TaxTMI 
TaxTMI 
2026 (9) TMI 196
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....ded period of limitation under Section 73(1) and imposed interest and penalties under Section 75, 76, 77 and 78 of the Finance Act, 1994. The petitioner has also assailed a notice dated 05.10.2016, apart from the order dated 12.03.2025, on the ground that the very jurisdictional fact necessary to trigger the invocation of Section 73(1) of the Finance Act, 1994, and the proviso thereto, which is the non-levy, short-levy etc., of Service Tax by a person chargeable under the Finance Act, 1994, has been erroneously assumed and decided in the present case. 2. The challenge to the notice and order is on several jurisdictional and substantive grounds, firstly, that they are a public authority performing a statutory duty and the mandatory deductions for mutual benefit do not constitute 'provision of service' for 'consideration' and are thus outside the ambit of Service Tax. Secondly, for the period after 01.04.2012, it is claimed by the petitioner that the same falls under the Negative List, as the service provided by the Government, and thirdly that, the impugned order was passed after a delay of nearly 8.5 years (3081 days), from the date of issuance of the show cause notice, which th....
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....ming the assessment, of nearly 3081 days, from the date of show cause notice dated 05.10.2016, which is well beyond the period of one year within which the respondent No. 1, was to strive to complete the assessment proceedings in terms of Section 73(4B)(b) of the Finance Act, 1994. On the respondents contentions and explanation for the delay that the same was caused by the petitioner's request, for retrospective exemption, and time taken for interdepartmental/ coordination, it has been submitted that an investigation should substantially precede the issuance of a show cause notice, and further Section 33A restricts adjournments to three, and representations or repeated requests, cannot indefinitely extend the statutory timeline. In support of his arguments, reliance has been placed on the cases of IDFC First Bank, Sunder System, L.R. Sharma and company and Power Spectrum Sarbidpur. Reliance has also been placed on the CBIC instructions dated 18.11.2021, which directed adjudication of extended period for Service Tax Notices to be within one year where possible. 5. It is then submitted that the Revenue Authorities had incorrectly assumed the jurisdictional facts necessary to initi....
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.... of 'no person should be a judge in their own cause'. The CBIC Circular No. 1053/02/2017-CX dated 10.03.2017, which permits the ADG (Adjudication) DGCEI, he submits to adjudicate cases and notice by DGCEI officers, itself facilitate institutional bias. The learned Senior counsel has then pointed out that under the subsequent GST regime, DGGI officers were confined principally to investigation and issuance of notices, while adjudication was assigned to separate officers, which he contends is recognition of the earlier problem of bias. He therefore submits that both the circular and the resulting order violate the principle of natural justice and Articles 14 and 265. 8. It is then submitted that Service Tax itself is not legally leviable on the Assam Rifles schemes, as the demand concerns premiums and subscriptions relating to 3(three) schemes operated for the Assam Rifles personnel namely, Death Benefit Insurance Scheme and administrative charges, Disability Benefit Scheme and Post Retirement Insurance Scheme. The respondents he submits for the period 01.04.2011 - 31.03.2012 (positive list regime) had treated the schemes as taxable life insurance business, under Section 65(105)(z....
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....ro quo. It is then argued that alternatively, even if the activity (schemes) is treated as a service, it would fall under the Section 66D negative list, and therefore exempt from tax, inasmuch as, Section 66D(a) excludes services by Government or Local Authority from Service Tax. The petitioner it is submitted, qualifies as 'government' and has all the trappings to be considered as such, i.e. exemptions granted under the Insurance Act and Life Insurance Corporation Act, its operation under statutory rules, government control and audit, maintenance of accounts under accounting provisions. Reliance has also been placed upon a CBIC Circular dated 18.12.2006, which he submits that statutory functions performed by public authorities for compulsory levies do not constitute taxable services. 11. In rounding up his submissions, the learned Senior Counsel has reiterated his submissions that the impugned order dated 12.03.2025, is liable to be quashed for being passed after an unexplained delay of 8.5 years, the Officers who issued and adjudicated the notice lacked pan-India jurisdiction, apart from the adjudication being in breach of the principles of natural justice, and that the welfar....
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.... petitioner were essential to ensure correct assessment, hence, justifies the time taken. It is submitted that the petitioner itself had approached the Department of Revenue seeking exemption from levy of tax via numerous letters, and that by a letter dated 14.05.2025, addressed to the Ministry of Finance, had requested a re-consideration of the petitioner's exemption proposal. 14. On another aspect, it is submitted that the impugned order dated 12.03.2025, was passed by the competent authority within lawful jurisdiction under Section 73(1) of the Finance Act, 1994, and Section 174 of the CGST Act, 2017. It is submitted that once the investigation indicated non-payment or short payment of service tax, the respondents were fully empowered to initiate proceedings and that the petitioners blanket claim of non-taxability cannot negate this assumption of jurisdiction, as the case is based on concrete findings and statutory authorities under the Finance Act, 1994. It is also contended that the allegation that the adjudicating authority had an interest in the outcome because the investigation and adjudication were undertaken within the same departmental framework is untenable, inasmuch....
