Gujarat High Court
M/S Ravray Construction vs The Add. Commissioner, Cgst And Ce, ... on 5 May, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/18762/2023 ORDER DATED: 05/05/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18762 of 2023
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M/S RAVRAY CONSTRUCTION & ANR.
Versus
THE ADD. COMMISSIONER, CGST AND CE, VADODARA 1 & ANR.
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Appearance:
MR ABHAY Y DESAI(12861) for the Petitioner(s) No. 1,2
MR D K TRIVEDI(5283) for the Petitioner(s) No. 1,2
PARAM V SHAH(9473) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE P. M. RAVAL
Date : 05/05/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Abhay Desai for the petitioners and learned advocate Mr.Param Shah for the respondents.
2. Rule returnable forthwith. Learned advocate Mr.Param Shah waives service of notice of rule on behalf of the respondents.
3. With the consent of learned advocates for the respective parties, the matter is taken up for hearing as the issue involved in the present petition is in narrow compass.
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3. This petition is filed on the ground that the respondents have issued the show cause notice and passed the order-in-original without granting pre-consultation notice to the petitioners.
4. Brief facts of the case are as under.
4.1 The petitioner No.1 is engaged in the business of construction, renovation or alteration of public roads.
4.2 During the financial year 2016-2017, petitioner No.1 provided services of construction, renovation and alteration of public roads to the main contractor i.e. M/s JRA Infrastructure Limited and M/s PM Construction and total value of service provided amounts to Rs.4,46,66,920/-.
4.3 The main contractor deducted TDS on the aforesaid contract value under section 194C of the Income Tax Act (For short "the Act").
4.4 It is the case of the petitioners that Rule 13(a) of the Notification No.25/2012-ST dated 20.6.2012 issued in exercise of powers conferred under section 93(1) of the Finance Act, 1994 granted unconditional exemption to the activities of construction, renovation or alteration of public Page 2 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined roads irrespective of the fact whether it is provided as sub- contractor to the main contractor or directly to the Government.
4.5 It is the case of the petitioners that in view of unconditional exemption granted to the construction, renovation or alteration of public roads, the petitioners were not legally required to obtain the registration under section 69 of the Finance Act, 1994 for payment of service tax.
4.6 The respondent No.1 issued show cause notice dated 23.10.2021 invoking extended period of limitation under section 73(1) of the Finance Act, 1994 based on the difference in value reported in the income tax return / Form 26AS under the Act and ST-3 return filed by the petitioners seeking to recover the service tax amounting to Rs.67,00,038/- along with interest and penalty.
4.7 In the show cause notice, it was stated that pre- consultation notice is not mandatory as per paragraph 5 of the circular dated 10.3.2017 but the same was granted but of no avail. It is the case of the petitioners that no such pre- consultation notice was issued by respondent No.1 or by the Principal Commissioner or Commissioner before issuance of the impugned show cause notice dated 23.10.2021.
Page 3 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined 4.8 The petitioners thereafter submitted reply to the show cause notice and the impugned order-in-original dated 7.2.2022 was passed by respondent No.1 confirming the demand against the petitioners on the basis of the alleged liability of payment of service tax by the petitioners and on a vague ground that the petitioners have not produced the copy of the agreement between the main contractor and the Government ignoring exemption as per Notification No.25/2012-ST dated 20.6.2012.
4.9 The petitioners could not file an appeal before the respondent No.2 in time due to the dispute between the petitioners and their consultant and therefore, the appeal filed by the petitioners was rejected by an order dated 21.2.2023 on the ground of limitation.
5. Learned advocate Mr.Abhay Desai for the petitioners submitted that in the similar facts of the case, this Court passed an order dated 9.1.2025 in the case of M/s Jay Mahakali Industrial Service Vs Union of India and others in Special Civil Application No.18864 of 2021 and allied matters and quashed and set aside the order-in- original in the similar facts.
