Patna High Court
Shashi Galvanising Private Limited vs Principal Commissioner Of Cgst And ... on 29 April, 2025
Author: P. B. Bajanthri
Bench: P. B. Bajanthri
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.5130 of 2024
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Shashi Galvanising Private Limited a Private Limited Company registered
under Companies Act, 1956 having its office at A/26, Ashokapuri Colony,
Khajpura, Bailey Road, Patna- 800014, Bihar through its Director Shashi
Prabha Dev (Female, aged about 60 Years) Wife of Surendra Narayan Singh
Resident of H. No.- A/26, Ashokpuri Colony, Khajpura, Bailey Road, B.V.
College, District- Patna, Bihar.
... ... Petitioner/s
Versus
1. Principal Commissioner of CGST and Central Excise having its office at
Central Revenue Building, (Annexe), Bir Chand Patel Marg, Patna.
2. Commissoner Of CGST And Central Excise having its office at Central
Revenue Building, (Annexe), Bir Chand Patel Marg, Patna.
3. Assistant Commissoner Of CGST And Central Excise having its Office at
Central Revenue Building, (Annexe), Bir Chand Patel Marg, Patna.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr. D.V.Pathy, Sr. Adv.
Mr. Sadashiv Towari, Adv.
Mr. Hiresh Karan, Adv.
Ms. Shivani Dewalla, Adv.
Ms. Prachi Pallavi, Adv.
For the Respondent/s : Dr. Krishna Nandan Singh, Sr. Adv. (ASGI)
Mr. Anshuman Singh, Sr. Sc, CGST,
Mr. Shivaditya Dhari Sinha, Adv.
Mr. Alok Kumar, Adv.
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CORAM: HONOURABLE MR. JUSTICE P. B. BAJANTHRI
and
HONOURABLE MR. JUSTICE S. B. PD. SINGH
ORAL JUDGMENT
(Per: HONOURABLE MR. JUSTICE P. B. BAJANTHRI)
Date : 29-04-2025
In the instant petition, petitioner has prayed for the
following reliefs:
"(i) the demand cum show cause notice dated
15.10.2020(as contained in Annexure -3) issued by the respondent no. 2 proposing levy of Service Tax, interest and penalty without a pre-show cause consultation as per Master Circular No. 1053/02/2017-CS dated 10.03.2017 issued by Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 2/16 the Central Board of Excise and Customs and subsequently clarified by Circular dated 19.11.2020 be set aside quashed.
(ii) the order dated 04.01.2024 (as contained in Annexure -6) passed by the respondent no. 1 imposing Service Tax, interest and penalty without consideration of the written submissions, the exemption Notification No.25/2012 - Service Tax dated 20.06.2012 issued by the Central Government and in violation of Article 366 (29Ab) read with Entry 54 of List II of the Constitution of India on the gross value of the contract only on ground that the original of the documents were not filed being wholly without jurisdiction be set aside and quashed.
(iii) the order dated 04.01.2024 (as contained in Annexure -5) passed by the respondent no. 1 imposing Service Tax, Interest and Penalty without consideration of the written submissions and the documents filed along therewith run counter to the settled principles of natural justice and fair play in action and as such is wholly illegal and without jurisdiction?
(iv) for granting any other relief (s) to which the petitioner is otherwise found entitled to.
2. Petitioner - Firm is a registered service tax payer under Service Tax - Chapter V of Finance Act, 1994 (for short Finance Act, 1994). Firm has undertaken certain civil contract with the State of Bihar in the year 2010 read with agreement stated to Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 3/16 have been entered in the year 2013. Petitioner-Firm had not paid service tax during the period April, 2015 to March, 2017.
