TaxTMI 
TaxTMI 
2026 (4) TMI 1574
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....x by not obtaining the Service Tax Registration or by filing its ST-3 returns for the Financial Year 2014-15 to 2017-18 and had consequently short paid its service tax dues to the tune of Rs. 58,72,656/- in violation of Section 66, 66B, 67, 68, 69 and 70 of the Finance Act, 1994 read with Rule 6 and 7 of the Service Tax Rules, 1994. It was also alleged that from the third party data provided by the Income Tax Department, it appeared that the petitioner received consideration for providing taxable services and made required declarations under various sections of the Income Tax Act, 1961 related to provision of services and TDS deductions which were duly reflected in its Income Tax returns but did not declare those receipts against 'services' by obtaining service tax registration and by filing its periodic ST-3 returns for the year 2014-15 to 2017-18 which resulted in non-payment/short payment of service tax. It was also alleged in the said Show Cause Notice dated 30.12.2020 that from the information received from the Income tax Department, it was found that during the Financial Year 2014-15 to 2017-18, the petitioner suppressed taxable value amounting to Rs. 3,93,74,552/- and ....
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.... on the ground that the Petitioner has handed over the matter to his legal consultant and they were in the course of examining certain issues going to the root of the matter. Though no specific order was passed by the Respondent No. 2 upon the said application of the petitioner seeking further time. The learned Senior counsel for the petitioner submits that while anticipating the communication regarding the date of personal hearing and for submission of documents, the Petitioner was received the impugned Order-in-Original/ADJ/AIZAWL-CGSTCOMNR/GST/NO.04 dated 18.04.2022 passed by the Additional Commissioner which was received by the Petitioner only in the second week of May, 2022. In the said impugned Order-in-Original/ADJ/AIZAWLCGST-COMNR/GST/NO.04 dated 18.04.2022, the Additional Commissioner assessed an amount of Rs. 58,72,656/- as service tax payable by the Petitioner and also confirmed the demand of service tax of the said amount of Rs. 58,72,656/- for the Financial Year 2014-15 to 2017-18 in terms of proviso to 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. 58,72,656/- under Section 77 of t....
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....ned Senior counsel further submits that though the Show Cause Notice dated 30.12.2020 and various notices for personal hearing were issued by the Additional Commissioner, Dibrugarh, the Respondent No. 2 herein however the impugned Order-in-Original/ADJ/AIZWL-CGSTCOMNR/GST/NO.04 Dated 18.02.4022 was passed by The Additional Commissioner, Aizawl, the Respondent No. 3 herein without issuing any notice of hearing or by granting any opportunity of hearing by the said Respondent No. 3 to the Petitioner. Though it was mentioned in the impugned Order-in Original/ADJ/AIZAWL-CGST-COMNR/GST/No. 04 dated 18.04.2022 that the Petitioner was allowed an opportunity to appear before the Additional Commissioner either on 8th 10th or 11th of March 2020 referring to a communication No. V(15)70/AD/ST/COMMR/DIB/2020/860 dated 23.02.2022, however neither such communication was served upon the Petitioner nor the Petitioner had any knowledge about the same. Being aggrieved by the aforesaid impugned Demand-Cum-Show Cause Notice dated 30.12.2020 issued by the Respondent No. 2 and the impugned Order-in-Original dated 18.04.2022 passed by the Respondent No. 3, the Petitioner approached this Court under Article....
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.... Legislature while enacting the said Finance Act, 1994 excluded certain services from the zone of taxability of services tax by way of incorporating a negative list as provided Section 66D of the Finance Act, 1994. Services by way of transportation of goods were also included in the said negative list under Section 66D. Section 66D is extracted below: "Section 66D. Negative list of Services. The negative list shall comprise of the following services, namely : ***** ***** (p) services by way of transportation of goods - (i) by road except the services of (A) a good transport agency or (B) a courier agency (ii) by an aircraft or a vessel from a place outside India up tothe customs station of clearance in India, or (iii) by inland waterways. ******" 6. The learned Senior counsel for the petitioner submits that from a combined reading of Section 66B and Section 66D, it is clear that the Legislature while enacting the Finance Act, 1994 specifically excluded the transportation of goods by road services except by a goods transportation agency or a courier agency. The petitioner is neither a goods ....
