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TMI Blog2023 (8) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Court be pleased to stay the effect of operation of the impugned show cause notice dated 16 March, 2012 issued by the respondent no. 1, being "Exhibit A" to the petition, and any adjudication, act or proceedings sought to be initiated by the respondents pursuant thereto." 3. The relevant facts are required to be noted: The petitioner, formerly known as S and H Services Pvt. Ltd., was engaged in the construction of a residential complex. For such work, the petitioner had entered into a contract with one Sunny Vista Pvt. Ltd. (for short "Sunny Vista") for undertaking construction of 10 towers and other works in a township called "Hiranandani Palace Gardens" in a Special Economic Zone. On 31 March, 2009, the petitioner addressed a letter to Sunny Vista Pvt. Ltd. specifying that as per the agreement Rs. 20 crores was to be paid by Sunny Vista as a deposit of refundable nature. The time of refund of such deposit was to be agreed mutually after three years. Accordingly, on 31 March, 2009, Sunny Vista deposited Rs. 20 crores as agreed. On 21 October, 2009, the petitioner filed its Service Tax Return in Form ST-3 for the period October, 2008 to March, 2009 declaring the deposit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, was called upon to show cause as to why service tax amounting to Rs. 1,86,76,337/- including education cess, secondary & higher education cess, in respect of advance received by them should not be demanded and recovered from the petitioner under the provisions of subsection (1) of Section 73 of Chapter V of the Finance Act, 1994, as also, as to why interest should not be demanded and penalty imposed. 6. On 24 January, 2013, the petitioner submitted a detailed reply to the show cause notice. After about 2 years from the date of issuance of the show cause notice, that is, on 18 April, 2015, S and H Services Pvt. Ltd. was merged with the petitioner under a scheme of amalgamation under the orders passed by this Court on 18 April, 2015, approving the merger, in the proceedings of Company Scheme Petition No. 25 of 2015 and connected proceedings. 7. It is the case of the petitioner that after a substantial passage of time of almost 10 years from the issuance of the show cause notice, a notice dated 29 December, 2021 was received by the petitioner from the adjudicating officer to attend a personal hearing on 10 January, 2022 at 1 p.m. The petitioner by its letter dated 7 January, 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons as set out in clauses (a) to (e) under the said proviso, i.e., in cases of fraud, collusion or willful misstatement or suppression of facts etc. It is thus submitted that the mandate of law being clear that unless an exceptional reason is available on record, the adjudicating officer cannot neglect its obligation to adjudicate the show cause notice and thereby cause a prejudice to the assessee. It is hence submitted that by no stretch of imagination, in the absence of any justifiable reason, the show cause notice can be adjudicated after a long delay of 10 years. In support of such contention, Mr. Raichandani has placed reliance on the decision of a co-ordinate Bench of this Court in ATA Freight Line (I) Pvt. Ltd. vs. Union of India & Ors. Writ Petition No. 3671 of 2022, against which Special Leave Petition (Civil) Diary No. 828 of 2023 filed by the Union of India came to be dismissed; in CMA-CGM Agencies (India) Pvt. Ltd. vs. Union of India & Ors. Writ Petition No. 1313 of 2021; decision of this Court in Shreenathji Logistics vs. Union of India & Ors. Writ Petition No. 540 of 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the department states that the delay has occurred due to shifting of the Commissionerate and Re- Organization of the field formations and therefore the same would be a justifiable delay so as to adjudicate the show cause notice. Mr. Adik would also submit that the petitioner is at liberty to raise all contentions including on the jurisdiction before the adjudicating officer in the adjudication of the show cause notice. In this context, reliance is placed on the decision of the coordinate Bench of this Court in case of Oil and Natural Gas Corporation Limited vs. The Union of India & Ors. Writ Petition No. 1270 of 2021 dated 8 March, 2023. Mr. Adik has also placed reliance on an order passed by the Supreme Court in Commissioner, GST and Central Excise Commissionerate II & Ors. vs. M/s. Swati Menthol and Allied Chemicals Ltd. & Anr. SLP(C) No. 20072 of 2021 dated 10 July, 2023, to contend that on a similar plea being raised by the assessee, the Supreme Court had permitted adjudication of the show cause notice. Mr. Adik has also made submissions on merits of the show cause notice. It is, therefore, his submission that the petition deserves to be dismissed. 