STIC Travels Private Limited v. Union of India & Ors.

1. The petitioner has filed the present petition, inter alia, impugning the Notice dated 21.08.2023 (hereafter the impugned notice) issued by respondent no.5 for re-initiating the adjudication proceedings in respect of the Show Cause Notice dated 24.10.2008 (hereafter the impugned SCN). The petitioner contends that the said proceedings are now barred by limitation under Section 73(4B)(a) and (b) of the Finance Act, 1994 (hereafter the Act).

2. It is relevant to note the material facts which are necessary to consider the said contention. Respondent no.2 had issued the impugned SCN invoking the proviso to Section 73(1) of the Act proposing to raise a demand of ₹2,15,96,130/- on account of service tax for the period from RAWAL 01.07.2003 upto 31.03.2008. Thereafter, on 12.11.2008, a corrigendum was issued requiring the petitioner to send its response to the impugned SCN to respondent no.3 (Commissioner of Service Tax, New Delhi).

3. The petitioner responded to the impugned SCN on 29.12.2008 and thereafter, filed an additional reply on 04.06.2009. The petitioner was afforded a hearing, which was scheduled on 04.06.2009.

4. Another notice was issued by the respondents fixing a hearing on 21.10.2019. According to the petitioner, the petitioner had attended the said hearing as well. The petitioner had also furnished the soft copies of its response to the impugned SCN.

5. There is a controversy with regard to the hearing held on 21.10.2009. According to the petitioner, the hearing was concluded. However, according to the respondent, the petitioner had sought some time to furnish Foreign Inward Remittance Certificates (FIRC). It is material to note that there is no order to the said effect.

6. Concededly, no further proceedings took place pursuant to the impugned SCN thereafter.

7. The respondents have filed an additional affidavit seeking to explain the delay. It is stated that the case was transferred to the Call Book on 16.12.2015. However, there is no explanation as to the steps taken by the respondents during the period of over five years after the last date of hearing dated 21.10.2009 and prior to the file being transferred to the Call Book.

8. The Revenue claims that the impugned SCN was put in the Call Book pursuant to the issues pending in Civil Appeal bearing no.1765/2009 captioned Commissioner of Central Excise, Mangalore v. Konkan Marine Agencies. The said appeal was disposed of on 11.01.2023 and the impugned SCN was removed from the Call Book on 28.04.2023. Thereafter, respondent no.5 issued another Notice dated 10.08.2023 seeking to revive reinitiate the proceedings pursuant to the impugned SCN.

9. It is clear from the facts of the present case that there has been a gross delay on the part of the respondents in proceeding with the impugned SCN. As noted above, the concerned authority had taken no steps after 21.10.2009 till transferring of the case in the Call Book on 16.12.2015. Thus, even if it is accepted – which this Court does not – that the Call Book procedure is permissible in law, the delay in adjudication of the present case clearly exceeds a reasonable period. Therefore, reinitiation of the proceedings are required to be set aside.

10. Section 73 of the Act as applicable prior to 06.08.2014 did not provide any specified time for determining the service tax payable. By virtue of Finance (No.2) Act, 2014, Sub-section (4B) was introduced in Section 73 of the Act with effect from 06.08.2014. Sub-section 4B of Section 73 of the Act reads as under: “(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 whose limitation is RAWAL specified as eighteen months in sub-section (i); and (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).”

11. By virtue of Section 73(4B) of the Act, the Adjudicating Authority is required to determine the amount of service tax due within a period of six months or one year from the date of notice as the case may be. However, there does not mean that the adjudication of Show Cause Notices issued prior to 06.08.2014, could remain open indefinitely.

12. It is settled law that in absence of any specific time period prescribed for conclusion of proceedings, the same are required to be concluded within a reasonable period. In State of Punjab v. Bhatinda District Coop. Milk Producers Union Ltd.: (2007) 11 SCC 363, the Supreme Court had held as under:

13. In Union of India v. Citedal Fine Pharmaceuticals: (1989) 3 SCC 483 the Supreme Court had rejected the challenge to Rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 as unreasonable and violative of Article 14 of the Constitution of India, inter alia, on the ground that it did not provide for any period of limitation for recovery of duty. The Supreme Court had held as under: RAWAL “…. While it is true that Rule 12 does not prescribe any period within which recovery of any duty as contemplated by the rule is to be made, but that by itself does not render the rule unreasonable or violative of Article 14 of the Constitution. In the absence of any period of limitation it is settled that every authority is to exercise the power within a reasonable period. What would be reasonable period, would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether in the facts and circumstances of the case notice of demand for recovery was made within reasonable period. No hard and fast rules can be laid down in this regard as the determination of the question will depend upon the facts of each case.”

14. In Sanghvi Reconditioners (P.) Ltd. v. Union of India: 2017 SCC OnLine Bom 9781, the Bombay High Court had held that larger public interest requires the Revenue and its officials to adjudicate the Show Cause Notice as expeditiously and within a reasonable period of time.