6. It was further submitted that as per paragraph 5 of the circular dated 10.3.2017 issued by the Central Board Page 4 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined of Excise and Customs relied upon by the respondents is on the contrary in favour of the petitioners as the impugned show cause notice is neither preventive nor based on any offence under the Finance Act, 1994 and admittedly, the proposed demand of duty / tax exceeds Rs.50 lakhs. It was therefore submitted that pre-consultation notice was mandatory to be issued by the respondents. Reliance was placed on the decision in the case of Dharamshil Agencies Vs Union of India, reported in 2021 (55) G.S.T.L. 516 (Guj.) wherein in similar facts, the show cause notice issued without pre-consultation was quashed and set aside.
7. It was therefore submitted that as per circular No.122/41/2019-GST dated 5.11.2019 along with circular No.128/47/2019-GST dated 23.12.2019 which mandates adjudication of any of the communication sent to the tax payer, the communication issued without a valid DIN is said to be invalid.
8. It was submitted that in the impugned show cause notice issued by the respondent No.2, there is no valid DIN and online search on the portal reveals that the same has been generated without indicating the Party Name, Party Address and also the document identifier and proper verification and therefore, it was not possible to find the party name and party address and also the petitioner Page 5 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined could not retrive any document identifier so as to find the DIN for impugned show cause notice.
9. On the other-hand, learned advocate Mr.Param Shah for the respondents submitted that the petitioners have never raised such contention. It was also pointed out that the petitioners have filed an appeal belatedly and therefore, the appellate authority could not entertain the appeal as it was filed beyond the period of limitation.
10. In support of his submissions, learned advocate Mr.Param Shah relied upon the following averments made in the affidavit-in-reply filed on behalf of respondent Nos.1 and 2.
"(b) It is respectfully submitted that the case law in the (b) case of Dharamshil Agencies v. Union of India 2021(55) GSTL 516(Guj), as relied upon by the Petitioner, is not applicable in this case. In the said case, the Adjudicating Authority had issued a pre-
consultation letter to the assessee one day before issuance of the show cause notice and in the said case, the assessee therein had requested to provide a reasonable opportunity for effective pre-show cause notice consultation. Whereby in the present case, the Petitioner has never raised any issue in respect of pre- consultation to show casue notice neither in their written submissions nor at the time of personal hearing held on 17.01.2022. Even otherwise, the case of the petitioner falls under the exemption to the board circular dated 10.03.2017 and therefore, also case of Page 6 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined Dharamshil Agencies (supra) is not applicable to the case of the petitioner.
(c) The contents of para 5(B) of the petition are denied and disputed in toto. It is respectfully submitted that both the SCN as well as OIO had been issued by the issuance of a valid DIN by the authority concerned and details of the same are as under:
i. For Show Cause Notice dated 23.10.2021 :
The DIN 20211065TA0000222F7E was generated on 23.10.2021 at 11.13.44 hrs under the category of 'Notices'.
II. For Order In Original dated 07.02.2022:
The DIN 20220265TA0000999DA9 was generated on 07.02.2022 at 16.12.15 hrs under the category of 'Orders'.
Annexed hereto and marked as Annexure-R4 (colly)' are the copies of proof showing DIN of SCN and OIO.
(d) The contents of para 5(C) of the petition are denied and disputed in toto. It is respectfully submitted that the show cause notice dated 23.10.2021 was issued after a case was booked by the on Department GST basis of information/intelligence received from third party data source regarding non-
payment of service tax by the Petitioner and after inquiry, it was noticed that the noticee had neither obtained Service Tax Registration nor filed ST3 returns even though Value of Income as per Income Tax Return was Rs.4,46,66,920/- in FY 2016-17 and the same was also reflected in their 26AS. It was clearly shown that petitioner had suppressed the taxable value just to evade payment of Service tax.
Page 7 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined Accordingly, SCN was issued to recover the service tax involved in this case for the period of 2016-17 by invoking the extended period of five years under the proviso to Section 73(1) of the Finance Act, 1994.
