Judgment & Order (CAV)

1. 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/- (Rupees Seventy- Two Lakh Thirty-Three Thousand Ten) along with interest and a penalty of equivalent amount on the ground of tax evasion is not justified. Further, when the entire tax was paid before the issuance of the Show Cause Notice, no penalty can be imposed as per Section 73(3) of the Finance Act, 1994.

7. Ms. N. Hawelia, learned counsel for the petitioner, referring to the gross receipts and service tax liability for the year 2016-17, submits that the petitioner paid an amount of Rs. 73,20,352/- (Rupees Seventy-Three Lakh Twenty Thousand Three Hundred Fifty-Two) on 07.06.2017 and 16.11.2017 along with interest of Rs. 6,85,455/- (Rupees Six Lakh Eighty-Five Thousand Four Hundred Fifty-Five).

8. Ms. Hawelia, learned counsel, while referring to Section 73 of the Finance Act, 1994, which pertains to the time limit for issuance of Show Cause Notice, submits that it is absolutely clear that Show Cause Notice for any financial period ought to be issued within 30 (thirty) months from the relevant date. In the present case, the Show Cause Notice for the Financial Year 2016-17 was issued on 22.10.2021, which was admittedly beyond the period of 30 (thirty) months from the relevant date. Therefore, the same is barred by limitation. She submits that the respondent authorities have levied service tax on the petitioner for evasion of tax amounting to Rs. 72,33,010/- (Rupees Seventy-Two Lakh Thirty-Three Thousand Ten) along with interest and penalty thereof, despite the fact that the petitioner had already paid the tax amount of Rs. 73,20,352/- (Rupees Seventy-Three Lakh Twenty Thousand Three Hundred Fifty-Two) along with interest of Rs. 6,78,455/- (Rupees Six Lakh Seventy-Eight Thousand Four Hundred Fifty-Five) in the year 2017 itself for the period 2016-17. There was no pending liability of service tax against the petitioner for the said period. Since the notice was issued on 22.10.2021 for the period 2016-17, which is beyond the period of limitation, the impugned order dated 05.07.2022 is also consequently barred by limitation.

9. Ms. Hawelia, learned counsel, submits that the extended period of limitation under Section 73 of the Finance Act, 1994 is not applicable in view of the fact that the 30 (thirty) months period can be extended only in cases of fraud, collusion, wilful misstatement, suppression of fact or contravention of any of the provisions of the Act and the rules made thereunder with intent to evade payment of service tax. She submits that none of these conditions is attracted, inasmuch as there was no fraud, collusion, wilful misstatement, suppression of fact, contravention or intention to evade payment of tax, as all the taxes were already paid before the initiation of proceedings against the petitioner.

10. Ms. Hawelia, learned counsel, submits that Section 73(8) of the CGST Act, 2017 provides that once tax with interest have been paid no demand order shall be issued by the respondent authorities. In the instant case, when respondent No. 2 was aware that the entire amount calculated by it had already been paid by the petitioner in the year 2017 itself, even before the issuance of the show cause notice, it ought not to have passed the Order dated 05.07.2022 levying Tax, interest and penalty already paid even before issuance of show cause notice. The impugned Order dated 05.07.2022 levying the tax, interest and penalty is, therefore, illegal and without jurisdiction and is liable to be set aside and quashed.

11. Ms. Hawelia, learned counsel, submits that against the impugned order dated 05.07.2022, even though there is an alternative remedy of filing an appeal, since there is a violation of the fundamental rights of the petitioner, besides there being a violation of natural justice and the order being wholly without jurisdiction and barred by limitation, the authority has lost its jurisdiction with respect to the relevant period. The respondent authority had no jurisdiction and rather usurped the jurisdiction without any legal foundation in passing the impugned order dated 05.07.2022, as no demand was leviable on the petitioner. Therefore, she submits that the impugned order dated 05.07.2022 levying tax, interest, and penalty, being without jurisdiction, illegal and barred by limitation, is liable to be set aside and quashed.

12. Ms. Hawelia, learned counsel for the petitioner has relied on the following judgements:

                   (i). Indian Oil Co. Ltd vs. State of Assam & Ors., WP(C) No. 6985 of 2010 decided on 03.09.2012.

