities on whom it has been bestowed to ensure that no infraction of the provisions of the Act and the Rules are made and no injustice is caused to the assessee during the process of demand and recovery. This Court while examining the facts and circumstances in minute detail and the exposition of the law laid down by various Courts including this Court as well as the Apex court of the country has held that for the Revenue authorities to invoke the powers under section 73(1), there must be a conclusive finding by the Revenue authorities that the petitioner assessee under the facts and circumstances, had wilfully and deliberately evaded or neglected to pay the GST. This conclusion by the Revenue authorities is not apparent and discernible from a plain reading of the impugned order in original. It is not a case that the petitioner assessee never responded to the notices. It is not....