3. Petitioner-Firm has also not filed form ST-3 ( return under Section 70 of the Finance Act, 1994). Resulted in issuance of notice/communications from the respondents on 25.11.2019, 06.08.2020, 10.08.2020 and 15.10.2020. The written submission was filed on behalf of the petitioner - Firm only on 17.10.2023. The official - respondents have proceeded to pass final order on 04.01.2024, while confirming the demand of service tax including applicable cess aggregating to a sum of Rs. 2,16,74,125/- for the period April, 2015 to March, 2017 against the petitioner - Firm under proviso to Section 73 (1) of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017. Further, confirming rate of interest and penalties. Feeling aggrieved by the aforementioned decision of the respondents, petitioner has invoked remedy under Article 226 of the Constitution of India.
Submissions on behalf of the petitioner :
4. Learned counsel for the petitioner submitted that even though petitioner has statutory remedy of appeal before the Appellate Authority/Tribunal under Section 86 of the Finance Act, 1994, petitioner has not resorted to on the sole issue that Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 4/16 the respondents have violated pre-consultation procedure under the Master Circular dated 10.03.2017. For non-compliance of Master Circular, he relied on para-5.0 of the Master Circular and so also decisions in the case of Amadeus India Pvt. Ltd.
Vs. Principal Commissioner, Central Excise Service Tax And Central Tax Commissionerate (para-17) Annexure-11. Feeling aggrieved by the Annexure-11 decision, Official - Respondents preferred Special Leave Petition (Civil) Diary No (s). 35886 of 2019 (Principal Commissioner, Central Excise Service Tax And Central Tax Commissionerate Vs. Amadeus India Pvt. Ltd.) and it is pending consideration before the Hon'ble Supreme Court even to this day in the light of order dated 04.11.2019 (Annexure-13).
5. Learned counsel for the petitioner submitted that insofar as execution of the civil works in particularly construction of road, he has been exempted under the notification No. 25/2012 -Service Tax dated 28.06.2012, item 13 reads as under:
"13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or altercation of,-
Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 5/16
(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;
(b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;
'(ba) a civil structure or any other original works pertaining to the 'In-situ rehabilitation of existing slum dwellers using land as a resource through private participation "under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojna, only for existing slum dwellers." Inserted vide Notification 9/2016-Service Tax. To be in effect from 1 March 2016.
(bb) a civil structure or any other original works pertaining to the Beneficiaryled individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojna;"; Inserted vide Notification 9/2016-Service Tax to be in effect from 1 March 2016.
(c) a building owned by an entity registered under section 12 AA of the Income Tax Act, 1961 (43 of 1961) and meant predominantly for religious use by general public;
Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 6/16
(d) a pollution control or effluent treatment plant, except located as a part of a factory; or
(e) a structure meant for funeral, burial or cremation of deceased;"
6. In the light of the aforementioned notification, petitioner need not file return under form ST-3 (under Section 70 of the Finance Act, 1994). It is further submitted that under sub-Section 7 of Section 64 of the Finance Act, 1994 read with Rule 7 of 1994 Rules to the extent that if a person or a Firm is exempted from service tax, in that event, concerned person or a Firm need not file return form ST-3. Further, he relied on Circular dated 23.08.2007 (para-6) to the extent that he need not require to file return.
7. It is further submitted that limitation would spring into action insofar as issuance of notice in the year 2020 and passing final order in the year 2024. On this issue, he relied on Circular dated 20.07.2021 para-3 (iv) and para-4 (b).
8. It is further submitted that insofar as pre-consultation is concerned, fraud must be willful and it is not forth coming in the present case. There is no fraud or a suppression in support of such contention, he relied on (2022) 17 SCC 90 (para 69) and Circular dated 13.12.2023 (3.2 and 3.3). On the issue of pre- Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 7/16 consultation, he relied on Co-ordinate Bench decision in the case of CWJC 7676 of 2023 decided on 24.04.2024 (para-6). In the light of the aforementioned submission, overall contentions are that final order dated 04.01.2021 is barred by limitation, pre- consultation is mandatory and non-filing of return would not be a hurdle for adhering to pre-consultation procedure. Submissions on behalf of Respondents :
9. Per-contra, learned counsel for the respondents submitted that question of limitation would not arise in the present lis for the reasons that respondents have the relevant information that petitioner had suppressed material information only in the year 2019, thereafter, number of communications have been made to the petitioner on 25.11.2019, 06.08.2020, 10.08.2020 and 15.10.2020. In the absence of filing return, the respondents are not in a position to assess what are the transactions made by the petitioner, during the assessment period April, 2015 to March, 2017 to find out which are exempted from Service Tax. It is highly impracticable to determine whether petitioner is liable for service taxes or not unless petitioner reveals what are the transactions during the relevant period i.e., only in the form of return under Section 70 of Finance Act, 1994.
Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 8/16
10. The petitioner has not responded to the aforementioned communications / notices. He has only filed written submission on 17.10.2023, thereafter final order has been passed on 04.01.2024. It is also submitted that petitioner was not co-operating in concluding the aforementioned proceedings initiated by the respondents in the year 2019-2020. It is further submitted that pre-consulation is not mandatory for the reasons that petitioner has failed to furnish form ST-3 return under Section 70 of service taxes of Finance Act, 1994. In the absence of foundation material, petitioner cannot contend that he has not suppressed or played any fraud in not filing return. At this stage, learned counsel for the respondent pointed out from Form ST-3 insofar as item no. C1 and D. C1 and D reads as under:
"C1 - Has the assessee availed benefit of any exemption notification ('Y/ N') D - If abatement is claimed as per notification No. 1/2006-ST, please furnish serial number in the notification under which such abatement is claimed."
(underline supplied)
11. Learned counsel for the respondents relied on Supreme Court Constitution Benches decisions insofar as interpretation of exemption notification namely, AIR 2018 SC Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 9/16 3606 in the case of Commissioner of Customs (Import), Mumbai V. M/s. Dilip Kumar and Company and others (para-
52) and (2011) 1 SCC 236 in the case of Commissioner of Central Excise, New Delhi Vs. Hari Chand Shri Gopal and Ors. (para nos. 29, 30 and 33) Yet another decision reported in (2003) 1 SCC 72 in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer And Ors.
12. Insofar as alternative remedy is concerned, learned counsel for the State - respondents relied on M/S Mangal Murti Constructions, wherein Co-ordinate Bench has interpreted in not exhausting alternative remedy with reference to four principles laid down in Godrej Sara Lee Ltd. Vs. Excise and Taxation Officer-cum-Assessing Authority and Others, reported in 2023 SCC OnLine SC 95 (para-4) case. Analysis:
13. Heard learned counsel for the respective parties. Core issues involved in the present lis are whether action of the respondent insofar as impugned decision dated 04.01.2024 is time barred or not? Pre-consultation Circular has been violated in the present case and what is the effect of non-compliance to Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 10/16 Master Circulation dated 10.03.2017 and that alternative remedy is available to the petitioner or not?
14. Undisputed facts are that the petitioner - Firm was a registered service tax payer. Petitioner-Firm is into certain civil construction work and it had executed certain civil works of the State of Bihar during the period from 2010 - 2015 and 2015 - 2017. It had not filed form ST-3 return under Section 70 of the Finance Act, 1994 for the assessment period from April, 2015 to March, 2017. Thereafter, the respondents came to notice that petitioner is due for certain service taxes. In this regard, they have issued communications on 25.11.2019, 10.08.2020, 06.08.2020 and 15.10.2020. The petitioner has filed written submission only on 17.10.2023. Return - A half yearly return has to be filed by every tax payer in form-ST-3 or ST-3A (i.e., for periods, April to September and October to March) by the 25th of the Month following the half year like 25 th October of that year and 25th April of that year. Form ST-3A is applicable to cases of provisional assessment and is in the nature of a memorandum for provisional deposit. Section 77 provides for a penalty for failure to furnish returns. Section 70 of Chapter-5 of Finance Act, 1994 provides for filing of service tax returns. Section 70(1) R/W Rule 7 of Service Tax Rules, 1994 provides Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 11/16 the method of filing service tax return. Section 70(2) of the Act provides that the person or class of persons notified under Section 69(2) of Section 69, shall furnish to the Superintendent of the Central Excise, a return in such form and in such manner and at such frequency as may be prescribed.