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....t Rule 4 (1) clearly provided that only the person liable for paying the service tax under Section 66 B of the Act, he shall have to apply for registration. 8. The learned senior counsel for the petitioner strenuously submits that in the present case since the Petitioner was not liable to pay service tax under Section 66 B of the Act by virtue of Section 66D(i)(A) of the Act, the petitioner was not required to be registered under the provisions of the Service Tax Rules, 1994 since the services provided by the Petitioner were expressly excluded from the service tax net by way of Section 66D(i)(A) of the finance Act, 1994. 9. The learned senor counsel further submits that under Section 70 of the Finance Act, 1994 provided for furnishing of returns. The said Section 70 is quoted herein below for the sake of convenience: "Section 70. Furnishing of Returns:(1) Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency and with such late fee not exceeding twenty thousand rupees, for delayed furnishing of ....
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.... short paid or erroneously refunded. Further the Notice has to be issued within a period of eighteen (18) months from the relevant date on the person chargeable with the service tax which has not been levied or paid or erroneously refunded. The Proviso to the said sub-section (1) also specifies that such notice can be issued within such extended period of five years only if such short-levy or short-payment or erroneous refunds were by reasons of fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the Act or the Rules made thereunder with the interest to evade payment of tax. 13. It is submitted by the learned Senior counsel that assuming though not admitting that there was a failure to furnish correct information, however, the same does not constitute suppression unless the failure/omission to furnish information or failure to pay taxes are made willfully in order to evade payment of tax. In support of his contentions, the learned Senior counsel has referred to the Judgment of the Apex Court rendered in Continental Foundation Joint Venture Holding Vs. CCE, reported in (2007) 10 SCC 334. It is submitted that the Apex Court in ....
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.... his contention, Dr. Saraf urges that from the law laid down by the Apex Court and referred to by him, it is clear that without examining the fact as to whether there was any suppression, mis-statement, fraud, collusion, or contravention of any of the provisions if the Act and the rules with the intent to evade payment of any tax, the Adjudicating Authority simply on the basis of the tax behavior has invoked the extended period of limitation without fulfilling the preconditions laid down in proviso to Section 73(1) of the Act and thereby the impugned show cause notice is clearly barred by limitation and consequently the impugned order in original as well as the show cause notice are liable to be set aside and quashed. The learned Senior counsel therefore submits that the order-in-original has been passed by invoking extended period of limitation of five (5) years without providing any tangible evidence to show that any material fact or information was willfully suppressed from the Revenue with the intent to evade payment of any tax and thereby the issuance of the show cause notice itself is barred by the limitation and consequently the impugned show cause as well the order in or....
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.... facts or contravention of any of the provisions of the Act as the services provided by the Petitioner Company were excluded service as provided under the negative list contained in Section 66D(i)(A) of Finance Act, 1994 in the relevant year 2014-15 to 2017-18 and therefore there was no short payment of service tax on account of any fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the Act and therefore in that view of the matter the extended period of limitation cannot be invoked in the present case only on the basis of documents like Form 26AS and therefore the impugned Order-in-Original/ADJ/AIZAWL-CGST-COMMNR/GST/NO.04 dated 18.04.2022 passed by the Respondent No. 3 by Invoking the extended period of limitation in the present case is bad in law and liable to be set aside and quashed. 19. The learned senior counsel for the petitioner further submits that the respondent authorities committed manifest error in treating the entire receipts of the Petitioner Company during the relevant year 2014-15 to 2017-18 as the receipts of the Petitioner as against taxable service and consequential assessment and confirmation of the dema....
