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TMI Blog2025 (2) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... self-restraint in conducting an enquiry as to whether it is a case of fraud or not. It is left open to be considered by Appellate Authority. On a bare reading of sub-Section (1) of Section 73 that the period of limitation for serving a notice under this provision was 18 months at the relevant time but the proviso to sub-Section (1) carves out an exception and it clearly provides that in the cases falling under any one of the reasons stated under clauses (a) to (e) of the proviso, the provisions of the sub-Section shall have effect, as if for the words "18 months", the words "five years" have been substituted. Since the initiation of proceeding itself has been done taking this case as one of evasion of tax, the respondents have rightly argued that the period of limitation in this case would be five years - No doubt the legislative intent is that the Central Excise Commissioner shall determine the amount of service tax due under sub-Section (2) - (a) within six months from the date of issue of notice where it is possible to do so, in respect of cases falling under Sub-Section (1); (b) within one year from the date of notice where it is possible to do so in respect of cases falling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order dated 02.01.2024 (as contained in Annexure - P2) passed by the respondent no. 2 for the Period 2015 - 2016 and 2016-17 proposing levy of Service Tax, interest and penalty without a pre-show cause consultation as per Master Circular No. 1053/02/2017 - CX dated 10.03.2017 issued by the Central Board of Excise and Customs and subsequently clarified by Circular dated 19.11.2020 be set aside quashed. ii) the order dated 02.01.2024 (as contained in Annexure - P 2) passed by the respondent no. 1 for the Period 2015 - 2016 and 2016-17 imposing Service Tax, interest and penalty without consideration of the exemption Notification No. 25/2012 - Service Tax dated 20.06.2012 issued by the Central Government beyond the period of limitation being wholly without jurisdiction be set aside and quashed. iii) for granting any other relief (s) to which the petitioner is otherwise found entitled to." Brief Facts of the Case 3. The petitioner is engaged in the business of transportation of goods who entered into an agreement on 05.02.2014 with the Bihar State Food and Civil Supplies Corporation Limited (hereinafter called 'Corporation') for transportation of foodgrains and other essent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of the show cause notice would be hit by Sub-Section (1) of Section 73 of the Act of 1994. 6. One of his contentions is that prior to issuance of the show cause notice, the Assessing Authority had a duty cast upon him to issue a pre-consultation notice. In this regard, learned Senior Counsel submits that it is a mandatory provision which has been brought into existence by virtue of the statutory powers conferred upon the competent authority and the instructions in this regard have been held to be mandatory in nature. Learned Senior Counsel has taken this Court through paragraph '5.0' of the Circular No. 1053/02/2017-CX dated 10th March, 2017 with which is annexed the Master Circular. According to paragraph '5.0' of the Master Circular, the Board has made a provision for pre-show cause notice consultation by the Principal Commissioner/Commissioner prior to issue of show cause notice in cases involving demands of duty above Rs. 50 lakhs (except for preventive/ offence related SCN's) mandatory vide instruction issued from F No. 1080/09/DLA/MISC/15 dated 21st December, 2015. It is stated therein that such consultation shall be done by the Adjudicating Authority with the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the information available in the proceeding of the income tax, form 26AS which contains the description of the taxes deducted at source shows the total amount of tax deducted at source against the PAN of this petitioner. In any case, this cannot be said to be a case of fraud or mis-statement or evasion of tax. Learned Senior Counsel has relied upon the Circular Instruction No. 05/2023-GST (paragraph '3.3') to strengthen his submissions. 10. Learned Senior Counsel further submits that no doubt sub-Section (4B) may be read as if it is not absolute but the cluster of words "where it is possible to do so" occurring under clauses (a) and (b) under Sub-Section (4B) would cast a duty upon the Assessing Authority to satisfy this Court that they were at work but despite their all efforts the proceeding could not be possibly concluded within the given period of limitation. 11. Learned senior counsel for the petitioner has placed before this Court a copy of the order of the judgment passed by a learned Co-ordinate Bench of this Court on 04.04.2024 in CWJC No. 18398 of 2023 (M/s Kanak Automobiles Private Limited vs. the Union of India and Others) to submit that in the said case, the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt agency by way of transportation of fruits, vegetables, eggs, milk, foodgrains or pulses in a goods carriage would not be subjected to service tax. It has been exempted from the list of taxable service. It is submitted that if the serviced rendered by the petitioner was not taxable by virtue of Mega Exemption Notification (Annexure 'P4'), the petitioner had no liability to file return showing the receipts from such receipts under the said agreement as income received on account of a service chargeable to service tax. It is submitted that in such circumstance, the Assessing Authority has erred in passing the impugned order whereby and whereunder a service tax amounting to Rs. 1,26,03,035/- has been confirmed and the petitioner has been held liable to pay the said amount with interest and penalty. 15. Learned Senior Counsel submits that in fact from perusal of the impugned order (Annexure 'P2'), it would be evident that the assessment as well as penalty proceeding have been taken up simultaneously and by the one and same or the Assessing Authority has confirmed the service tax as well as the penalty which would not be appropriate and is liable to be held bad in law. Submissions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 73 of the Act of 1994. Learned Senior Counsel submits that in the present case, the proceeding was initiated by putting this case in the category of evasion of tax. Attention of this Court has been drawn towards the brief facts of the case mentioned in the impugned order. It is submitted that the Assessing Authority has taken up this case for one of the reasons stated under (a) to (e) vide proviso to sub-Section (1) of Section 73. Thus, it is submitted that the case would fall under the extended period of five years limitation. 