MS Shyam Indus Power Solutions Pvt Ltd v. Principal Commissioner CGST Delhi North

015) 21.09.[2] 017 and 06.10.[2] Response of dated 2017 to decide on merits as per reply 29.02.20 24, 7.03.202 4 and 18.03.20 23.08.[2] 2014-15 13.10. 16.11.[2] 21.09.[2] 017 and 06.10.[2] Response of 23.08.[2] 017 dated 2017 to decide on merits as per reply 29.02.20 24, 7.03.202 4 and 18.03.20 2015-16 to 30th June 01.03. 02.05.[2] 29.02.20 24, 7.03.202 4 and 18.03.20 23.08.[2] ANALYSIS:

13. The date of issuance of the impugned SCNs and order are not disputed facts in the present case. The first impugned SCN, for FY 2008-2009 to 2011-12, was issued on 18.10.2013 and the latest one, for FY 2015-16 to 30th June 2017, was issued on 01.03.2018. These SCNs were decided together vide the impugned order dated 23.08.2024; and thus, it is apparent that the Respondent kept the impugned SCNs pending for periods between 6 to 10 years. The following table summarizes the timelines followed by the Respondent in adjudicating the impugned SCNs: Period SCN Adjudication Order Delay in adjudication 2008-2009 to 2011-12 18.10.2013 23.08.2024 10 years, 10 months, 5 days 2012-13 21.05.2014 23.08.2024 10 years, 3 months, 2 days 2013-14 07.09.2015 23.08.2024 8 years, 11 months, 16 days 2014-15 13.10.2016 23.08.2024 7 years, 10 months, 10 days 2015-16 to 30.06.2017 01.03.2018 23.08.2024 6 years, 5 months, 22 days

14. Section 73 of the Act empowers the taxing authorities to issue SCN(s) to the assessee, chargeable with service tax, which has not been levied or paid or short-levied or short-paid or erroneously refunded. After issuance of the SCN, Section 73(4B) of the Act casts a duty upon the authorities to determine the due amount of service tax withinsix months/ one year, where it is possible to do so, from the date of notice. The relevant portion of Section 73 states as follows:

(4-B) The Central Excise Officer shall determine the amount of service tax due under sub-section (2)— (a) within six months from the date of notice where it is possible to do so, in respect of cases falling undersubsection (1); (b) within one year from the date of notice, where it is possible to do so, in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4-A).”

15. This court, in Vos Technologies India, had the opportunity to consider the effect of inordinate delay and failure on the part of the tax authorities to conclude the adjudication proceedings within a reasonable period of time (arising out of the Customs Act, 1962[9], the Finance Act, 1994 and the Central Goods And Services Act, 2017) and held that such delay/ failure to act within a reasonable period of time, constituted sufficient ground to quash such proceedings. This Court also held that the authorities are bound and obliged in law to make endeavors to conclude adjudication with due expedition. Relevant extracts of the judgment are as follows: “…….

2. The principal ground of attack is the inordinate delay in the finalisation of the adjudication proceedings with the writ petitioners contending that the failure on the part of the respondents to conclude adjudication within a reasonable period of time and inordinately delaying the same for decades together would constitute a sufficient ground to annul those proceedings. They would contend that the principles of a „reasonable period‟ which courts have propounded in connection with an adjudicatory function conferred upon an authority would apply and the impugned SCNs‟ and orders are liable to be quashed on this short score alone. ……. The Custom Act

18. This provision flows along lines similar to those appearing in the Customs Act and creates two separate streams dependent on whether the allegation be plainly of short-levy, non-levy or erroneous refund as contrasted with cases where that may have occurred by reason of fraud, collusion, wilful misstatement or suppression of facts. However, and of significance is sub-section (4-B), and which continues to employ the phrase “where it is possible to do so” as opposed to the amendments which came to be made in Section 28 of the Customs Act. *****

20. We have chosen to extract those provisions for the sake of completeness and notwithstanding the petitioners asserting that by virtue of Section 174(2) of the CGST Act, and which constitutes the „Repeal and Saving‟ clause, it would be the provisions of the 1994 Act which would govern.