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....t of the same does not arise. In the present case, there was no liability to pay the taxes inasmuch as either the services liability to pay tax was on the recipient of the services on reverse charge basis and whichever tax was payable. 22. The learned Senior counsel submits that the Judgments of the Apex Court cited are subsequently followed in Commissioner of Income Tax Vs. Provident Investment Company Ltd. reported in (1957) 32 ITR 190. The learned Senior counsel also presses into service Judgments in support of his contention by referring to Venkateswara Stainless Steel and Wire Industries Vs. Union of India, reported in (1987) 27 ELT 648 and M/S N.E Logistics & Anr. Vs. Union of India & 2 Ors. [W.P(C) No. 1870/2020]. It is submitted that in N.E Logistics (Supra), similar show cause notice was issued based on information collected from the Income Tax Department through Form 26AS. It is submitted that the High Court remanded the matter back to the authorities on the ground that the department had proceeded on a presumption that the assessee therein was liable to pay tax. It was held that the liability to pay tax of a service tax is not based on presumption nor can it be based ....
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....eipts in respect of the various services rendered, it cannot be said that the said services were taxable under the Finance Act of 1994. A particular receipt on account of services rendered though may be liable to Income Tax under the Income Tax Act, 1961, the same may not be liable for payment of service tax because of the exemptions granted under the Finance Act of 1994, or because the liability for payment of service tax may have been fastened on the service recipient on reverse charge basis. As such the information contained in the 26AS statement cannot by any stretch of imagination be said to be indicative of the fact that the services in respect of which the amount was received and the income tax was deducted at source on the said receipt were also taxable under the Finance Act of 1994 and liable to Service Tax. The Adjudicating Authority simply on the basis of inferences and analogy levied Service Tax on the entire receipts as reflected in the 26AS statement without examining the fact as to whether those Services were liable to Service Tax under the Finance Act of 1994. Without undertaking such an exercise and examination, the Adjudicating Authority cannot levy the Service Ta....
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....he same is liable to be set aside and quashed. Such a non-speaking order is not maintainable in law and same is liable to be set aside and quashed. 26. It is further submitted by the learned Senior counsel that if an authority while acting within its jurisdiction makes an error of law which is revealed on the face of its recorded determination, 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. 27. In so far as the question of maintainability of the writ petition is concerned in view of the statutory remed....
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....here has been violation of natural justice or the invocation of the jurisdiction itself is contrary to the provision of law, a writ Court is not denuded of it's powers to invoke the prerogative writs notwithstanding the availability of statutory alternative remedy. 31. The learned Senior counsel for the petitioner further fortifies his submissions by referring to the Judgments of the Apex Court rendered in Whirlpool Corporation Vs. Registration of Trade Mark, reported in (1998) 8 SCC 1; Union of India Vs. Parashotam Dass, reported in 2023 SCC Online SC 314; State of Tripura Vs. Monoranjan Chakraborty, reported in (2001) 10 SCC 740; Assistant Commissioner of State Taxes Vs. Commercial Steel Co. Ltd., reported in 2021 SCC Online SC 884 and Godrej Sara Lee Ltd. Vs. Com. Assessing Officer, reported in 2023 SCC Online SC 9695. 32. The learned Senior counsel therefore submits that the writ petition be allowed. The impugned order-in-original be interfered with and set aside interfering with the demand of service tax as well as the imposition of penalty imposed on the writ petitioner. 33. Mr. S.C Keyal, learned counsel appearing for the Respondents has strongly disputed the conten....
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....it that in the face of well anointed procedures prescribed under the GST providing for appeals, the petitioner should be relegated for filing appeal before the appropriate authority. 35. Heard learned counsel for the parties. Pleadings available on records have been carefully perused as also the demand made by the show cause notice which ultimately came to be confirmed by the impugned order in original which is the issue in the present proceedings has been assailed primarily on the ground. 36. The first ground urged before this Court by the writ petitioner assessee is that there were no dues of service tax payable by the petitioner in respect of the services rendered. 37. The first limb of argument by the learned Senior counsel 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....