                   (ii). North East Coal Fields Vs State of Assam & Ors., WP(C) No. 5625 of 2013 decided on 30.09.2013 (Division Bench).

                   (iii). Gupta Hardware Pvt. Ltd. Vs State of Assam & Ors., WP(C) No. 6453 of 2010 decided on 04.12.2012 (Division Bench).

                   (iv). Commissioner of Wealth Tax, Gujarat vs Ellis Bridge Gymkhana, reported in (1998) 1 SCC 384.

                   (v). Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai & Ors., reported in (1998) 8 SSC 1.

                   (vi). State of Tripura vs. Manoranjan Chakraborty, reported in (2001) 10 SCC 740.

13. Mr. S. C. Keyal, learned Standing Counsel , CGST, for the respondents, while raising the maintainability of the writ petition, submits that as per Section 85 of the Finance Act, 1994, an appeal shall lie to the Commissioner of Central Excise (Appeals) which provides that any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Principal Commissioner of Central Excise or Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals) within a period of 3 (three) months from the date of receipt of the decision or order of such adjudicating authority relating to service tax, interest or penalty. Since the impugned order has been passed by the adjudicating authority, i.e., Additional Commissioner, CGST & CE, appeal lies before the Commissioner of Central Excise (Appeals) and no appeal has been preferred by the petitioner. Therefore, in view of availability of an alternative remedy, the present writ petition is not maintainable.

14. Mr. Keyal, learned Standing Counsel, on merit, submits that the order was passed on the basis of available records and the petitioner did not dispute the Service Tax liability of Rs. 72,33,010/- (Rupees Seventy-Two Lakh Thirty-Three Thousand Ten) which was confirmed and the reason for invocation of the extended period of limitation is for suppression of facts of non filing of periodical ST-3 returns. The petitioner did not provide any proof of filing the periodical ST- 3 returns for the Financial Year 2016-17. As per the data available in the backend system of the portal, no ST-3 return pertaining to the period 2016-17 is reflected.

15. Mr. Keyal, learned Standing Counsel, while referring to the provisions of the Finance Act, 1994, submits that the petitioner has to inform the officer of such payment in writing if the tax is paid and failure on the part of the petitioner to inform the department in writing led to the issuance of the Show Cause Notice. The petitioner has not satisfied the conditions for imposition of penalty under Section 78 of the Finance Act and its rationale behind imposition of penalty. He submits that the petitioner has cited the provisions of the CGST Act, 2017, but the CGST Act cannot be made applicable to the Finance Act, 1994, as they are two different statutes. The Show Cause Notice was issued on the basis of data shared by the Income Tax Department and ample opportunity was provided to the petitioner by issuing the Show Cause Notice and the impugned order was passed after taking into consideration all the submissions made by the petitioner and the available records. He submits that as per the impugned order, interest was confirmed but it was already paid by the petitioner and therefore the amount of interest was appropriated and as such the petitioner did not require paying any more amount as interest and the issue of levy of interest has been settled. Therefore, the writ petition is not maintainable and liable to be dismissed not only on the ground of availability of alternative remedy but also on merit.

16. Mr. S. C. Keyal, learned Standing Counsel, CGST has relied upon the decisions in Rikhab Chand Jain vs. Union of India, passed in Civil Appeal No. 6719/2012, decided on 12.11.2025 and GNRC Limited vs. Union of India and Ors., reported in (2024) 4 GLT 834, to submit that if an alternative remedy is available to a party under the Statute, the writ jurisdiction should not normally be exercised on a petition under Article 226, for, that would allow the machinery set up by the concerned statute to be bye-passed.

17. I have considered the submissions of the learned counsels for the parties and perused the materials available on record.

18. The challenge to the impugned Order-in-Original, dated 05.07.2022, passed by the Additional Commissioner, CGST & CE, Guwahati and the order Demand cum-Show Cause Notice dated 22.10.2021, hinges on the provisions of the Finance Act, 1994 that pertains to the period of limitation and extended period of limitation for initiation of proceedings for recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded.

19. The maintainability of the writ petition having been raised by the learned Standing Counsel for the respondents to the effect that the provisions of the Finance Act, 1994 provides for an alternative remedy of appeal before the appropriate authority as it provides that any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Principal Commissioner of Central Excise or Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals), it would be appropriate to first consider the same.