(e) The contention raised in para 5(D) of the petition are denied and disputed in toto. It is respectfully submitted that any service except exempted service provided in taxable territory for consideration was chargeable to service tax under Section 66B of the Finance Act, 1994 till 30.06.2017. It is an undisputed fact that all types of transactions related to receipt/income during the FY are to be computed in the Income tax Return/Form 26AS as per the provisions of the Income Tax Act, 1961. Further, if a person is liable for paying service tax on the taxable value of services provided but has either not been paid or not accurately reported their liability in the ST3 return, the authorities can assess or determine the amount based on any evidence gathered by Central Excise Officers. This process is known as "Best Judgment Assessment," as outlined in section 72 of the Finance Act, 1994. Hence, in the present case, the petitioner had provided service to M/s. JR A Infrastructure Pvt. Ltd., Ahmedabad and M/s. P.M.Construction, Modasa during the FY 2016-17 for consideration of Rs. Rs.4,46,66,920/-and the same had been ascertained from the third party data source which includes the Income tax Return/Form 26AS of the petitioner. The said facts have been accepted by the petitioner in their reply dated 16.11.2021 to the show cause notice, wherein it was submitted that during the period from 1.4.2016 to 31.03.2017, they had undertaken only activity of Construction of Road from Balasinor to Jetholi and that they had received an amount of Rs.4,46,66,920/- In the F.Y. 2016-17. As the income received by the petitioner was for providing of services, Service Tax on the same was proposed to be recovered from them under relevant provisions of Page 8 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined the Finance Act, 1994. Therefore, the contention of the petitioner is not tenable.
(f) The contents of para 5(E) of the petition are denied and disputed in toto. It is respectfully submitted that as per the say of the petitioner, during the disputed period, the petitioner was engaged in the construction, renovation or alteration of public roads and the said activity is exempted from the levy of service tax by virtue of Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. Hence, at this juncture, the relevant portion of the Mega Exemption notification dated 20.06.2012 is reproduced herein below:
"13- Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alternation of
(a) road, bridge, tunnel, or terminal for road transportation for use by the general public
(b) ......
(c) ......."
Further, "general public" defined as 2(q) of the said Notification means the body of people at large sufficiently defined by some common quality of public or impersonal nature.
(g) From the above, it is clear that the construction of road, only meant for the general public, was exempted from Service Tax. Therefore, to decide the applicability of exemption from Service tax, It is required to be verified that the petitioner had provided service for construction of road which was constructed for the use of general public. The said inquiry can only Page 9 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined be done after verification of various documentary evidences such as work order issued from the Government to the main contractor, copy of the agreement executed between parties and government authority, RA Bills etc. However, such documentary evidences are not produced by the petitioner before the adjudication authority and in absence of such documentary evidence, it would not have been possible to decide the case whether the exemption under Sr. 13(a) of Notification No. 25/2012-Service Tax dated 20.06.2012 was available to the petitioner or not. Further, it is a settled principle that the person who claims the exemption, the burden of proof is upon claimant. Therefore, the adjudicating authority had rightly decided the case as mentioned in OIO."
11. Learned advocate Mr.Param Shah therefore, summarized the contentions as referred to in paragraph (h) at page 177 as under.
"(h) The contents of para 5(F) of the petition are denied and disputed in toto. It is respectfully submitted that as mentioned in the foregoing paras the adjudication authority:
(a) has not conduct pre-Show Cause Notice (SCN) consultation, as it is not required for offenses related to the SCN.
(b) Issued the SCN and Order-in-Original (OIO) with a valid Document Identification Number (DIN).
(c) has Correctly issued the SCN based on income reported in documents such as Income Tax Returns (ITR) or Form 26AS, as this falls under the purview of best Page 10 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined judgment assessment as per Section 72 of the Finance Act, 1994.
(d) has rightly invoked the extended period of limitation in the SCN, as the petitioner suppressed the value of taxable services by not filing ST3 returns.
(e) has found that the petitioner failed to provide relevant documents concerning the claimed exemption, noting that the burden of proof lies with the claimant in cases of exemption.
Further, The judgement in case of 'Gujarat in case of Panoli Intermediate (India) Ltd Vs UOI [2015 (326) ELT 532(Guj)]' as relied upon by the petitioner is not applicable to the fact of the present case as the facts of the said case are different and for the reasons mentioned herein above."
12. It was therefore submitted that no interference is required to be made in the impugned show cause notice as well as the order-in-original passed by respondent No.1 while exercising the extra-ordinary jurisdiction under Article 227 of the Constitution of India.
