2015 (9) TMI 835 - HC - Service Tax

Demand of service tax - Validity of SCN - Invocation of extended period of limitation - Held that - It is for the department to investigate whether the issue of a works contractor not including the value of the materials supplied to them to the service recipients is related to the subject matter of the impugned show cause notice. The two issues may not be identical but are related to each other. But this question of fact as to the extent to which the subject matter of the earlier three show cause notices was a factor in the issuance of the impugned show cause notice, with all data and necessary details have to be gone into by the Commissioner and not by this court. If it is found by him that the facts, data and factors, which were the basis of the earlier show cause notices were relevant in issuing the impugned show cause notice, then the show cause notice would be clearly hit by the judgment of the Hon ble Supreme Court 2006 (4) TMI 127 - SUPREME COURT OF INDIA . In other words, the show cause notice would be barred by the laws of Limitation, because the department had knowledge of the ingredients of the impugned show cause notice. The petitioner could not be charged with suppression to invoke the longer period of limitation. - show cause notice dated 6th January, 2014 is set aside with an option to the Commissioner to scrutinise all relevant facts in the light of this judgment and to issue another show cause notice, if the same is warranted in law - Decided in favour of assessee.

Summary

Issues:
Challenge to show cause notice on jurisdictional grounds, invocation of longer period of limitation, suppression of facts, multiple show cause notices for the same period, application of Supreme Court decision on suppression of facts, department acting contrary to its circular, different subject matter in show cause notices.

Jurisdictional Grounds and Limitation Period:
The writ petitioner challenged a show cause notice issued by the Commissioner, Service Tax Commissionarate, Kolkata, demanding a significant amount of service tax. The petitioner argued that the Commissioner had no jurisdiction to issue the notice invoking the longer period of limitation. Despite the department's claim of wilful suppression, the petitioner contended that the notice was time-barred and lacked jurisdiction.

Suppression of Facts and Multiple Notices:
The petitioner highlighted that earlier show cause notices had been issued by the department regarding similar issues of service tax payment. The petitioner argued that the department's failure to address the issue in a timely manner did not constitute suppression on the petitioner's part. Citing a Supreme Court decision, the petitioner emphasized that the department could not allege suppression for issuing multiple notices on the same issue to the same party.

Subject Matter Dispute and Application of Supreme Court Decision:
The petitioner contended that the subject matter of the impugned show cause notice was not entirely different from the earlier notices, as they all related to service tax. The petitioner argued that the issues were interconnected, especially concerning the availing of free materials and abatement calculations. The court acknowledged the relatedness of the issues and directed the Commissioner to investigate further to determine if the impugned notice was barred by limitation.

Decision and Future Action:
The court set aside the show cause notice, allowing the Commissioner to reexamine the facts and issue a new notice if necessary. If a new notice is issued, detailed explanations must be provided to justify overcoming the limitation period and the Supreme Court decision. The writ application was allowed on these grounds, emphasizing the importance of thorough scrutiny and compliance with legal principles.

This detailed analysis of the judgment from the High Court of Calcutta underscores the complexity of the issues surrounding jurisdiction, limitation periods, suppression of facts, and the relatedness of multiple show cause notices. The court's decision to set aside the notice and allow for further investigation demonstrates the meticulous approach required in legal proceedings involving tax matters and administrative actions.