20. Section 85 of the Finance act, 1994 provides for an appeal against any decision or order passed by an adjudicating authority subordinate to the Principal Commissioner of Central Excise or Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals), which is extracted herein under:-

                   “85. Appeals to the Commissioner of Central Excise (Appeals):

                   (1) Any person aggrieved by any decision or order passed by an adjudicating authority subordinate to the Principal Commissioner of Central Excise or Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals).

                   (2) Every appeal shall be in the prescribed form and shall be verified in the prescribed manner.

                   (3) An appeal shall be presented within three months from the date of receipt of the decision or order of such adjudicating authority, relating to service tax, interest or penalty under this Chapter, made before the date on which the Finance Bill, 2012, receives the assent of the President:

                   Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months.

                   (3A) An appeal shall be presented within two months from the date of receipt of the decision or order of such adjudicating authority, made on and after the Finance Bill, 2012 receives the assent of the President, relating to service tax, interest or penalty under this Chapter :

                   Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of two months, allow it to be presented within a further period of one month.

                   (4) The Commissioner of Central Excise (Appeals) shall hear and determine the appeal and, subject to the provisions of this Chapter, pass such orders as he thinks fit and such orders may include an order enhancing the service tax, interest or penalty :

                   Provided that an order enhancing the service tax, interest or penalty shall not be made unless the person affected thereby has been given a reasonable opportunity of showing cause against such enhancement.

                   (5) Subject to the provisions of this Chapter, in hearing the appeals and making orders under this section, the Commissioner of Central Excise (Appeals) shall exercise the same powers and follow the same procedure as he exercises and follows in hearing the appeals and making orders under the Central Excise Act, 1944 (1 of 1944).”

21. Bare reading of the above provision shows, inter alia, that if any person is aggrieved by any decision or order passed by an adjudicating authority subordinate to the Principal Commissioner of Central Excise or Commissioner of Central Excise may appeal to the Commissioner of Central Excise (Appeals), within three months from the date of receipt of the decision or order of such adjudicating authority, relating to service tax, interest or penalty, provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within a period of three months, allow it to be presented within a further period of three months. Thus, an alternative efficacious remedy is provided to the aggrieved person against any decision or order passed by the adjudicating authority.

22. In the present case, the case of the petitioner is 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 has been issued purportedly invoking the extended period of limitation of five years, which can be invoked only when there is fraud, collusion, willful misstatement, suppression of fact or contravention of any provisions of the Act with intent to evade payment of tax, which is contrary to the provisions of law. 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 consequently, the impugned Order-in-Original dated 05.07.2022 is also barred and is illegal. On consideration, I find that issue raised by the petitioner would be very well within the jurisdiction of the appellate authority. Thus, the subject matter of the case and Order-in-Original, dated 05.07.2022 passed by the Additional Commissioner, CGST & CE, imposing service tax amounting to Rs. 72,33,010.00/- (Rupees Seventy-Two Lakh Thirty-Three Thousand and Ten) for the Financial Year 2016- 17, with interest and also penalty, 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) would be within the jurisdiction of Appellate authority under the Statute.

23. In the case of Whirlpool Corporation (supra), the Hon’ble Supreme Court has held that under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has the discretion to entertain or not to entertain a Writ Petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the Writ Petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. The law as to the jurisdiction of the High Court in entertaining a Writ Petition under Article 226 of the Constitution, in spite of the alternative statutory remedy, is not affected, especially in a case where the authority against whom the Writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. In Manoranjan Chakraborty (supra), the Hon’ble Supreme Court has held that if gross injustice is done and it can be shown that for good reason the Court should interfere, then notwithstanding the alternative remedy which may be available, a Writ Court can in an appropriate case exercise its jurisdiction to do substantive justice. Normally, of course the provisions of the Act would have to be complied with, but the availability of the writ jurisdiction should dispel any doubt which a citizen has against a highhanded or palpable illegal order which may be passed by the assessing authority.