13. Having heard learned advocates for the respective parties, issue raised in the present petition is no more res integra in view of the order passed by this Court in the case of M/s Jay Mahakali Industrial Service (supra) wherein it was observed as under, :
Page 11 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined "12. So far as the other petitions are concerned, on perusal of the show cause notices, none of the petitioners would fall within the scope of para 5 of the Circular No.1079/03/2021-CX dated 11 th November, 2021. The Circular 1079 of 2021 reads as under :-
"Subject: Clarification in respect of the Master Circular No. 1053/02/2017- CX dated 10.03.2017-reg.
As a trade-facilitation measure, a concept of pre-show cause notice consultation in Central Excise and Service Tax was introduced vide Board's instruction dated 21.12.2015, issued vide F. No. 1080/09/DLA/MIS/15. Vide the said Instruction, it was clarified that "Pre-show couse notice consultation with the Principal Commissioner and Commissioner is being made mandatory prior to issue of show cause notice (SCN) in the case of demand of duty above Rs.50 Lakhs (except for preventive/offence related SCNS)"
2 Para 5.0 of the Master Circular No. 1053/02/2017-CX dated 10.03.2017 merely reiterates the principle of pre-show cause notice consultation enunciated vide aforementioned Instruction dated 21.12.2015. Further, vide Circular No. 1076/02/2020-CX dated 19.11.2020, it was clarified that "Pre-show cause notice consultation with assessee, prior to issuance of SCN in case of demand of duty is above Rs.50 Lakhs (except for preventive/offence related SCNs) is mandatory & shall be done by the Show Page 12 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined cause notice issuing Authority",
3. Subsequent to this, a reference has been received from the DGGI to clarify whether DGGI formations fall under the exception/exclusion category of the CBIC's instruction supra dated 21.12.2015 or otherwise.
4. In this regard, it is hereby clarified that exclusion from pre-show cause notice consultation is case-specific and not formation specific
5. It is, therefore, retterated that pre-whow cause notice consultation shall not be mandatory for thuse cases booked under the Central Excise Act, 1944 or Chapter V of the Fosance Act, 1994 for recovery of Buties or taves not levind or paid or short levted or short pald 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 provision of the Central Excise Act, 1944 or Chapter V of the Finance Act, 1994 or the rules made there under with the intent to evade payment of duties or taxes.
6 Trade, industry and field formations may be suitably informed"
12.1 The aforesaid Circular came up for consideration before this Court in case of L AND T Hydrocarbon Engineering Ltd. Vs.Union of India reported in 2022 (4) TMI 70. This Court Page 13 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined while considering the facts of the said case held as under:-
ABSENCE OF MANDATORY PRE-SHOW CAUSE NOTICE CONSULTATION IS FATAL TO THE PRESENT SHOW CAUSE NOTICE.
83 In view of the Circular No. 1053/2/2017-CX., dated 10th March 2017, it is clear that the Board had made the pre-
show cause notice consultation mandatory for the Principal Commissioner / Commissioner prior to the issuance of show cause notice in cases involving the demands of duty above Rs.50 lakh. Such consultation is required to be done by the adjudicating authority with the assessee as an important step towards reducing the necessity of issuing show cause notice.
84 The contention of the learned A.S.G. that since the present case originated from the intelligence gathered from the DGGI such pre-consulting is not required. The said contention runs contrary to the recent clarification issued by the Board. For the very objection now being raised, a clarification was sought by the DGGI office from the Board as to whether the DGGI formations will fall under the exclusion category of the master circular dated 10th March 2017 read with the circular dated 19th November 2020. The Board vide the Circular No. F.No.116/13/2020-CX-3 Dated 11.11.2021 clarified that the exclusion from the pre-show cause notice consultation is case specific and not formation specific. Therefore, merely because in the present case, the case originated on account of Page 14 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined investigation of the DGGI will not be a sufficient ground for not following the mandatory procedure prescribed by the Board which is binding on the department. Therefore, it was mandatory for the adjudicating authority in the present case to conduct the pre-show cause notice consultation and in absence of the same the present proceedings could be said to be bad in law and deserves to be quashed and set aside.
