TaxTMI 
TaxTMI 
2026 (4) TMI 433
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....y speaking, the relevant facts of the case, shorn of unnecessary detail, are as follows: FACTS 2.1 The petitioner is a proprietorship concern engaged in the fabrication and erection of structures at the sites of principal employers using materials supplied by them and is registered under the Service Tax laws. Pursuant to work orders dated 31.01.2007 issued by M/s Aditya Cement Limited and 06.01.2009 issued by M/s Prism Cement Limited, the petitioner carried out fabrication and erection works at their respective sites. 2.2 For the period April 2008 to March 2009, a show cause notice dated 01.10.2009 was issued alleging short payment of service tax amounting to Rs. 42,60,123/- on the premise that fabrication formed part of "erection, commissioning or installation" and was a service under Section 65(39a) of the Finance Act, 1994.The petitioner disputed the said demand. 2.3. While the final decision on the earlier show cause notice dated 01.10.2009 was still pending, another show cause notice dated 30.04.2010, for the period April 2007 to March 2008, was issued alleging short payment of service tax amounting to Rs. 81,46,056/- on the same premise that fabrication formed par....
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....n view of the Government's litigation policy and the Board's Circular dated 11.07.2018 prescribing monetary limits, the Department withdrew the appeal from this Court vide an order dated 06.09.2018. 2.15. As a bolt from the blue, the Department later took the pending three show cause notices out of the Call Book and proceeded with adjudication. The Joint Commissioner, Central Excise & GST, Udaipur, passed the common impugned Order-in-Original dated 24.10.2019, qua all three notices, holding that since the Department's appeal against the Tribunal's order had been withdrawn on the ground of monetary limits, the Tribunal's order and findings rendered therein carried no precedential value. On this premise, the authority confirmed the demands along with interest and penalties. 3. The adjudicating authority (Joint Commissioner) proceeded to raise the disputed demand as below:- Sr. No. PERIOD DEMAND 1. April 2007 - March 2008 Demand of Rs. 81,46,056/- by imposing penalty under Sections 76 and 78 2. April 2009 - March 2010 Demand of Rs. 1,04,97,017/- with penalty under Section 76 3. April 2010 - March 2011 Demand of Rs. 1,03,44,427/- with penalty u....
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....sion of facts or intent to evade tax, the controversy being one of bona fide interpretation of the statutory provisions. 6.6. Finally, learned counsel submits that the impugned Order-in-Original dated 24.10.2019 is ex facie without jurisdiction, being grossly time-barred under Section 73(4B) of the Finance Act, 1994, inasmuch as a show cause notice issued on 14.09.2010 could not, in law, have been adjudicated nearly nine years thereafter. SUBMISSIONS ON BEHALF OF THE RESPONDENTS 7. Learned counsel for the respondents would argue that:- 7.1. The contention of the appellant is not tenable inasmuch as C.E.S.T.A.T Final Order dated 27.12.2011 was never accepted by the Department on merits. It was duly appealed against before Rajasthan High Court. The said appeal was withdrawn from this Court only due the Board's Circular issued under the Government's litigation policy bearing F. No.90/Misc/116/2017-JC dated 11.07.2018, since the demand raised was less than Rs.50 lakhs. 7.2. Appeals withdrawn on monetary grounds do not signify acquiescence qua findings rendered in the orders under challenge, nor do such orders carry precedent value. This position is fortified by CBIC Inst....
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...., in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4A)." 10. a perusal of the above reveals that Section 73(4B) of the Finance Act, 1994 prescribes a time discipline for adjudication of show cause notices relating to recovery of service tax. It provides that the Central Excise Officer 'shall' determine the tax liability within six months from the date of notice in normal cases under Section 73(1), and within one year where the extended period is invoked under the proviso to Section 73(1) or in cases covered by the proviso to Section 73(4A), 'where it is possible to do so'. 10.1. The provision reflects a legislative intent to ensure expeditious adjudication and to prevent proceedings from remaining pending indefinitely. At the same time, the phrase "where it is possible to do so" indicates that the timelines are directory rather than mandatory. Nevertheless, the Department is expected to act within a reasonable period and cannot justify inordinate or unexplained delays in concluding proceedings. 10.2. In essence, Section 73(4B) operates as a statutory reminder that recovery proceedings must be pursued with diligence, and prolon....
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....assessment orders ought to have been passed within 1 year from the said date even if the explanation given by the revenue is to be taken as reasonable ground for keeping the case pending. However, impugned assessment order qua the said financial year was passed on 24.10.2019 which is once again beyond the one year period in terms of Section 73 (4B), ibid. 14. The sequence of events demonstrates that after issuance of notices between 2010 and 2011, the Department allowed the matters to remain pending for more than 9 years by placing them in the Call Book and by failing to take timely steps even after withdrawal of its appeal from High Court in 2018. The delay is entirely attributable to administrative inaction, resulting in revival of proceedings after an inordinate lapse of time, thereby causing serious prejudice to the petitioner and rendering the continuation of proceedings contrary to the principles of certainty, fairness, and reasonable exercise of statutory power. 15. In somewhat similar circumstances, High Court of Delhi in the matter of MS L.R. Sharma & Co. vs. Union of India WP(C)13689/2024, decided on 20.12.2024, observed as under: "29. This Court is of the ....
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....he learned CESTAT by way of an appeal. However, strangely, the Revenue did not proceed with the case, awaiting the outcome in the appeal pending before the learned CESTAT, and in the meanwhile, the petitioner was left under the impression that since he had not received any adverse communication/order from the Revenue, the proceedings and show cause notice had been closed. 32. Therefore, in view of the foregoing discussion, we do not find any reason for the delay caused in the present case in not concluding the hearing qua the impugned show cause notice dated 21.04.2015 within the stipulated time period, and for issuing the impugned hearing notice dated 18.09.2024 after a period of nine years." (emphasis is ours) We are in respectful agreement with the aforesaid view taken by Delhi High Court. 16. Once a show cause notice is issued, the statute contemplates that adjudication should be completed within a reasonable and proximate timeframe. The prescription of six months or one year, as the case may be, in section 73(4B), ibid, reflects a clear legislative expectation of procedural timelines to be followed. Allowing the Revenue to revive proceedings after nine ....