2023 (4) TMI 659 - HC - Service Tax

Non-payment of service tax - port services - It appears that no action was taken pursuant to the above SCN issued on 23rd April, 2007 which was for the period 1st October, 2005 to 31st March, 2006 and after 10 years impugned notice was issued - HELD THAT - After lapse of 10 years second impugned notice dated 30th October, 2017 was issued to the Petitioner asking him to appear for hearing. The Petitioner filed an application dated 9th November, 2017 before the authority expressing its inability to collect documents after such a long lapse of time. Thereafter, the present petition was filed in this Court. On 11th December, 2017, an interim order was passed staying further proceeding pursuant to the impugned notices. That interim order has continued. The Petitioner places reliance on another judgment of the CESTAT, South Zonal Bench, Bangalore in the case of Aspinwal and Co. Ltd. v. Commissioner of Central Excise 2010 (10) TMI 321 - CESTAT, BANGALORE answering a similar issue in favour of the assessee. Civil Appeal No. 10763 of 2017 2023 (2) TMI 991 - SC ORDER filed against the said judgment stands dismissed by the Supreme Court of India on 11th January, 2023 2023 (2) TMI 991 - SC ORDER . The net result is the orders answering the issue in favour of the Petitioner have been upheld by the Supreme Court of India. The impugned notice dated 23rd April, 2007 and further letter dated 30th October, 2017 issued by the Department to the Petitioner are hereby quashed. Petition allowed.

Summary

Issues:
1. Challenge to notice and letter issued by the Department regarding non-payment of service tax.
2. Petitioner's impression of dropped proceedings by the Department.
3. Impugned notice issued after a lapse of 10 years.
4. Reference to pending appeal in the Supreme Court.
5. Dismissal of appeal by the Supreme Court.
6. Reliance on judgment of CESTAT and Supreme Court's dismissal of appeal.
7. Quashing of impugned notices.
8. Challenge to another notice dated 18th October, 2006.
9. Quashing of the two notices.

Analysis:

In W.P.(C) No. 23950 of 2017, the Petitioner challenged a notice and letter issued by the Department regarding non-payment of service tax for the period 1st October, 2005 to 31st March, 2006. The Petitioner believed that the proceedings had been dropped as no action was taken after the initial Show Cause Notice (SCN) issued in April 2007. However, a subsequent notice was issued in October 2017, after a lapse of 10 years, requiring the Petitioner to appear for a hearing. The Petitioner expressed difficulty in collecting documents after such a long time, leading to the filing of the present petition. An interim order was passed staying further proceedings, and the Department filed a counter affidavit mentioning a pending appeal in the Supreme Court regarding a similar issue.

The Petitioner's counsel highlighted the dismissal of the Department's appeal by the Supreme Court in January 2023, along with another judgment favoring the assessee by the CESTAT, which was upheld by the Supreme Court. Based on these judgments, the High Court quashed the impugned notices dated April 2007 and October 2017, ruling in favor of the Petitioner.

In W.P.(C) No. 21602 of 2017, the challenge was to a notice dated October 2006 and subsequent letters for the period 16th July, 2001 to 30th September, 2005. Following the same reasoning as in the previous case, the High Court also quashed these two notices. Both petitions were allowed without any order as to costs, concluding the judgment.