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.... before any conclusion can be arrived at that the assessee is liable to assessment as contended by the revenue authorities. The relevant provisions this Act are extracted below: "The three stages in the imposition of a tax which are laid down here predicate, in the first instance, a declaration of liability as the starting point. If there is a liability to tax, imposed under the terms of the taxing statute, then follow the provisions in regard to the assessment of such liability. If there is no liability to tax there cannot be any assessment either. Sales or purchases in respect of which there is no liability to tax imposed by the statute cannot at all be included in the calculation of turnover for the purpose of assessment 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 su....
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....paid or the persons to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) willful misstatement ;or (d) suppression of 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....
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....tent to evade payment of duty. When the facts are known to both the parties, omissions by one party would not constitute suppression. It was held that 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. The relevant paragraphs of the Judgment are extracted below: 12. The expression "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 in....
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.... proceedings from the recital of the impugned order-in-original, it is seen that Form 26AS mentioned, the petitioner suppressed taxable value amounting to Rs. 3,93,74,552/- and on such services, Service Tax amounting to Rs. 58,72,656/- including Ed. Cess. S&HE Cess, Krishi Kalyan Cell and Swachh Bharat Cess was required to be paid by the Petitioner. Therefore, assessing authority found that the petitioner did not obtain the registration and suppressed the material fact to the Department willfully by way of providing taxable services without discharging service tax liabilities with the intent to evade payment of service tax and therefore the extended period under Section 73(1) of the Finance Act, 1994 is invocable. The petitioner also violated the provisions of Sections 66, 66B, 67, 68, 69 and 70 of the Finance Act, 1994 read with Rules 4, 6 and 7 of the Service Tax Rule, 1994 and thus evaded payment of Service Tax amounting Rs. 58,72,656/- including Ed. Cess, S&SE Cess, Krishi Kalyan Cess and Swachh Bharat Cess against the taxable services provided by the petitioner along with interest as applicable under Section 75 ibid. The petitioner was also liable for penal action under Sectio....
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....the authority assumed by a Tribunal was the issue in Anisminic Ltd (Supra). It was held therein that the jurisdiction of the superior Court is to see that the inferior court has not exceeded its own, and for that very reason it is bound not to interfere in what has been done within that jurisdiction, for in so doing it would itself, in turn, transgress the limits within which its own jurisdiction of supervision, not of review, is confined. That supervision goes to two points: one is the area of the inferior jurisdiction and the qualification and conditions of its exercise; the other is the observance of the law in the course of its exercise. If, therefore, a tribunal while within the area of its jurisdiction committed some error of law and if such error was made apparent in the determination itself (or, as it is often expressed, on the face of the record) then the superior court would certainly be competent correct that error unless it was otherwise forbidden to do so under the statute. It would be so forbidden if the determination was "not to be called in question in any court of law". If so forbidden it could not then even hear argument which suggested that error of law had been ....
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....an, reported in (1910) 2 K.B. 859, it was held that no tribunal of inferior jurisdiction can by its own decision finally decide on the question of the existence or extent of such Jurisdiction: such question is always subject to review by the High Court, which does not permit the inferior tribunal either to usurp a jurisdiction which it does not possess, whether at all or to the extent claimed, or to refuse to exercise a jurisdiction which it has and ought to exercise. Subjection in this respect to the High Court is a necessary and inseparable incident to all tribunals of limited jurisdiction; for the existence of the limit necessitates an authority to determine and enforce it: it is a contradiction in terms to create a tribunal with limited Jurisdiction and unlimited power to determine such limit at its own will and pleasure - such a tribunal would be autocratic, not limited - and it is immaterial whether the decision of the inferior tribunal on the question of the existence or nonexistence of its own jurisdiction is founded on law or fact. 51. In Pilling Vs. Abergele Urban District Council, reported in (1950) 1KB 636, it was held that where a duty to determine a question is con....
