2024 (7) TMI 188 - HC - Service Tax

Determination of tax liability of the petitioner in terms of the show cause cum demand notice - time limitation - benefit of Mega Exemption Notification dated 20th June, 2012 - HELD THAT - It is noticed that the show-cause had been issued by invoking the extended period as provided for in the first proviso to Section 73 (1) of the said Act. It appears from the aforesaid show cause that on the basis of the information received by the Department from the Central Board of Direct Taxes for the financial year 2015-16 and 2016-17 that the assessee was requested to submit certain documents, inter alia, including profit and loss account, income tax return, Form 26AS, output service bills, explanation and clarification for the mismatches in reporting different value of services provided to different tax authorities for the financial year 2015-16, 2016-17 and 2017-18. It is not in dispute that the payment had been disbursed in favour of the petitioner by the PWD as would corroborate from the documents appearing at pages 42 and 43 of the writ petition dated 1st September, 2016. The aforesaid ought to have been considered by the authorised officer. To the extent of the non-consideration of the aforesaid by glossing over the payment certificate and refusing to accept the payment certificates issued by the Government since, the work orders were not disclosed in original, such finding returned by the authorised officer is perverse. It would be prudent to send back the petitioner before the respondents for reconsideration of the matter afresh, inasmuch as the respondents on instruction has not denied that in appropriate cases benefit of Mega Exemption Notification dated 20th June, 2012 can be granted. The petitioner is remanded back to the adjudicating authority, who shall dispose of the aforesaid show cause notice by affording an opportunity of personal hearing to the petitioner and/or her representative within a period of eight weeks from the date of communication of this order subject to payment of Rs. 5,00,000/- with the respondents. Petition disposed off by way of remand.

Summary

Issues involved:
Challenge to tax liability determination under the Finance Act, 1994; Barred show cause notice; Benefit of Mega Exemption Notification; Irregularity in procedure; Jurisdictional error; Extended period for show cause notice; Mismatch in reporting values; Non-submission of original work order; Perverse finding by authorized officer.

Analysis:
The petitioner challenged the tax liability determination under the Finance Act, 1994, based on a show cause notice issued by the Additional Commissioner, Headquarter, Central Tax CGST. The petitioner argued that the show cause notice was barred by limitation and claimed entitlement to the benefit of Mega Exemption Notification dated 20th June, 2012. The petitioner contended that despite confirmation of payments made by governmental authorities, the authorized officer overlooked the evidence presented. It was highlighted that in cases like this, bills are usually prepared by the Public Works Department (PWD), and the petitioner is required to sign them.

The petitioner further raised concerns about the irregularity in the procedure followed, as the show cause notice was issued by one authority but the final order was passed by a different authority. On the other hand, the CGST authority argued that the order was appealable and the petitioner had been given ample opportunity to present their case. The CGST authority emphasized that the Additional Commissioner had the jurisdiction to pass the adjudication order, and there was no jurisdictional error in the process.

The Court examined the show cause notice issued invoking the extended period under the Finance Act, 1994, based on information received from the Central Board of Direct Taxes. The petitioner provided clarifications, including details of services provided to the West Bengal Government. The Court noted discrepancies in reporting values and the non-submission of original work orders by the petitioner. Despite payment certificates issued by governmental authorities, the authorized officer refused to accept the contractual price due to the lack of original work orders. The Court found this decision to be perverse and ordered a reconsideration of the matter by the adjudicating authority.

Consequently, the petitioner was remanded back to the adjudicating authority for a fresh consideration of the show cause notice, with an opportunity for a personal hearing. The petitioner was directed to make a specified payment, subject to further decisions by the respondents. The Court allowed the petitioner to submit additional documents and kept all points open for further review. The writ petition was disposed of with these directions, and no costs were awarded.