Patna High Court
Karanveer Singh Yadav Enterprises … vs The Union Of India on 5 May, 2025
Author: Rajeev Ranjan Prasad
Bench: Rajeev Ranjan Prasad, Ashok Kumar Pandey
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.16975 of 2024
======================================================
Karanveer Singh Yadav Enterprises Private Limited, a Private Limited
Company having its office at Ramayan Bhawan, Daldali Road, Bakarganj,
Patna, Bihar-800004 through its Director and authorized representative Shri
Ranvir Kumar, aged about 40 years (Male), son of Late Ramvilash Prasad @
Ramvilas Yadav, R/o Ward No. 04, N.H. 31, Near School, Gulab Bag, Barh,
Patna, Bihar-803213.
... ... Petitioner
Versus
1. The Union of India through the Chief Commissioner of Central Goods and
Services Tax (GST) and Central Excise (CX), Patna Central Division, Patna.
2. The Principal Commissioner, Central Goods and Services Tax (CGST) and
Central Excise (CX), Patna-I, Patna.
... ... Respondents
======================================================
Appearance :
For the Petitioner : Mr. Aditya Prakash, Advocate
Mr. Rudra Pratap Singh, Advocate
Mr. Akshansh Ankit, Advocate
For the Respondents : Dr. K.N. Singh, Additional Solicitor General
Mr. Anshuman Singh, Senior SC
======================================================
CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD
and
HONOURABLE MR. JUSTICE ASHOK KUMAR PANDEY
ORAL JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD)
Date : 05-05-2025
Heard Mr. Aditya Prakash, learned counsel for the
petitioner and Dr. K.N. Singh, learned ASG assisted by Mr.
Anshuman Singh, learned Senior Standing Counsel for the
Department of CGST and CX.
2. The present writ application has been filed seeking
the following reliefs:-
"a) To quash the impugned order-in-original
vide No. 41/ST/Aayukt/2024 dated 24.06.2024
passed by Respondent No. 2 whereby and
Patna High Court CWJC No.16975 of 2024 dt.05-05-2025
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whereunder tax liabilities and penalties for the
Financial Year 2016-17 to 2017-18 (upto June,
2017) were imposed against the Petitioner
under the Finance Act, 1994, in a most
arbitrary manner without following the
statutory provisions as well as the principles of
natural justice.
b) For issuance of appropriate direction
restraining the respondents from taking any
coercive action against the Petitioner for
recovery of any amount of service tax, interest
and penalty, in terms of the impugned order-
in-original vide No. 41/ST/Aayukt/2024 dated
24.06.2024
passed by Respondent No. 2
during the pendency of the present writ
application.
c) To pass any other order/orders in shape of a
consequential relief to which the Petitioner
may be found to be legally entitled to in the
facts and circumstances of the instant case at
hand.”
Brief Facts of the Case
3. Petitioner-company is engaged in providing services
to their clients of “Erection Commissioning and Installation
Service” as defined under Section 65(105) of the Finance Act,
1994 (hereinafter referred to as the ‘Act of 1994’).
4. It is the case of the petitioner that on 12.10.2021, the
Respondent No. 2 issued a notice to the petitioner alleging that he
has contravened the provisions of Sections 67, 68 and 70 of the
Patna High Court CWJC No.16975 of 2024 dt.05-05-2025
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Act of 1994 read with Rules 6 and 7 of the Service Tax Rules,
1994 (hereinafter referred to as the ‘Rules of 1994’) as he has not
paid Service Tax amounting to Rs. 2,96,85,837/- on the
consideration amount received by them from their various clints
during the period 2016-17 to 2017-18 (til June, 2017) and also not
paid Service Tax amounting to Rs. 11,60,639/- under Reverse
Charge Mechanism as recipient of the Service as per Notification
No. 30/2012-Service Tax dated 20.06.2012 as amended during the
relevant period on the basis of third party data received from
Income Tax Department for the Financial Year 2016-17 and hence
the amount of Service Tax shown to be liable for recovery under
Section 73(1) of the Act of 19945 and further petitioner was held
liable for penalty under Section 78 of the Act of 1994. In addition
to this the petitioner was also held liable for penalty under Section
77(2) of the Act of 1994 for non-filing of ST-3 Returns for the
period April 2016, 2016 and April, 2017 to June, 2017. The
petitioner was also held liable for penalty under Section 77(1) (c)
(ii) of the Act of 1994 for their failure to produce document called
for by the Department.
Submission on behalf of the petitioner
5. Learned counsel for the petitioner submits that there
is no fraud or mis-statement or suppression of facts on the part of
Patna High Court CWJC No.16975 of 2024 dt.05-05-2025
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the petitioner in making non-payment of service tax for the
relevant period. It is submitted that the respondent no. 2 passed the
impugned order without considering the materials available on the
record.
