The court held that a service tax demand order issued after the statutory time limit is invalid, emphasizing the necessity for timely adjudication in tax matters.

JUDGMENT :

(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)

Heard Mr. Bijay Kumar Gupta, learned counsel for the petitioner and Dr. K.N. Singh, learned ASG assisted by Mr. Anshuman Singh, learned Senior Standing Counsel for the CGST and CX.

2. In the present writ application, the petitioner has prayed for the following reliefs:-

“i) The show cause notice bearing No.:- C. No. V(18)379/Pankaj Rai/SCN/PD-W/2021- 22/1585 dated 11.10.2021 (as contained in Annexure-P-2) issued by the Respondent No.- 4 for Service tax amounting to Rs.13,07,700 (Thirteen lakhs Seven Thousand Seven hundred only) for the Period April 2016 to June 2017/- under proviso to sub section (1) of Section 73 Finance Act, 1994 read with S 174 of the CGST Act, 2017, applicable interest under S. 75 Finance Act, 1994 read with S 174 of the CGST Act, 2017, Penalty under Section 78 Finance Act, 1994 read with S 174 of the CGST Act, 2017 for, Penalty under Section 77(1)(c)(ii) Finance Act, 1994 read with S 174 of the CGST Act, 2017, penalty under section 77(1)(a) & Penalty under section 77(1)(c)(ii) Finance Act, 1994 read with S 174 of the CGST Act, 2017 be quashed as the show cause notice is time barred in view of the provision of Section 73(1) of Finance Act, 1994 wherein there is time limit of 30 months to issue notice and extended period of limitation is not applicable in this case.

ii) The Order in Original bearing No.- AC/JSR/ST-120/2024 dated 13.05.2024 (as contained in Annexure-P-5) passed by the Respondent No.-5 demanding Service tax amounting to Rs.13,07,700 (Thirteen lakhs Seven Thousand Seven hundred only) under sub section (2) to Section 73 of Chapter V of the Finance Act, 1994 read with Section 174 of the Central Goods and Services Tax Act, 2017 for the period April 2016 to June 2017 and Penalty of similar amount along with applicable interest be quashed as a demand order issued by Respondent No 5 is violative of statutory time limit of one year provided under Sub-section (4B) of Section 73 of Finance Act, 1994 as Respondent No. 5 failed to adjudicate the issue within one year from issuance of show cause notice i.e. 11.10.2021 (Annexure-P2) and the demand order was passed on 13.05.2024 (Annex-P-5) after lapse of more than 2 years 7 months.

iii) For issuing a writ in the nature of prohibition to direct Respondent No. 03, 04 and No.-5 not to take any coercive step against the petitioner as the demand order was not adjudicated within one year of issuance of show cause notice in violation of statutory limit of one year as provided in Sub-section (4B) of Section 73 of Finance Act, 1994 and demand order was passed without jurisdiction (Annex P-5).

iv) For granting any other relief (s) to which the petitioner is otherwise found entitled to in accordance with law.”

Brief Facts of the Case

3. It is the case of the petitioner that on 11.05.2020, the Respondent No. 3 issued a notice to the petitioner’s Late Husband Pankaj Rai alleging non-payment of service tax for the financial year 2016-17 on the basis of gross value of turnover shown in the income tax return as credited under Section 194C, 194J and 194H and demanded various documentary evidences shown in the notice within 15 days. Thereafter, a reminder notice was also issued. The husband of the petitioner submitted his reply on 06.09.2020, however, his submissions were ignored and not acknowledged.

4. The further case of the petitioner is that the petitioner’s Late husband was issued a Show Cause Notice (in short ‘SCN’) bearing C. No. V(18)379/Pankaj Rai/SCN/PD-W/21- 22/1585 dated 11.10.2021 (Annexure ‘P2’) by Respondent No. 4 claiming a service tax amounting to Rs.13,07,700/- for the period from April, 2016 to June, 2017. The notice to show cause was issued under proviso to sub-section (1) of Section 73 of the Finance Act, 1994 (hereinafter referred to as the ‘Act of 1994’) read with Section 174 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the ‘CGST Act’). The Respondent No. 4 alleged tha