2024 (12) TMI 1145 - HC - Service Tax

Reinitiation of adjudication proceedings after a gap of nine years is time-barred u/s 73 (4B) of the Finance Act or not - jurisdiction to issue SCN - issuance of the impugned hearing notice by an officer under the CGST Act is valid or not - HELD THAT - There is a merit in the contention of the learned counsel for the petitioner that the Revenue / respondents were in knowledge about the proceedings being dropped against the petitioner in respect of the earlier two show cause notices, and also the fact that the appeal of the Revenue had already been dismissed by the learned CESTAT vide judgment dated 15.09.2022 2022 (9) TMI 853 - CESTAT NEW DELHI , i.e. about two years prior to issuance of impugned hearing notice dated 18.09.2024. This Court is of the view that Section 73 (4B) was framed and introduced in the Finance Act to ensure effective administration of taxation. While there cannot be denying that the taxation forms the backbone of a nation's economy, any inordinate delay by the Revenue itself in prosecuting its own cases cannot be construed in their favour by stretching the period of limitation to nine years especially when the provision requires the proceedings to be concluded within six months / one year - De hors the aforesaid findings, even if one accepts that the time period of six months/one year as mentioned in Section 73 (4B) of the Finance Act is only suggestive, it would be unreasonable to hold that the same can be extended till a period of nine years in the given facts and circumstances of the case. The Revenue s contention that it was justified in keeping the proceedings in this case, in abeyance because an appeal pertaining to similar issue was pending before the learned CESTAT, is unmerited. The filing of an appeal in another case qua the petitioner, though on identical issue, and its pendency before the learned CESTAT cannot be held as a valid reason for not conducting the proceedings in the present case, after a show cause notice has already been issued, within the time frame as laid down in Section 73 (4B) of the Finance Act. Even if the said appeal was pending, the proceedings in this case could have continued and order(s) could have been passed, and if aggrieved, the Revenue could have again approached the learned CESTAT by way of an appeal. There are no reason for the delay caused in the present case in not concluding the hearing qua the impugned show cause notice dated 21.04.2015 within the stipulated time period, and for issuing the impugned hearing notice dated 18.09.2024 after a period of nine years - it is apposite to quash and set aside the impugned hearing notice dated 18.09.2024 issued by respondent no. 5. Petition disposed off.

Summary

Issues Involved:

1. Whether the reinitiation of adjudication proceedings after a gap of nine years is time-barred under Section 73 (4B) of the Finance Act.
2. Whether the issuance of the impugned hearing notice by an officer under the CGST Act is valid.

Issue-wise Detailed Analysis:

1. Time-barred Adjudication Proceedings:

The petitioner challenged the reinitiation of adjudication proceedings, arguing that they were time-barred under Section 73 (4B) of the Finance Act. The original show cause notice was issued on 21.04.2015, with the hearing concluded on 19.10.2015. However, no order was communicated, and a fresh hearing notice was issued on 18.09.2024, nearly nine years later. The petitioner contended that the proceedings should have been concluded within six months or one year from the date of the notice, as stipulated in Section 73 (4B) (a) & (b) of the Finance Act. The petitioner cited precedents where similar delays led to the quashing of show cause notices.

The Revenue argued that the limitation period is suggestive, not mandatory, due to the phrase "where it is possible to do so" in Section 73 (4B). They claimed the delay was justified as the proceedings were kept in abeyance pending an appeal before the CESTAT, which was dismissed in 2022.

The court found that the proceedings had become time-barred, emphasizing that the statutory authority must exercise jurisdiction within a reasonable period. The court noted that the Revenue's inaction and failure to transfer the matter to the call book or issue any order within the stipulated time frame rendered the proceedings invalid. The court referenced previous judgments underscoring the necessity of adhering to statutory timelines for adjudication.

2. Jurisdiction of the CGST Officer:

The petitioner also questioned the jurisdiction of the officer who issued the impugned hearing notice, arguing that an officer appointed under the CGST Act lacks authority under the Finance Act. The Revenue countered that officers under the Central Excise Act are deemed officers under the CGST Act and are empowered to handle matters under the Finance Act.

While the court acknowledged this jurisdictional challenge, it focused primarily on the time-barred nature of the proceedings. Since the court quashed the impugned hearing notice on the grounds of being time-barred, it did not find it necessary to adjudicate the jurisdictional issue.

Conclusion:

The court quashed the impugned hearing notice dated 18.09.2024, citing the unreasonable delay in concluding the proceedings as per Section 73 (4B) of the Finance Act. The petition was disposed of on the grounds of the proceedings being time-barred, without addressing the jurisdictional contentions in detail.