85 (i) Amadeus India Pvt Ltd Vs. Principal Commissioner - 2019-TIOL-1027-HC-DEL- ST
12. It will be immediately noticed that there are two exceptions carved out for the Respondent to engage in a pre-SCN consultation. The first is that the SCN is preventive and the second is that it is related to an offence in terms of the Finance Act, 1994.
13. In the present case, as is evident from the impugned SCN, the alleged non-payment of service tax pertains to period between 2012- 2013 to 2016- 2017. Consequently, there is no 'preventive' aspect involved in the SCN and this is not even disputed by learned counsel for the Respondent. However, what is urged before the Court by the Respondent is that since the SCN was preceded by a search that was conducted in the business premises of the Petitioner, and the Petitioner also rendered itself liable for penal action 'for suppression of facts Page 15 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined and contravention of various statutory provisions with intent to evade payment of due service tax' and other incidental levies, the SCN partakes of the character of an 'offence related' SCN and therefore falls within the exceptions carved out under para 5.0 of the Master Circular.
14. The above submission runs contrary to the very object of which is to narrow down the scope of the dispute by engaging the Assessee on specific areas where the Respondent may require information/clarification from the Assessee regarding alleged evasion of service tax. In the context of the present case, in relation to documents recovered during the search and statements recorded of representatives to the Petitioner in that process, several questions may have arisen for consideration by the Respondent which may require a clarification from the Petitioner as to its conduct. It is to facilitate this very exercise that para 5.0 finds place in the Master Circular. The mere possibility that at the end of the adjudication process, the Petitioner may have to face consequences for having committed an 'offence' under Finance Act, 1994 need not per se render the SCN itself as an 'offence related' SCN. If that were to be the logic, then in every case para 5.0 can be dispensed with on the ground that the adjudication of the SCN is likely to be lead to the noticee facing Page 16 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined proceedings for having committed an offence. The exception would then become the rule and not vice versa, and the need for any pre-notice consultation being rendered redundant. Further, without the conclusion of the adjudication on the SCN, the Respondent would not be in a position to decide whether an offence is made out.
(ii) Tube Investment of India Ltd. Vs. Union of India - 2018-TIOL-330-HC-MAD-CX
7. Admittedly, the above referred procedure, which has been held to be a mandatory by C.B.E. & C., has not been adhered to in the instant case. That apart, when the petitioner had been given an opportunity to submit the reply to the Audit Slip, which they had submitted by reply dated 16-12- 2016, the same ought to have been considered by the fourth respondent prior to issuance of the show cause notice. If, for some reasons, the fourth respondent was of the opinion that the reply given by the petitioner to the Audit Slip is not satisfactory, then at least the same should have been dealt with in the impugned show cause notice, which has not been considered.
8. Thus, for the above reasons, this Court is inclined to entertain the present writ petition, challenging the show cause notice. In the result, the writ petition is allowed, the impugned Page 17 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined notice is set aside and the matter is remanded to the fourth respondent, for fresh consideration. The fourth respondent is directed to afford an opportunity of personal hearing to the authorized representative(s) of the petitioner, consider the reply given by the petitioner dated 16-12-2016 to the Audit Slip and after affording full and effective opportunity, consider the case and then proceed in accordance with law. No costs. Consequently, connected miscellaneous petition is closed.
86. The above judgement of the Delhi High Court in Amadeus (Supra)also negatives the stance taken in the reply affidavit dated 5th March 2021 of the respondents, wherein, it has been urged by the Respondent that the offence/preventive cases are outside the purview of the procedure relating to the pre-show cause consultation.
87 It would be appropriate at this stage to reproduce the relevant provisions of Sub-sections (1) and (4) of Section 11A of the Excise Act and they are as follows:
"11A. Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded.-
(1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules Page 18 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined made thereunder with intent to evade payment of duty,-
(a) the Central Excise Officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so short- levied or short-
paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice;
(4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of-
(a) fraud; or
(b) collusion; or
(c) any wilful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty.
by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice."
