2023 (12) TMI 736 - HC - GST

Invocation of extended period of limitation - procedural irregularity inasmuch as the pre-show-cause notice was not issued as per the relevant circular issued by the Board - HELD THAT - In the instant case, on going through the show-cause notice dated 11th November, 2019 as well as the order in original dated 31st March, 2023. Prima facie, while issuing the show-cause notice dated 11th November, 2019, the adjudicating authority in paragraph 9 has set out certain reasons as to why the extended period of limitation is invokable against the appellants. The appellants have contested the show-cause notice by submitting the reply and the adjudicating authority has sustained the allegations in the show-cause notice and justified invocation of the extended period of limitation. Thus, the case on hand appears to be not a simple case of going through the show-cause notice and examining as to whether there is any factual finding with regard to wilful misstatement or suppression or fraud but to consider the said aspect, facts have to be gone into, much of which has been seriously disputed by the appellants in their reply to the show-cause notice. In the instant case, the issue as to whether extended period of limitation could be invoked is not purely a question of law but a mixed question of fact and law and necessarily, disputed questions of fact have to be gone, which cannot be adjudicated in a writ petition. The appellants should not be permitted to bypass the appellate remedy available under the Act and for such reason, the appellants have to necessarily file an appeal before the learned Tribunal challenging the order in original dated 31st March, 2023 - Appeal dismissed.

Summary

Issues Involved: Challenge to order demanding service tax and penalty under Section 73(2) of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017; Procedural irregularity in issuance of pre-show-cause notice; Invocation of extended period of limitation; Allegations of perversity in the order in original.

Procedural Irregularity in Pre-Show-Cause Notice:
The appellants challenged the order in original primarily on the ground of procedural irregularity, contending that the pre-show-cause notice was not issued in accordance with the relevant circular. However, it was noted that the appellants had already submitted their reply to the show-cause notice, and this point was not strongly argued during the proceedings.

Invocation of Extended Period of Limitation:
The challenge was also raised regarding the correctness of invoking the extended period of limitation for the proceedings covering the period from April 2014 to June 2017. The appellants argued that as there were two audits conducted by the department prior to the show-cause notice, there was no basis for invoking the extended period. They relied on a previous court decision to support their contention.

Allegations of Perversity in the Order:
The appellants further contended that the order in original displayed perversity on its face as certain documents submitted to the adjudicating authority were not considered, and some were rejected on insufficient grounds like being illegible. This raised concerns about the fairness and thoroughness of the adjudication process.

Court's Decision and Analysis:
The Single Bench dismissed the writ petition, stating that the order in original was appealable under the statute, and the court could not delve into the factual basis for the adjudicating authority's conclusions. The Court observed that the issue of invoking the extended period of limitation involved mixed questions of fact and law, which could not be resolved through a writ petition. Similarly, the allegations of perversity in the order required a detailed examination of facts, best suited for the appellate remedy before the Central Excise and Service Tax Appellate Tribunal.

Conclusion and Dismissal of Appeal:
The Court declined to interfere with the order in original, emphasizing that the appellants should pursue their remedy by filing an appeal before the Tribunal. The appellants were granted liberty to file an appeal within 90 days, ensuring their right to address all issues of fact and law before the Tribunal. The Court's observations were deemed prima facie and would not prejudice the appellants' rights in the appeal process.

Final Verdict and Costs:
The appeal was dismissed, with no costs imposed, and the parties were directed to receive a certified copy of the order promptly upon compliance with legal formalities. All questions of law and facts remained open for consideration in the appellate proceedings.