2023 (8) TMI 1050 - HC - Service Tax

Inordinate delay of almost 10 years in adjudication of the case - respondents contended that the petition be dismissed because the Petitioner has not attended the hearing and the revenue should be permitted to proceed with the show cause notices - HELD THAT - The Respondents have not explained the delay as to why after issuing notices in 2010/2011, they could not complete the adjudication proceedings for a period of almost 10 years. The Respondents have not furnished any proof of the notice of personal hearing, alleged to have been, granted in the year 2015 and 2017 except making an averment in the affidavit-in-reply nor pursuant to RTI application proof of service of these notices were furnished to the Petitioner. The Respondents were not prevented to complete the adjudication proceedings ex-parte if the Petitioner, as alleged by the Respondents, did not attend the so-called personal hearing granted in 2015 and 2017. There is no explanation provided by the Respondents explaining delay in adjudication. The delay in completion of the adjudication proceedings for a period of almost 10 years cannot be attributed to the Petitioner and further in the absence of the delay having been explained by the Respondents, the impugned notices ought to be quashed - it cannot be expected that oblivious to the above position in law as also the mandate of Section 73(4B) of the CGST Act, the adjudicating officer would nonetheless proceed to adjudicate the show-cause notice. Petition allowed.

Summary

Issues Involved:
1. Legality of the delay in adjudication of show cause notices.
2. Compliance with Section 73 of the Finance Act, 1994.
3. Prejudice caused to the Petitioner due to the delay.

Summary:

1. Legality of the delay in adjudication of show cause notices:
The Petitioner filed a petition under Article 226 of the Constitution of India seeking to quash three show cause notices issued in 2010 and 2011, citing an inordinate delay of almost 10 years in their adjudication. The Petitioner argued that the delay is contrary to the scheme of the Service Tax Act and has caused serious prejudice. The Respondents contended that personal hearings were granted, but the Petitioner did not attend. The court found that the Respondents failed to explain the delay and did not provide proof of the personal hearing notices allegedly granted in 2015 and 2017. The court held that the delay in completion of the adjudication proceedings cannot be attributed to the Petitioner and quashed the impugned notices.

2. Compliance with Section 73 of the Finance Act, 1994:
The court referred to Section 73(1) and Section 73(4B) of the Finance Act, 1994, which mandate specific timelines for the determination of service tax dues. The court emphasized that the statute prescribes a period of six months or one year for adjudication, depending on the case. The court noted that the Respondents overlooked this requirement, and no provision permits condoning such an inordinate delay. The court reiterated that adjudication must occur within a reasonable period to avoid uncertainty and prejudice to the assessee.

3. Prejudice caused to the Petitioner due to the delay:
The court observed that an inordinate delay in adjudication is seriously prejudicial to the assessee and can affect their legal rights and interests. The court highlighted that such delays could lead to irreversible changes, frustrating the adjudication process. The court also noted that delays could abridge the right of appeal and violate principles of natural justice. The court concluded that the delay in adjudication amounted to denying fairness and judiciousness, and arbitrary administrative behavior is antithetical to lawful adjudication.

In conclusion, the court allowed the petition, quashing the show cause notices due to the unjustifiable and inordinate delay in their adjudication. No order as to costs was made.