11. We have heard lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words "eighteen months", the words "five years" had been substituted. Explanation: Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of eighteen months or five years, as the case may be. (1A) Notwithstanding anything contained in sub-section (1), (except the period of eighteen months of serving the notice for recovery of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73, when it concerns the obligation and repository of the power to be exercised by the concerned officer to recover service tax, in adjudicating any show cause notice, issued against an assessee considering the raison d'etre of the provision. It is hence expected that the approach and expectation from the officer adjudicating the show cause notice would be to strictly adhere to the timelines prescribed by provisions of the Act, as there is a definite purpose and intention of the legislature to prescribe such time limits, either under Section 73(4B) of six months and one year respectively or of five years under Section 73(1). 17. In our opinion, in the facts of the present case, such requirement and obligation the law would mandate is completely overlooked by the officer responsible for adjudicating the show cause notice. We are not shown any provision, which in any manner would permit any authority to condone such inordinate delay on the part of the adjudicating officer to adjudicate show cause notice. There can be none, as the legislature has clearly intended to avoid uncertainty, which otherwise can emerge. Thus, what would become applicable are the settled principles of law as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which are implicit in the latin maxim "lex dilationes abhorret", i.e., law abhors delay. 21. In such context as to how the Courts have dealt with similar situations can be seen from some of the significant decisions on the issue. In Sushitex Exports (India) Ltd.(supra), a Division Bench of this Court was dealing with a case in which a show cause notice was issued on 30 April, 1997, which was not adjudicated till the petitioners filed the writ petition in the year 2020. In such context, the Court while allowing the petition, observed that the law is well settled that when a power is conferred to achieve a particular object, such power has to be exercised reasonally, rationally and with objectivity. It was observed that it would amount to an arbitrary exercise of power if proceedings initiated in 1997 are not taken to their logical conclusion even after a period of over two decades. The Court agreed with the view taken in Parle International Ltd. (supra) that the proceedings should be concluded within a reasonable period, and if the proceedings that are not concluded within a reasonable period, the Court considering such facts, may not allow the proceedings to be carried any furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt having issued the show cause notice, it is their duty to take the said show-cause notice to its logical conclusion by adjudicating upon the said show-cause notice within a reasonable period of time. In view of the gross delay on the part of the respondent, the petitioner cannot be made to suffer. The law laid down by the Division Bench of this Court in the case of Parle International Limited (supra), applies to the facts of this case. We do not propose to take any different view in the matter. Hearing of show-cause notice belatedly is in violation of natural justice." 23. In ATA Freight Line (I) Pvt. Ltd. (supra), a Division Bench of this Court considering the decisions in Parle International Ltd. (supra), Bhagwandas S. Tolani vs. B.C. Aggarwal & Ors. 1983 (12) E.L.T. 44 (Bom.) and Reliance Industries Ltd. (supra) held that a show cause notice issued a decade back should not be allowed to be adjudicated by the Revenue merely because there is no period of limitation prescribed in the statute to complete such proceedings. The relevant observations of the Court are required to be noted, which reads thus: "24. This Court in case of Parle International Ltd. (supra) after consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to preserve the evidence/record intact for such a long period to be produced at the time of hearing of the Show Cause Notice. 27. It is held that the respondent having issued the Show-Cause notice, it is their duty to take the the said Show-Cause notice to its logical conclusion by adjudicating upon the said Show-Cause Notice within a reasonable period of time. In view of gross delay on the part of the respondent, the petitioner cannot be made to suffer. This Court accordingly was pleased to quash and set aside dated 16th September 2005 in that matter. The principles of law laid down by this Court in the above referred judgment would apply to the facts of this case. We are respectfully bound by the principles of law laid down by this Court in the said judgment. We do not propose to take a different view in the matter. 28..... 29. In our view, since the respondents were totally responsible for gross delay in adjudicating the show cause notices issued by the respondents causing prejudice and hardship to the petitioner and have transferred the show cause notices to call book and kept in abeyance without communication to the petitioner for more than 7 to 11 years, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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