6. It is submitted that the adjudicating officer has passed
the impugned order after a substantial delay of approximately 2
years and 8 months which is in contravention of the stipulated
time frame in terms of Section 73(4B) of the Act of 1994 which
envisaged that an order must be passed within a period of six
months from the date of the notice.
Consideration
7. When this case was taken up for consideration on
24.04.2025, this Court passed the following order:-
“The solitary issue which has been raised on behalf of
the petitioner is that in this case, the respondent
authority did not determine the liability within the
prescribed period of one year as envisaged under clause
(b) of sub-section (4B) of Section 73 of the Finance
Act, 1994 (hereinafter referred to as the ‘Act of 1994’).
At the same time, the authority who has passed the
Order-in-Original has not indicated in his order as to
why it could not become possible for him to pass the
Order-in-Original within the prescribed period.
2. Learned counsel for the petitioner has argued that the
words “…where it is possible to do so…” as occurring
under clause (b) of sub-section (4B) of the Act of 1994
has fallen for consideration before this Court as well as
before the several High Courts in India. The Courts
Patna High Court CWJC No.16975 of 2024 dt.05-05-2025
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have a consistent view that though the period
prescribed in clause (b) of sub-section (4B) of the Act
of 1994 is not an absolute period and the same cannot
be taken as a period of limitation for passing of the
order determining the liability, the Taxing Authority
must show that why it could not become possible for
him to determine the amount of service tax within a
period of one year from the date of notice. It is
submitted that in this case, the show cause notice was
issued on 12.10.2021 but the first notice of hearing was
issued after a period of two years. The counter affidavit
nowhere explains the reason behind it.
3. In view of the aforementioned submissions, this
Court directs the Respondent Authority to produce the
records. If they wish to file an additional counter
affidavit, the same may also be filed within a week.
4. List this case on 05th May, 2025 under the same
heading maintaining its position.”
8. Today, learned ASG has produced the official file. On
perusal of the official file placed before this Court, it is found that
a copy of the demand-cum-show cause notice no.
18/2021/Pr.Commr/Patna-I dated 12.10.2021 addressed to the
petitioner by the Principal Commissioner, CGST and CX, Patna-I
is on the record. There is no ordersheet showing placement of the
draft show cause notice, approval thereof and the order of the
issuing authority. The only order available on the record is the
order dated 24.06.2024 which contains the operative part of the
order dated 24.06.2024. It appears from the records that the first
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date of personal hearing was fixed on 19.10.2023. In between the
period issuing show cause notice and the date of personal hearing,
no action has been taken by the respondent. The records do not
show that either any communication was made or any date was
fixed in the matter. It is not known what prevented the respondent
authority from proceeding with the file.
9. This Court has found from the records that in the
counter affidavit filed on behalf of the respondents, there is no
whisper from their end as to why after more than two years, a
notice of personal hearing was issued on 12.10.2023.
10. In the case of M/s Kanak Automobiles (supra), the
learned co-ordinate Bench of this Court has, though, held that the
period prescribed in clause (b) of sub-section (4B) of Section 73 of
the Finance Act cannot be taken as an absolute mandate that the
proceeding should be completed within one year from the notice
but at the same time, the learned co-ordinate Bench has recorded
“.. but it requires the statutory authority to take all possible steps,
so to do and conclude the proceedings within an year. No steps
were taken in the entire one year period, which results in the
frustration of the goal of expediency as required statutorily. We
hence find that the proceedings cannot be continued.”
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11. The judgment of the learned co-ordinate Bench in
M/s Kanak Automobiles (supra) was challenged before the
Hon’ble Supreme Court in SLP (Civil) Diary No. 54313/2024
decided on 03.01.2025, however, the Hon’ble Supreme Court
refused to interfere with the judgment of the learned co-ordinate
Bench in M/s Kanak Automobiles (supra) and held that it is not
laying down a law but considering the quantum involved, the
Hon’ble Supreme Court was not inclined to interfere with the
judgment.
12. This Court has taken a view that whether it was
possible to determine the service tax within the period of one year
or not is required to be determined in the facts of the case. In the
case of M/s Power Spectrum (supra), this Court had occasion to
consider a similar plea where the Order-in-Original was passed
after five years of the issuance of ‘SCN’. This Court was
persuaded in the facts of the case and by citing two judgments of
the Hon’ble Delhi High Court in the case of L.R. Sharma & Co.
v. Union of India reported in 2024 SCC OnLine Del 9031 and
Sunder System Pvt. Ltd. v. Union of India and Others reported
in 2020 (33) G.S.T.L. 621 (Del). 14. This Court would reproduce
the relevant paragraph nos. ’16’ and ’17’ from the judgment of M/s
Power Spectrum (supra) hereunder for a ready reference:-
Patna High Court CWJC No.16975 of 2024 dt.05-05-2025
8/11“16. In the case of L.R. Sharma (supra) and in the
case of Sunder System Pvt. Ltd. v. Union of India
and Others reported in 2020 (33) G.S.T.L. 621
(Del), sub-section (4B) of Section 73 of the Finance
Act, 1994 has fallen for consideration. In Sunder
System Pvt. Ltd. (supra), the Hon’ble Delhi High
Court has quoted in paragraph ‘9’ of it’s judgment one
paragraph from National Building Construction Co.