Page 19 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined 88 The case on hand by any stretch of imagination cannot be described as an offence/preventive case whatsoever. This is not a case where the goods have been removed illicitly without a statutory invoice. In the cases of offence, there is no dispute about the dutiability or taxability of the transaction. The only dispute is whether the transaction is put through. In other words, the only question is whether, the goods have been actually manufactured or removed. The dispute is whether on facts, the assessee has manufactured or cleared those goods. Those are offence/preventive cases mentioned in the circular dated 10 th March 2017.
13. In all the petitions, except Special Civil Application No.1770 of 2022, the show cause notice is issued based on the difference in value of income as per Form 26AS issued under the Income Tax Act, 1961 and Form ST3-return filed by the petitioners. In Special Civil Application No. 1770 of 2022, the show cause notice refers to the liability of service tax upon interpretation of the provisions of the Finance Act, 1994 read with various Notifications in relation to the issues as to whether the petitioner of the said petition constructed the roads for the general public or the private road and labour charges, TTA Charges, taxation which does not contain any of the ingredients of the fraud, wilful mis-statement for separation of facts for collusion which would categorize such show cause notice in the exception curved out in para 5 of the Circular No 1079 of 2021.
14. In view of the facts of the case being Page 20 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025 NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined squarely covered by the decision of this Court in the case of L AND T Hydrocarbon Engineering Ltd. (Supra) wherein the reliance is also placed on the decision of the Hon'ble Delhi High Court in case of Amadeus India Pvt. Ltd. Vs. Principal Commissioner of Central Excise Services Tax & Central Tax reported in 2019(25) G.S.T.L (Del.) wherein, so far as the merits of the matter is concerned, the Hon'ble Apex Court has not interefered and issued the notice in SLP only for the purpose of as to whether the respondents are entitled to issue reviving of earlier show cause notice or not ? The order passed by the Hon'ble Apex Court, the procedings arising from the judgement of the Hon'ble Delhi High Court reads as under:-
ORDER Delay condoned.
Learned Additional Solicitor General submits that if a fresh show cause notice is to be issued as directed by the High Court after pre-consultation, the Department may be given liberty to revive the earlier show cause notice to obviate any objection in regard to limitation.
Issue notice confined to the above issue, returnable in eight weeks.
14.1 As pointed out by learned advocate Mr. Nainawati that Special Leave Petition is still pending before the Hon'ble Apex Court for the aforesaid issue of revival of the show cause notice to obviate the objection with regard to limitation is only pending for adjudication.Page 21 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025
NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined
15. Taking into consideration the above facts and in view of the decision of this Court in case of L AND T Hydrocarbon Engineering Ltd. (Supra), we are of the opinion that none of the show cause notice except Special Civil Application No. 5685 of 2022 can be sustained in absence of pre-consultation notice. Even in Special Civil Application No. 5685 of 2022, the show cause notice contained the ingredients of the issue of liability of the petitioner but it only refers to the difference in value of income as per Form 26AS and as per Form ST-3 returns filed by the petitioner. In such circumstances, the show cause notices issued in the respective petitions are hereby quashed and set aside and therefore as a consequence the Order-in-Original if any shall also be quashed and set aside, with a liberty to the respondent-Department to initiate the proceedings or to revive the original show cause notice subject to outcome of the pending proceedings before the Hon'ble Apex Court in accordance with law. All the petitions are accordingly disposed of. Notice is discharged."
14. In view of the aforesaid settled legal position, impugned show cause notice dated 23.10.2021 and the order-in-original dated 7.2.2022 as well as the appellate orders are hereby quashed and set aside. However, it is made clear that the respondent authorities may take appropriate proceedings if permitted as per the period of limitation in accordance with law after giving pre- consultation notice to the petitioners.
Page 22 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025NEUTRAL CITATION C/SCA/18762/2023 ORDER DATED: 05/05/2025 undefined
15. Rule is made absolute with no order as to costs.
(BHARGAV D. KARIA, J) (P. M. RAVAL, J) H.M. PATHAN Page 23 of 23 Uploaded by H.M. PATHAN(HC00167) on Mon May 26 2025 Downloaded on : Fri May 30 21:50:16 IST 2025