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Patna High Court
M/S Power Spectrum vs The Union Of India on 17 April, 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.16772 of 2024
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M/s Power Spectrum Sarbidipur, Kahalgaon, Bhagalpur, Bihar- 813203
Proprietorship firm having its office at Sarbidipur, Kahalgaon, Bhagalpur,
Bihar-813203 through its Proprietor Abha Singh, aged about 61 years
(Female), Wife of Kamal Kishore @ Kamal Kishore Singh, Resident of
Village- Mahant Baba Mandir, Sarabadipur, P.S.- Kahal Gaon, District-
Bhagalpur, Bihar - 813203.
... ... Petitioner
Versus
1. The Union of India through the Chief Commissioner, of Central Goods and
Services Tax (GST) and Central Excise (CX), Ranchi Zone, Patna.
2. The Assistant Commissioner, Central Goods and Services Tax (CGST) and
Central Excise (CX), Division - Bhagalpur.
... ... Respondents
======================================================
Appearance :
For the Petitioner/s : Mr. Aditya Prakash, Advocate
Mr. Rudra Pratap Singh, Advocate
Mr. Sudarshan Kumar, Advocate
Mr. Akshansh Ankit, Advocate
For the Respondent/s : 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 : 17-04-2025
Heard Mr. Aditya Prakash, learned counsel for the
petitioner and Mr. Anshuman Singh, learned Senior Standing
Counsel for the CGST and CX.
2. The petitioner in the present writ application is
seeking the following reliefs:-
"a) To quash the impugned order-in-original
bearing No.42/ST/AC/BGP/2024-25 dated
09.07.2024
passed by the Respondent No. 2
whereby and whereunder tax liabilities,
interest and penalties for the Financial year
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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2012-13 to 2013-14 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 the
recovery of any amount of service tax, interest
and penalty, in terms of the impugned order-
in-original bearing No.42/ST/AC/BGP/2024-
25 dated 09.07.2024 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. It is the case of the petitioner that being a
proprietorship firm, it is registered under the Service Tax Laws as
a maintenance or repair service provider. A demand-cum-show
cause notice (in short ‘SCN’) as contained in Annexure-P/1 to the
writ application was issued on 05.09.2018 alleging that the
petitioner had received certain amount from its customers but
willfully escaped the proper assessment of taxable value with
intent to evade the payment of leviable Service Tax including
Education Cess and Secondary & Higher Education Cess being
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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Rs.14,10,900/- for the years from 2012-13,2013-14 and the
amount to be calculated on availability of the requisite data for the
year 2014-15, 2015-16 and 2016-17. In the ‘SCN’ (Annexure-P/1),
it was alleged that the petitioner had received Rs.1,14,15,052/-
under Section 194C of the Income Tax Act, 1961 (hereinafter
referred to as the ‘Act of 1961’) during the finanical year 2012-13
and 2013-14 but the payment of service tax in that particular
financial year is not in consonance with the said payment.
4. The petitioner was served with the ‘SCN’ and was
called upon to submit his defence reply. It, however, appears that
the petitioner did not submit any defence reply on the ‘SCN’.
Thereafter, as it appears from the records, date of personal hearing
was fixed on 21.11.2023, 07.03.2024 and 15.05.2024 and the same
was communicated to the petitioner but the petitioner had neither
himself nor through his authorized representative participated in
the personal hearing.
5. In the circumstances stated above, the order-in-
original (Annexure-P/2) has been passed on 09.07.2024 by
Respondent No. 2. The operative part of the order-in-original
which is impugned in the present writ application reads as under:-
“1. I determine and confirm demand of Service
Tax including Cess amounting to
Rs.14,10,900/- (Rupees Fourteen lakhs ten
Thousands Nine Hundreds only) (Inclusive of
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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for the year 2012-13 & 2013-14 upon M/s
Power Spectrum (Prop-Abhay Singh),
Sarbidipur, Kahalgaon, Bhagalpur, Bihar
813203 having Service Tax Registration No.
CITPS0480DSD002 under Section 73(2) of the
Finance Act, 1994 read with section 174 of the
CGST Act, 2017.”
Submissions on behalf of the Petitioner
6. Before this Court, learned counsel for the petitioner
has submitted that the ‘SCN’ as well as the Order-in-Original were
issued beyond the period of limitation prescribed by the statute.
The Adjudicating Officer (Respondent No. 2) has issued the
impugned order (Annexure-P/2) after a substantive delay of
approximately five years and ten months which is hit by Section
73 (4B) of the Finance Act, 1994 (hereinafter referred to as the
‘Act of 1994’). It is submitted that according to the said provision,
the Adjudicating Officer was obliged to determine the amount of
service tax within a period of one year in the present case if at all
he was justified in invoking the extended period of limitation of
five years under proviso to sub-section (1) of Section 73 of the Act
of 1994.
7. It is submitted that sub-section (4B) of Section 73 of
the Act of 1994 has fallen for consideration before this Court in
M/s Kanak Automobiles Private Limited vs. the Union of India
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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and Others in CWJC No. 18398 of 2023. In the said case, a
learned co-ordinate Bench of this Court was pleased to set aside
the order passed by the Adjudicating Officer on the ground of huge
delay in passing of the order even as there was no explanation to
satisfy the Court with the reasons for not passing the order within
the period of limitation.
8. Learned counsel has further relied upon a Division
Bench judgment 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. In the said case, the Hon’ble Division Bench
has taken a view that Section 73(4B) was framed and introduced in
the Finance Act to ensure effective administration of taxation and
any inordinate delay by the Revenue itself in prosecuting its own
cases cannot be construed in their favour by stretching the period
of limitation to nine years especially when the provision requires
the proceedings to be concluded within six months/one year. The
Hon’ble Delhi High Court, therefore, quashed and set aside the
impugned notice issued by Respondent No. 5 in the said case.