Ltd Vs. Union of India reported in 2019 (20)
G.S.T.L. 515 (Del.). The relevant paragraph from the
said judgment is being reproduced hereunder:-
“9. A Coordinate Bench of this Court in the case
of National Building Construction Co. Ltd. Vs.
Union of India; 2019 (20) G.S.T.L. 515 (Del.)
has held as under:-
“20. … Sub-section 4B to Section 73 of the
Fin Act fixes the time or limitation period
within which the Central Excise Officer has
to adjudicate and decide the show cause
notice. The time period fixed under Clause
A or B is six months and one year
respectively. Limitation period for passing
of the adjudication order, described as
Order-in-Original, starts from the date of
notice under Sub-section 1 to Section 73 of
the Fin Act.””
17. In L.R. Sharma (supra), the Hon’ble Delhi High Court
has referred the judgment of the Hon’ble Gujarat High
Court in Siddhi Vinayak Syntex Pvt. Ltd. v. Union of
India reported in 2017 (352) E.L.T. 455 (Guj.) in respect of
Section 11A of the Central Excise Act, 1944 wherein the
Hon’ble Court has observed as under:-
27. Similarly, the High Court of Gujarat in Siddhi
Vinayak Syntex Pvt. Ltd. v. Union of India (supra),
in respect of Section 11A of Central Excise Act,
1944, had observed as under:
“When the legislature has used the
expression “where it is possible to do so”, it
means that if in the ordinary course it is
possible to determine the amount of duty
Patna High Court CWJC No.16975 of 2024 dt.05-05-2025
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be so done. The legislature has wisely not
prescribed a time limit and has specified such
time limit where it is possible to do so, for the
reason that the adjudicating authority for
several reasons may not be in a position to
decide the matter within the specified time
frame, namely, a large number of witnesses
may have to be examined, the record of the
case may be very bulky, huge workload, non-
availability of an officer, etc. which are
genuine reasons for not being able to
determine the amount of duty within the
stipulated time frame. However, when a
matter is consigned to the call book and
kept in cold storage for years together, it is
not on account of it not being possible for
the authority to decide the case, but on
grounds which are extraneous to the
proceedings. In the opinion of this court,
when the legislature in its wisdom has
prescribed a particular time limit, the
CBEC has no power or authority to extend
such time limit for years on end merely to
await a decision in another case. The
adjudicatory authority is required to
decide each case as it comes, unless
restrained by an order of a higher forum.”
(Emphasis added)””
13. Learned counsel for the petitioner has further
submitted that in a recent judgment, the another learned co-
ordinate Bench of this Court has in the case of Pawan Kumar
Upmanyu (supra) set aside the order of the respondents finding
that the delay was beyond one year for no reason explained, and
the quantum of the tax involved. The relevant paragraph of the
judgment in the case of Pawan Kumar Upmanyu (supra) is being
extracted hereunder:-
Patna High Court CWJC No.16975 of 2024 dt.05-05-2025
10/11“3. Having regard to the quantum of tax
involved in the present case and M/S Kanak
Automobiles Private Limited are concerned, in
Kanak Automobiles it is Rs. 86 Lakh whereas in
the present case it is Rs. 6,33,879/-, therefore,
we intend to dispose of in the light of Kanak
Automobile case read with Hon’ble Supreme
Court decision dated 03.01.2025.”
14. Since we have noticed from the records that there
was no movement at all of the file for two years and the matter
remained pending at the end of the taxing authority, there being no
reason shown that it was not possible to determine the liability of
the petitioner within the period of one year, we are of the
considered opinion that the present case would be covered by the
judgments of this Court as discussed hereinabove.
15. This Court, therefore, sets aside the Order-in-
Original No. 41/ST/Aayukt/2024 dated 24.06.2024 (Annexure
‘P2’) and the consequent demands raised against the petitioner.
16. While parting with this case, this Court must place
on record it’s concern for the manner in which the case was kept
pending without any movement of file for more than two years.
What went wrong on the part of the Department is required to be
looked into by the Principal Commissioner of CGST and CX
(Respondent No. 2). The Respondent No. 2 is expected to look
into the failure which has taken place in this matter, even as this
Patna High Court CWJC No.16975 of 2024 dt.05-05-2025
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Court has been coming across several matters in which similar
situation exist. What action may be taken by Respondent No. 2 is
left to his wisdom.
17. This writ application is allowed.
(Rajeev Ranjan Prasad, J)
(Ashok Kumar Pandey, J)
lekhi/-
AFR/NAFR CAV DATE Uploading Date 08.05.2025 Transmission Date
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