2018 (11) TMI 922 - HC - Service Tax

Time limitation to issue SCN - penalty - Section 78A of FA, 1994 - Held that - If, a demand is raised beyond the prescribed period of limitation, then, the same cannot be recovered. In the present case, the first petitioner was found to have rendered services defined as taxable service under Section 65B (51) of the Finance Act, 1994. It was found to have contravened various provisions of the Act of 1994 as also the Rules of 1994. It was issued a show-cause notice dated April 22, 2016 for the period 2010 to 2014 in respect of the first writ petition and another show-cause notice dated April 22, 2016 for the period 2010 to 2012 for the second writ petition - the first petitioner being an assessee was required to submit half-yearly return by the 25th of the month following the particular half year. Therefore, in the facts of the present case, the petitioner ought to have filed the return by April 25, 2011. The show-cause notice was issued on April 22, 2016. It was within a period of five years contemplated under Section 73 (6)(b) of the Act of 1994 - the two impugned orders are not barred by the laws of limitation. Penalty u/s 78A of the Act of 1994 - Held that - Such a provision cannot be invoked for the purpose of imposing a penalty for an offence happening prior to such provision coming into effect. Consequently, the penalty imposed in the impugned order of the first writ petition by invoking Section 78A of the Act of 1994 is quashed. In the present case, none of the two writ petitions contain any prayer for allowing the petitioners to prefer an appeal by condoning the delay in preferring such appeals. Therefore, the question of directing the petitioners to prefer an appeal by condoning the delay therefore does not arise. Petition disposed off.

Summary

Issues involved:
1. Whether the two impugned show-cause notices dated April 22, 2016 are barred by limitation?
2. Is the penalty imposed in the impugned order in original of the first writ petition vitiated?
3. To what relief or reliefs are the parties entitled to?

Analysis:

(a) Limitation of Show-Cause Notices:
The petitioners argue that the impugned show-cause notices were issued beyond the prescribed limitation period. They contend that the claims made in the notices are time-barred as per Section 73 of the Finance Act, 1994. The petitioners assert that the notices dated April 22, 2016, exceed the permissible time frame for raising claims under the Act. However, the Revenue argues that the notices fall within the limitation period as per Section 73(1) and Section 73(6)(b) of the Act. The Court examines the relevant dates and rules governing the filing of returns to determine the validity of the notices.

(b) Validity of Penalty Imposed:
The first writ petition involves the imposition of a penalty under Section 78A of the Act of 1994. The petitioners challenge the penalty, citing that Section 78A came into effect after the period in dispute. The Court agrees with this argument and quashes the penalty imposed under Section 78A. It clarifies that other aspects of the impugned order remain unaffected by this decision.

(c) Relief for the Parties:
The Court considers the arguments presented by both parties and concludes that the imposition of penalty under Section 78A is invalid. It further states that no additional relief can be granted to the petitioners in the two writ petitions. The judgment highlights the legal principles governing the imposition of penalties and the limitations on statutory remedies in such cases.

In summary, the High Court of Calcutta addressed the issues of limitation regarding the show-cause notices, the validity of the penalty imposed under Section 78A, and the relief entitled to the parties in the two writ petitions. The Court found that the show-cause notices were not barred by limitation, but the penalty imposed under Section 78A was deemed invalid. The judgment provides a detailed analysis of the legal provisions and precedents relevant to the case, ultimately disposing of the petitions without granting any further relief to the parties.