24. In the present case, except for bald submissions of violation of fundamental rights and principle of natural justice or without jurisdiction, the petitioner has not filed the present petition for the enforcement of any of the fundamental rights or a violation of the principle of natural justice or the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged, but in actuality, questioning the proceedings of adjudicating authority being time barred, which, in my view, would be a subject matter to be decided by the appellate authority which would very well be within the jurisdiction of the appellate authority for which an alternative efficacious remedy is provided under the statute.

25. As the impugned Order-in-Original dated 05.07.2022 has been passed by the adjudicating authority, i.e., the Additional Commissioner, CGST & CE, Guwahati, the appellant ought to have filed an appeal against the order or decision of the adjudicating authority directing appropriation of the amount of service tax paid by the petitioner and the imposition of interest and penalty. Thus, the petitioner had an alternative and efficacious remedy under the statute and as such, the writ petition would not be maintainable.

26. Coming to the merit of the matter, the petitioner was issued a Demandcum- Show Cause Notice on 22.10.2021, demanding recovery of 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. Consequently, vide an impugned Orderin- Original dated 05.07.2022, the adjudicating authority, i.e. the Additional Commissioner, CGST & CE, has affirmed the demand, whereby, demand of Service Tax with interest and penalty has been imposed and 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).

27. A reading of the provisions of Section 73 of the Finance Act, 1994, shows that the recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded requires the assessee to show cause why he should not be directed to pay the said amount provided where any service tax has not been levied or paid by reason of fraud, collusion, wilful misstatement, suppression of facts or contravention of any of the provisions with an intent to evade payment of service tax by the person chargeable with the service tax, shall be within a limitation of five years. In other words, if the recovery of service tax is not levied or paid or short-levied or short-paid or erroneously refunded for the reasons of fraud, collusion, wilful misstatement, suppression of facts or contravention of any of the provisions with an intent to evade payment of service tax, the limitation period shall be five years.

28. Section 78 of the Finance Act, 1994, provides for the penalty on failure to pay tax for reasons of fraud, collusion, wilful misstatement, suppression of facts or contravention of any of the provisions with the intent to evade payment of service tax.

29. Having observed and viewed above, in view of the provision of Section 85 of the Finance Act, 1994, the appeal would lie from any decision or order passed by an adjudicating authority and has to be presented within three months from the date of receipt of the decision or order of such adjudicating authority and the appellate authority may allow the appeal to be presented within a further period of three months if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the limitation period of three months, this Court refrains from considering the matter on merit as the same would be subject matter to be considered by the Appellate Authority and to avoid any possibility of prejudice to the parties.

30. The petitioner admittedly had paid the service tax for the Financial Year 2016-17 before the issuance of the notice. The demand appears to have been made by extending the period of limitation of five years in terms of the proviso to Section 73 of the Finance Act, 1994, on the ground of suppression of facts, as the petitioner has failed to provide any proof of filing the periodical ST-3 returns for the Financial Year 2016-17. However, having concluded that the petitioner has an alternative efficacious remedy under the provisions of Section 85 of the Finance Act, 1994, this Court refrains from deciding as to whether such non-providing of the proof of filing of ST-3 returns for the Financial Year 2016-17 would constitute suppression of facts for invocation of the extended period of five years and for demanding the service tax, interest and penalty. For the reason that the petitioner has an alternative efficacious remedy, therefore, the writ petition would not be maintainable.

31. The other case laws relied on by the learned counsel for the petitioner relate to cases where there were clear violation of the provisions of a statute, including the limitation provided under the statute. Thus, I am of the considered view, that no detail discussion is required, for the reason of the view taken on maintainability of the writ petition and also considering the cases having been decided on their own contextual facts and the law applicable, where it was found that the actions of the authorities were time-barred under provisions of the relevant statute.

32. In view of what has been discussed hereinabove, I am of the considered view that the writ petition is not maintainable in view of the fact that an appeal against the decision or order of the adjudicating authority lies before the appellate authority under Section 85 of the Finance Act, 1994, which the petitioner has failed to avail. It is held accordingly. However, the petitioner may avail the appropriate remedy that may be permissible under the law. In the event an appeal is filed by the petitioner, the time consumed in the present proceedings may be excluded for the purpose of limitation.

33. Writ petition stands disposed of, accordingly. No order as to cost(s).