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.... the schemes were framed according to Government instructions, it is submitted that the obligation to disclose or relevant operational and financial particulars rests squarely on the petitioner. Thus, it is submitted, the failure to furnish complete information regarding the nature and taxability of the schemes squarely attracts the proviso to Section 73(1) of the Finance Act, 1994. 17. It is then submitted that since the impugned notice and order were issued within the lawful statutory framework, the petitioner had recourse to available statutory appellate remedy which has been by-passed by the petitioner. It is asserted that the Finance Act, 1994, has an established complete and comprehensive appellate hierarchy, for challenging assessment orders including dispute over jurisdiction, limitation and the validity of departmental actions, which the petitioner has chosen not to avail of for unknown reasons. It is further submitted that merely challenging a notification or circular does not make the alternative remedy inefficacious, and that the petitioner being fully aware of the proceedings and timelines, the approximately 5(five) month delay in pursuing the remedy is deliberate a....
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....sessment proceedings, and the same is reproduced herein below. "Section 73. ...................................................... (4B) The Central Excise Officer shall determine the amount of service tax due under sub-section (2)- (a) within six months from the date of notice where it is possible to do so, in respect of cases [falling under] subsection( 1); (b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4A)" A perusal of the aforementioned provision, shows that the Revenue Authorities are mandated to complete the assessments within the prescribed timelines unless justified reasons exist, that prevents the time limits from being adhered to. It is seen from the facts that the extended period of limitation under the proviso to Section 73(1) of the Act, had been invoked on grounds of willful suppression. As such, therefore, in view of this invocation, Section 73(4B)(b) would be attracted, and thus, the concerned Respondent No. 1, was as far as possible to do so, determine the amount of service tax vide an assessment order w....
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....held as follows: 12. If such are the averments in the reply affidavit, we wonder as to why respondent No. 2 kept on granting requests of IDFC Ltd. for adjournment and did not pass appropriate order and/or final orders on the show cause notice. There is no justification whatsoever or any reason set out for such lapse/inaction of respondent no. 2, which would be acceptable, as set out in the reply affidavit, which can be accepted as a plausible reason preventing the Commissioner from passing appropriate orders for a period of almost five years upto May 2015. We may also note that there is no justification whatsoever for the inaction of the officer from 21 May 2015 to 10 June 2022 when the recent notice came to be issued. 15. From a plain reading of the provisions of Section 73(4B) and more particularly, in the context of the legislative intent in introducing sub-section (4B), we cannot accept such contention as urged by the respondent that there is no mandate on the concerned officer of the department to decide the show cause notices expeditiously, and/or the timelines which are set out in sub-section (4B) would be required to be held to be merely directory, as the ....
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.... use of such words a complete freedom is available to the adjudicating officer to adjudicate the show cause notice at his own sweet will, much less, with such inordinate delay as in the present case which is of almost more than 12 years. 18. If the interpretation of the provisions as canvassed on behalf of the revenue is accepted, it would tantamount to defeating the well settled principles of law that a show cause notice is required to be taken to its logical conclusion within a reasonable period of time and expeditiously, as a show cause notices issued under any fiscal legislation and concerning recovery of revenue would have a very serious concern and bearing on the public revenue. Hence, there cannot be any laxity much less any lethargic approach on behalf of the officers is delaying adjudication of such notices. The legislative provisions which intend to bring about an expeditious and effective adjudication of a show cause notice cannot be defeated by the officers sitting tight on the show cause notice and/or not expeditiously taking them to the logical conclusion. Such is the view repeatedly taken in series of judgments of this Court, to which a detailed reference ha....
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.... have not provided any justified cause or reason to keep proceedings pursuant to the show cause notice dated 05.10.2016, pending for 8.5 years, which in the considered view of this Court caused an unreasonable and inordinate delay in passing of the impugned order dated 12.03.2025. 26. Though as mentioned earlier, the respondents had attempted to justify the delay and to place the onus on the petitioner by stating that exemption has been sought, and further that the nature of schemes operated by the petitioner required detailed examination, this argument would hold no water, inasmuch as, the show cause notice itself contains the relevant facts, allegations and reasons sought on why the tax is not to be levied. With regard to another aspect i.e. repeated adjournments from the year 2017 onwards, which the respondents maintained has contributed to the long delay, this argument also is of no assistance, in view of the fact that Section 33A of the Finance Act, 1994, has provided that during assessment proceedings, no adjournment shall be granted to a party more than three times. As such, the letters in question dated 07.11.2017, 21.02.2018, 04.06.2018, 14.06.2018, 26.06.2025, 10.03.20....