Court held that tax demands require adherence to statutory limits, and if payment is made prior to notice issuance, penalties are not justified.

JUDGMENT :

Kardak Ete, J.

Heard Ms. N. Hawelia, learned counsel for the petitioner. Also heard Mr. S. C. Keyal, learned Standing Counsel, CGST for the respondents.

2. Challenge made in this writ petition is against the impugned Order-in- Original, dated 05.07.2022 passed by the Additional Commissioner, CGST & CE, Guwahati, whereby, Service Tax amounting to Rs. 72,33,010.00/- (Rupees Seventy-Two Lakh Thirty-Three Thousand and Ten) for the Financial Year 2016- 17 in terms of Section 73(2) of the Finance Act, 1994 with interest as applicable in terms of Section 75 of the Finance Act, 1994 has been imposed on the petitioner and also imposed a penalty of Rs. 10,000/- (Rupees Ten Thousand) and Rs. 72,33,010/- (Rupees Seventy-Two Lakh Thirty-Three Thousand Ten) in terms of Section 78(1) of the Finance Act, 1994, thereby, ordered the appropriation of service tax amount of Rs. 73,20,352/- (Rupees Seventy-Three Lakh Twenty Thousand Three Hundred Fifty-Two) and interest amount of Rs. 6,85,455/- (Rupees Six Lakh Eighty-Five Thousand Four Hundred Fifty-Five).

3. The petitioner, M/s Hotel Gateway Grandeur is a company, which is a registered dealer under the Goods & Services Tax Act, 2017, the Finance Act, 1994 as well as the Assam Value Added Tax Act, 2003. The petitioner is engaged in the hotel business, having the Service Tax Registration No. AADC55816H SD001 and claims to have been regularly filing its returns and has never been considered a defaulter in any year. The petitioner filed its return for the period 2016-17 under Service Tax and paid the tax amount of Rs. 73,20,352/- (Rupees Seventy-Three Lakh Twenty Thousand Three Hundred Fifty-Two) along with interest amounting to Rs. 6,78,455/- (Rupees Six Lakh Seventy-Eight Thousand Four Hundred Fifty-Five).

4. A Demand-cum-Show Cause Notice dated 22.10.2021 was issued by the Additional Commissioner, CGST & CE for the Financial Year 2016-17 alleging that the petitioner had suppressed the actual value of services provided during the Financial Year 2016-17 and consequently did not pay service tax to the tune of Rs. 1,44,15,758/- (Rupees One Crore Forty-Four Lakh Fifteen Thousand Seven Hundred Fifty-Eight) in violation of the provisions of Sections 66B, 67, 68 & 70 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994. Therefore, the respondents have sought to recover Service Tax amounting to Rs. 1,44,15,758/- (Rupees One Crore Forty-Four Lakh Fifteen Thousand Seven Hundred Fifty-Eight) along with penalty of an equivalent amount and interest applicable thereon.

5. It is the case of the petitioner that the Demand-cum-Show Cause Notice dated 22.10.2021 ought to have been issued within 30 (thirty) months of the relevant date however the same, having been issued invoking the extended period of limitation, which is five years, can be invoked only when there is fraud, collusion, wilful misstatement, suppression of fact or contravention of any provisions of the Act with intent to evade payment of tax. It is contended that the entire amount of tax was paid before the issuance of the notice and therefore the extended period of limitation was not invocable and thereby the impugned Show Cause Notice dated 22.10.2021 was barred by limitation and hence, is illegal.

6. It is contended that the petitioner had already deposited the entire tax calculated in the year 2017 itself along with applicable interest. The tax calculated by respondent No. 2 is Rs. 72,33,010/- (Rupees Seventy-Two Lakh Thirty-Three Thousand Ten), however the petitioner had admittedly deposited an amount of Rs. 73,20,352/- (Rupees Seventy-Three Lakh Twenty Thousand Three Hundred Fifty-Two) and interest of Rs. 6,78,455/- (Rupees Six Lakh Seventy-Eight Thousand Four Hundred Fifty-Five) in the year 2017 itself, which is much more than the total demand calculated by the respondents. Once the tax has been paid in full, it cannot be said that there was any intention to evade payment of tax and therefore the demand of Rs. 72,33,010/-