9. Learned counsel submits that recently, in the case of
this very petitioner in respect of the financial year 2014-15 to
2017-18, a learned co-ordinate Bench of this Court has passed
order dated 15.02.2025 in CWJC No. 17171 of 2024. The learned
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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co-ordinate Bench has held that the case of the present petitioner
would be squarely covered by M/S Kanak Automobiles Private
Limited case and having said so, the impugned order in the said
writ application has been quashed. The present case would be
standing on identical footing as it is between the same parties and
the same issue is involved hereunder.
Submissions on behalf of the Respondents
10. The writ application has been contested by learned
Senior Standing Counsel for the CGST and CX. Emphasis has
been given in course of argument on the submission that despite
opportunity given to the petitioner, the petitioner did not file any
defence reply and failed to avail the opportunity of hearing.
11. Learned Senior Standing Counsel for the
Department has at one stage gone on to submit that the delay
took place during the Corona period, however, very soon he
realized that in this case, the ‘SCN’ was issued on 05.09.2018
and the period prescribed for determination even if assumed to
be one year in terms of clause (b) of sub-section (4B) of Section
73 of the Act of 1994, it came to an end on 05.09.2019 which
was much before the beginning of the Corona period.
12. This Court called upon learned Senior Standing
Counsel for the CGST and CX to show from the counter
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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affidavit as to whether they have shown, in terms of the statutory
provision that it was not possible to pass the order determining
the liability of the petitioner within a period of one year. In the
counter affidavit, however, no whisper has been made in this
regard and no attempt has been taken to say as to why it was not
possible to pass the order within one year.
Consideration
13. Having heard learned counsel for the petitioner
and learned Senior Standing Counsel for the CGST and CX as
also taking note of the relevant provisions of Section 73 of the
Act of 1994, this Court finds that the Act of 1994 clearly
stipulates the intention of the legislature in providing a time
frame in the matter of determination of the amount of service tax
due under sub-section (2) of Section 73 of the Act of 1994.
Section 73(1) with it’s proviso and Section 73(4B) are being
reproduced hereunder for a ready reference:-
“SECTION 73. Recovery of service tax
not levied or paid or short-levied or short-
paid or erroneously refunded. —
(1) Where any service tax has not been levied
or paid or has been short-levied or short-paid
or erroneously refunded, the Central Excise
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
8/12Officer may, within 1[2[thirty months]] from
the relevant date, serve notice on the person
chargeable with the service tax which has not
been levied or paid or which has been short-
levied or short-paid or the person to whom
such tax refund has erroneously been made,
requiring him to show cause why he should
not pay the amount specified in the notice :
PROVIDED that where any service tax has not
been levied or paid or has been short-levied or
short-paid or erroneously refunded by reason
of —
(a) fraud; or
(b) collusion; or
(c) wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this
Chapter or of the rules made thereunder with intent
to evade payment of service tax,
by the person chargeable with the service tax or his
agent, the provisions of this sub-section shall have
effect, as if, for the words 1[2[thirty months]], the
words “five years” had been substituted.
1
(4B) 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 2[falling
under] sub-section (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 (4A);].”
1. Substituted for “one year” by Finance Act, 2012 (23 of 2012), dt.28-5-2012.
2. Substituted for “eighteen months” by Finance Act, 2016 (28 of 2016), dt.14-5-2016.
1. Inserted by Finance (No. 2) Act, 2014 (25 of 2014), dt. 6-8-2014, dt. 6-8-2014
2. Substituted for “whose limitation is specified as eighteen months in” by Finance Act, 2016 (28 of
2016), dt. 14-5-2016
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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14. In the case of the petitioner, ‘SCN’ has been issued
under proviso to Section 73(1) in the light of saving provision of
Section 174(2) of the Central Goods and Services Tax/Bihar
Goods and Services Tax Act, 2017.
15. This Court is alive to the submission of learned
Senior Standing Counsel that the period of limitation of one year
as prescribed under clause (b) above is not absolute. In Kanak
Automobiles Private Limited case, the learned co-ordinate Bench
has agreed to the said submission to the extent that the period of
limitation is not absolute period stated in clause (b) of sub-section
(4B) of Section 73 of the Act of 1994, but then a question arises as
to whether a duty has been cast upon the Department to show that
it was not possible to pass an order determining the amount within
one year from the date of notice in respect of cases falling under
the proviso to sub-section (1) or the proviso to sub-section (4A) of
the Act of 1994. This Court has taken a view that in an appropriate
case, this would be a matter of fact which would be required to be
looked into in the context of a particular case.
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
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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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:-
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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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
within the specified time frame, it should
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)”
18. There is a consistent view on this point that the time
frame of six months/one year as mentioned in Section 73(4B)
cannot be extended for an inordinate period. In this case, it is over
Patna High Court CWJC No.16772 of 2024 dt.17-04-2025
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five years and the Revenue has failed to explain as to how such a
delay has taken place.
19. On facts, this Court finds no ambiguity in the present
case. There is a huge delay of five and half years from the date of
‘SCN’ in passing of the Order-in-Original (Annexure-P/2). No
explanation at all is present in the counter affidavit. Coupled with
this fact, the views expressed by the learned co-ordinate Bench of
this Court in the case of this petitioner in CWJC No. 17171 of
2024 persuades this Court to take an identical view.
20. In result, the Order-in-Original as contained in
Annexure-P/2 is hereby quashed.
21. This Writ Application is allowed.
(Rajeev Ranjan Prasad, J)
(Ashok Kumar Pandey, J)
lekhi/-
AFR/NAFR AFR CAV DATE Uploading Date 23.04.2025 Transmission Date
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