2023 (8) TMI 1152 - HC - Service Tax

Non-adjudication of show cause notice issued 13 years back - non-payment of service tax on import of service on bank charges under banking and financial services and professional fee under Management Consultancy Services - HELD THAT - The provisions of Section 73 and more particularly the provisions of sub-section (4)(B) which were inserted by the Finance Act 2014 being the statutory mandate was staring at respondent no. 2 during the pendency of the show cause notice not to conclude the proceedings of the show cause notice. However, the conduct of respondent no. 2 was totally overlooking the mandate of such legal requirement. Even in absence of the provisions of sub-section (4) (B) of Section 73, respondent no. 2 could not have acted oblivious to the settled principle of law, that a show cause notice would be required to be adjudicated within a reasonable time depending the facts of each case. In COVENTRY ESTATES PVT. LTD. VERSUS THE JOINT COMMISSIONER CGST AND CENTRAL EXCISE ANR. 2023 (8) TMI 352 - BOMBAY HIGH COURT , it was held that reasonable time would not be an egregious, unjustified and unexplained inordinate delay. Having perused the reply affidavit, there are no justification whatsoever is given by the Deputy Commissioner in Commissioner not adjudicating the show cause notice - the present case is clearly covered by our decision in Coventry Estates Pvt. Ltd. Versus The Joint Commissioner CGST and Central Excise Anr. in regard to the legal position set out. Petition allowed.

Summary

Issues Involved:
1. Delay in adjudication of the show cause notice.
2. Competence of the Deputy Commissioner to file a reply affidavit.
3. Legal implications of inordinate delay on the rights of the assessee and public revenue.

Summary:

1. Delay in adjudication of the show cause notice:
The petitioner filed a petition under Section 226 of the Constitution to quash a show cause notice issued by the Commissioner of Central Excise on 21 October 2010, citing a 13-year delay in adjudication. The Court observed a pattern of delayed adjudication by jurisdictional officers, which adversely affects public revenue and the legal rights of the assessee. The Court referenced its decision in Coventry Estates Pvt. Ltd. Versus The Joint Commissioner CGST and Central Excise & Anr., emphasizing that such delays violate the statutory mandate and principles of natural justice. The Court noted that the petitioner had repeatedly requested necessary documents and hearings, but the department failed to act from August 2011 to February 2016 and again from May 2016 to February 2021, leading to the petitioner's current plea.

2. Competence of the Deputy Commissioner to file a reply affidavit:
The Court questioned why the Commissioner, who issued the show cause notice, did not respond to the petition and instead, the Deputy Commissioner of CGST & Central Excise filed the reply affidavit. The Court found this inappropriate, as the Commissioner was the officer with knowledge of the case.

3. Legal implications of inordinate delay on the rights of the assessee and public revenue:
The Court highlighted that an inordinate delay in adjudication is prejudicial to the assessee and contrary to law. It emphasized that such delays cause irreversible changes, frustrate adjudication, and nullify the noticee's rights, causing irreparable harm. The Court also noted that administrative delays defeat the substantive rights of the noticee and undermine the principles of fairness and natural justice. The Court referenced Section 73(4B) of the Finance Act, which mandates a specific period for adjudication, and found the department's delay unjustified and without legal basis.

Conclusion:
The Court allowed the petition, quashing the show cause notice and prohibiting further proceedings. The Court directed that a copy of the order be forwarded to the Secretary, Ministry of Finance, and the Central Board of Customs and Indirect Taxes to ensure adherence to legal timelines in adjudication. The rule was made absolute with no costs.