21. In terms of Section 73(1) of the CGST Act, which is principally concerned with cases other than where allegations of fraud, wilful misstatement or suppression of facts are made, and pertains to tax incorrectly computed, erroneously refunded or benefits wrongly availed, sets out terminal points within which action referable to that provision would have to be commenced and concluded. A final order on the culmination of adjudication is liable to be framed by the proper officer in terms contemplated under Section 73(9) of the CGST Act. By virtue of sub-section (10) thereof, the proper officer is bound to frame such an order within three years from the due date for furnishing of an annual return. A notice commencing proceedings referable to Section 73 must be issued at least three months prior to the time limit as specified in sub-section (10) coming to an end. It is relevant to observe that Section 73(10) of the CGST Act uses the words “shall issue” and does not adopt the “where it is possible to do so” phraseology as employed by the Customs Act and 1994 Act. Similar is the position that obtains in cases where fraud, wilful misstatement or suppression of facts may be alleged, and in which eventuality it is the provisions of Section 74 of the CGST Act which would govern. *****

74. The meaning to be ascribed to the phrase “where it is possible to do so” was lucidly explained in Swatch Group. As the Court observed on that occasion, while the aforesaid expression did allow a degree of flexibility, it would have to be understood as being concerned with situations where the proper officer may have found it impracticable or impossible to conclude proceedings. Swatch Group had explained that expression to be applicable only where the proper officer were faced with “insurmountable exigencies” and further recourse being rendered “impracticable or not possible”. It thus held that the leeway provided by the statute when it employed the phrase “where it is possible to do so”, could not be equated with lethargy or an abject failure to act despite there being no insurmountable factor operating as a fetter upon the power of the proper officer to proceed further with adjudication. It was these aspects which came to be further amplified by the Court in Gala International. *****

85. The position which thus emerges from the aforesaid discussion and a review of the legal precedents is that the respondents are bound and obliged in law to endeavour to conclude adjudication with due expedition. Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together. A statute enabling an authority to conclude proceedings within a stipulated period of time “where it is possible to do so” cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence. Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act.

86. When we revert to the facts that obtain in this batch, we find that the respondents have clearly failed to establish the existence of an insurmountable constraint which operated and which could be acknowledged in law as impeding their power to conclude pending adjudications. In fact, and to the contrary, the frequent placement of matters in the call book, the retrieval of matters therefrom and transfer all over again not only defies logic it is also demonstrative of due application of mind quite apart from the said procedure having been found by us to be contrary to the procedure contemplated by Section 28. The respondents have, in this regard, failed to abide by the directives of the Board itself which had contemplated affected parties being placed on notice, a periodic review being undertaken and the proceedings having been lingered unnecessarily with no plausible explanation. The inaction and the state of inertia which prevailed thus leads us to the inevitable conclusion that the respondents clearly failed to discharge their obligation within a reasonable time. The issuance of innumerable notices would also not absolve the respondents of their statutory obligation to proceed with promptitude bearing in mind the overarching obligation of ensuring that disputes are resolved in a timely manner and not permitted to fester. Insofar as the assertion of the assessees‟ seeking repeated adjournments or failing to cooperate in the proceedings, it may only be noted that nothing prevented the respondents from proceeding ex parte or refusing to reject such requests if considered lacking in bona fides.

87. We are further constrained to observe that the respondents also failed to act in accord with the legislative interventions which were intended to empower them to pursue further proceedings and take the adjudicatory process to its logical conclusion. We have in the preceding paragraphs of this decision taken note of the various statutory amendments which were introduced in Section 28 and were clearly intended to ratify and reinforce the jurisdiction which the Legislature recognised as inhering in them. The above observations are, of course, confined to those cases to which the Second Proviso placed in Section 28(9) would not apply. The Second Proviso where applicable would in any case deprive the respondents of the right to continue a pending adjudication or frame a final order once the terminal point constructed by statute came into effect.”

16. There is no apparent reason given for the inordinate delay in adjudication.

17. The court notes that despite a hearing conducted on 30.10.2015 (in respect of SCN dated 07.09.2015, for FY 2013-14), the Respondent did not issue the final order for approximately 9 years. Had the SCN dated 07.09.2015 been decided in 2015, the SCNs dated 21.05.2014, 13.10.2016 and 01.03.2018 could also have been adjudicated on similar lines as it had similar issues.

18. In Vos Technologies India this Court categorically held that matters having financial liabilities or penal consequences cannot be kept unresolved for years; and the phrase “where it is possible to do so” cannot be a license to keep matters pending for years. The flexibility provided by the legislation is not meant to be misused or construed as sanctioning indolence. The statutory leverage cannot be brought into play routinely and in an unfettered manner for years, without any due justification or explanation.

19. As is apparent from the table above, the rationale espoused in the decision of this Court in Vos Technologies India, would apply with full vigour to the facts of the present case. For the said reason, the impugned SCNs dated 18.10.2013, 21.05.2014, 07.09.2015, 13.10.2016 and 01.03.2018 and the impugned order dated 23.08.2024 issued by the Respondent are hereby quashed.

20. The Petition and pending application(s), if any, are disposed of in the above terms.

YASHWANT VARMA, J. HARISH VAIDYANATHAN SHANKAR, J. MARCH 20, 2025/sm/er