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....o the letter and to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. 56. Again in Shalini Soni Vs. Union of India, reported in (1980) 4 SCC 544, it was held by the Apex Court that it is an unwritten rule of law, constitutional and administrative, that whenever a decision-making function is entrusted to the subjective satisfaction of a statutory functionary, there is an implicit obligation to apply his mind to pertinent and proximate matters only, eschewing the irrelevant and the remote. Applying this principle in CIT Vs Mahindra & Mahindra, reported in (1983) 4 SCC 392, the Supreme Court quashed a decision under Section 72-A of the Income Tax Act, as the government was "clearly influenced by irrelevant and extraneous materials vitiating the impugned conclusion. 57. In S.R Venkataraman Vs. Union of India, reported in AIR 1979 SC 49, the Apex Court held that an administrative order which is based on reasons of facts which do not exist is infested with an abuse of power. There will be an error of fact when a public body is promoted by a mistaken belief in the existence of a non-existing fact or circumstance. 58. From a ca....
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....that there is no inflexible rule that the existence of an alternative remedy is a bar to the issue of writ of certiorari. The issuance of prerogative writs or directions is always to the discretion of the Court and the Court while exercising its discretion may take into consideration the existence of an alternative remedy as a matter of policy, but the existence of an alternative remedy is not per se a bar to the issue of writ of certiorari. The High Court at Paragraph 42 held as under: "42 No Tribunal and no Officer can confer jurisdiction or authority or competence upon itself or himself by misconstruing a section. An authority cannot claim to exercise jurisdiction by construing a section erroneously and thereby contending that the section so wrongly construed gives him the necessary power. In such a case, if the section has been wrongly construed, it would be a clear case of absence of jurisdiction apparent on the face of the record because the Court has got to look at the section and to decide whether the officer construing the section was in the right or in the wrong." 61. The Apex Court in TELCO Vs. Assistant Commissioner, reported in AIR 1967 SC 1 401 held tha....
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....under Article 226 has not pursued, would not oust the jurisdiction of the High Court and render a writ petition "not maintainable". The Court made it clear that availability of an alternative remedy does not operate as an absolute bar to the "maintainability" of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law. The Apex Court in further held that dismissal of a writ petition by a high court on the ground that the petitioner has not availed the alternative remedy without, however, examining whether an exceptional case has been made out for such entertainment would not be proper. The Apex Court further held that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available. The relevant paragraph is extracted below: "9. Now, reverting to the facts of this appeal, we find that the appellant had claimed before the High Court that the suo motu re....
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....lieve that the High Courts are quite conscious of the parameters within which the jurisdiction is to be exercised, and those principles, in turn, are also already enunciated by this Court." 68. From a careful analysis of the judgments discussed above, it is clear that the writ Court can interfere any arbitrary action notwithstanding the availability of alternative remedy when the authorities acts within jurisdiction or in exercise of jurisdiction or there is a procedural irregularity or were the order is high handed and is palpably illegal order in as much the same would amount to violation of Article 14 of the Constitution of India. 69. Although ordinarily it is the law enunciated by this court as well as by the Apex Court that an aggrieved assessee ought to avail of statutory remedies ascribed or prescribed under the statute, there is no quarrel on this principle of law. The GST is a complete code in itself providing for filing of returns, assessments, recovery as well as for appeals before the appropriate appellate authority. The facts involved in the present proceedings are however peculiar in essence that this show cause notice and the consequential confirmation of deman....
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....m payment of the taxes due. The revenue authorities were within their rights to issue appropriate notices and carry out proceedings within the ordinary period of limitation prescribed, if it was their conclusion on due examination of the materials before them that there was any shortfall in the payment of GST and the same was required to be recovered. However, this process for demand and recovery was not initiated within the period of limitation ordinarily prescribed under the provisions of the Act. Therefore, the revenue authorities invoked the provisions under Section 73(1) to issue the demand cum show cause notice and the consequential impugned order in original confirming the demand and imposition of penalty and interest. It is the view of this Court that while demand and recovery of taxes as ordinarily prescribed under the provisions of the Act requires careful consideration of the facts and circumstances and satisfaction of all the parameters prescribed upon, the demand and recovery under the extended period of limitation under section 73(1) being an exception to the General Rule, requires a higher degree of responsibility and diligence on the part of the revenue authorities ....