20. Learned Senior Counsel submits that the Sub-Section (4B) of Section 73 of the Act of 1994 provides two clauses and under both the clauses the period of limitation has, though been fixed but a bare reading of those provisions would show that they are not mandatory in nature. It is submitted that in case of M/s Kanak Automobiles Private Limited (supra), learned Coordinate Bench of this Court, though exercised its discretion under Article 226 of the Constitution of India and did not permit proceeding to continue but at the same time, in paragraph '10' of its judgment, the Hon'ble Division Bench expressed its agreement with the submission that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara '4') and Shalini Shyam Shetty and another Versus Rajendra Shankar Patil reported in (2010) 8 SCC 329 took a view that this Court cannot adjudicate the issue involved in the writ application in exercise of its power under Article 226 of the Constitution of India. The petitioner in the said case was relegated to the Appellate Tribunal to seek his remedy in appeal. It is his submission that similar view be taken in the present appeal. 22. Learned Senior Counsel has further submitted that since this case has been put in the category of evasion of tax by the petitioner, it would be incumbent upon the petitioner to satisfy the Appellate Authority by producing cogent materials and on the strength of judicial pronouncements to demonstrate that it would not fall in the category of evasion of tax. The intent of the petitioner would be required to be judged by the Appellate Authority, therefore, this Court may not record its own views on this aspect of the matter as it is well settled that the issue of fraud would necessarily involve a question of fact. 23. It is further pointed out that so far as the judgment in the case of M/S Kanak Automobiles Private Limited (supra) is concerned, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nity to submit his response together with all documents and information in his support but he did not avail that opportunity. 26. He was given sufficient opportunity even in course of adjudication proceeding but he did not avail the opportunity. In such circumstance, the impugned order would not require any interference on the ground of violation of the principle of audi alterm partem. So far as the submission of learned Senior Counsel that a pre-show cause notice consultation is concerned, there is no difficulty in accepting the submission that a pre-show cause notice consultation would be mandatory in certain circumstances but a bare reading of the Circular referred to would show that the pre-consultation notice is not mandatory for the cases booked under fraud, collusion, wilful mis-statement, suppression of facts, evasion of tax etc. 27. The contention of learned Senior Counsel for the petitioner that 'fraud or collusion' is to be established with reference to the intent of the petitioner is based on judicial pronouncement and in this regard, the judgment of the Hon'ble Supreme Court in the case of Northern Operating System Private Limited (supra) would govern the field. What ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking note of the relevant provision. We reproduce Section 73 (1) and (2) and sub-Section (2A) and (4B) of Section 73 of the Act of 1994 which are the two relevant provisions placed before this Court for consideration, hereunder for a ready reference:- "SECTION 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded. -- (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, Central Excise Officer may, within [thirty months]] from the relevant date, serve notice on the person chargeable 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 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly argued that the period of limitation in this case would be five years. We, would, however, hasten to add that we are not recording any finding that it is a case of evasion of payment of service tax as any such opinion of this Court would be an encroachment upon the jurisdiction of the Adjudicating Authority or Appellate Authority, as the case may be, in reaching to a just and proper conclusion after giving appropriate opportunity of hearing to the petitioner. The fact remains that the proceeding was initiated taking this case as one under evasion of tax, therefore, the period of limitation would be five years. At the same time, we, having gone through sub-Section (4B) of Section 73 of the Act of 1994, are of the opinion that this sub-Section cannot be taken as providing an absolute period of limitation. No doubt the legislative intent is that the Central Excise Commissioner shall determine the amount of service tax due under sub-Section (2) - (a) within six months from the date of issue of notice where it is possible to do so, in respect of cases falling under Sub-Section (1); (b) within one year from the date of notice where it is possible to do so in respect of cases falling u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CGST Act. 3.2 In this regard, section 74 (1) of CGST Act reads as follows: "(1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized by reason of fraud, or any wilful-misstatement or suppression of facts to evade tax." 3.3 From the perusal of wording of section 74 (1) of CGST Act, it is evident that section 74 (1) can be invoked only in cases where there is a fraud or wilful misstatement or suppression of facts to evade tax on the part of the said taxpayer. Section 74 (1) cannot be invoked merely on account of non-payment of GST, without specific element of fraud or wilful mis-statement or suppression of facts to evade tax. Therefore, only in the cases where the investigation indicates that there is material evidence of fraud or wilful mis-statement or suppression of fact to evade tax on the part of the taxpayer, provisions of section 74 (1) of CGST Act may be invoked for issuance of show cause notice, and such evidence should also be made a part of the show cause notice." 32. On going through the instructions, we find that all that has been stated in par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not be wrong in having a reasonable belief that the assessee is not cooperating and providing information in response to the notice with sole intention to evade the tax. 35. In our opinion, no fault may be found on the part of the competent authority in forming of a reasonable belief in absence of a response by the petitioner. 36. The upshot of the aforesaid discussions would lead this Court to conclude that it is not a fit case to interfere with the impugned order in original (Annexure 'P2') in exercise of the writ jurisdiction of this Court. 37. In a recent judgment in the case of M/s Mangal Murti Constructions (supra), the learned coordinate Bench has recently passed an order on 18.01.2025 in similar circumstance relegating the petitioner to the alternative remedy of appeal and a request has been made to the Appellate Tribunal to condone the delay. 38. The petitioner may, if so advised, avail the statutory remedy of appeal before the Commissioner, (Appeal), CGST and CX. 39. Mr. D.V. Pathy, learned senior counsel submits that the impugned order in original (Annexure 'P2') is dated 02.01.2024, therefore, the period of limitation for filing the appeal has expired. At thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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