Late Fee - Under Section 17(1) read with Rule 7C provides for the late fee payable in case of return is filed after the due date. 'Nil' return - During any half year where the gross amount of taxable service is nil, a 'Nil' return is to be filed within the prescribed time limit. Nil return shall be filed after the Cessation of a particular service and up to the date of surrender of registration certificate. If there is delay in filing the Nil return, the Central Excise Officer may, on being satisfied that there is sufficient reason for not filing the Nil return, reduce or waive the penalty.
15. Penalty for non-filing of return is under section 77(2) of the Act provides that any person, who contravenes any of the provisions of this chapter or any rules made thereunder for which no penalty is separately provided in this chapter, shall be liable to a penalty which may be extended to ten thousand rupees.
Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 12/16
16. Final order was passed on 04.01.2024 taking note of the aforementioned dates and events, question of limitation in passing final order is not attracted for the reasons the petitioner failed to file return and failed to answer to the notice/communications dated 25.11.2019, 06.08.2020 and 10.08.2020 and it is learnt that petitioner answered only on 17.10.2023 with reference to notice/communication dated 15.10.2020 and on receipt of petitioner's answer on 17.10.2023 final order has been passed on 04.01.2024 and it is within three months and limitation issued to initiate proceedings contention stands rejected.
17. The circular cited on behalf of the petitioner dated 20 th July, 2021 para 3(iv) and para 4(b) do not assist in order to overcome the limitation issue is concerned. Though, initially notice was in the year 2020 and it has attained finality only in the year 2024. Pre-consultation before issuing show-cause notice in the light of Master Circular dated 10.03.2017 is mandatory or not. In the present case, the petitioner has failed to furnish form ST-3 return. That apart, having regard to the non- cooperation of the petitioner to the extent that he has not answered number of communications / notices like 25.11.2019, 10.08.2020, 06.08.2020 and only one written submission was Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 13/16 filed on 17.10.2023. But despite of issuing several letters and reminders, petitioner has not submitted the desired documents and information and suppressed the facts from the department with intention to evade service tax, thus, petitioner has rendered themself liable for impugned action. Therefore, pre-consultation before issuing demand and show-cause notice is not warranted. In other words, pre-consultation is not mandatory and it is directory in nature. Moreover, question of invoking Pre- consultation procedure would spring into action only in the event of filing ST-3 return under Section 70 of the Finance Act, 1994.
18. The petitioner's contention is in respect of not exhausting alternative remedy. His sole contention is that pre- consultation Master Circular dated 10.03.2017 has been violated. This has been taken note of in the previous paragraph.
19. Having regard to the factual aspects of the present case, the cited decisions on behalf of petitioner do not assist. That apart, the conduct of the petitioner in not apprising the concerned authority from time to time with reference to notice issued in the year 2019-20 on more than one occasion read with in not filing ST-3 return under Section 70 of Finance Act, 1994. Therefore, the petitioner cannot take shelter to overcome Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 14/16 alternative remedy that Circular dated 10.03.2017 to the extent before issuance of demand and show-cause notice on 15.10.2020, it is mandatory to invoke Master Circular dated 10.03.2017. Circular is to be adhered where party files return under Section 70 of the Finance Act, 1994.
20. Question of fraud is willful or suppression of facts on behalf of the petitioner cannot be examined by this Court . It has to be examined by the concerned authorities and further petitioner has statutory remedy of appeal before the Appellate Tribunal under Section 86 of the Finance Act. Therefore, the cited decision (2022) 17 SCC 90 (para 69) read with Circular dt. 13.12.2023 (3.2 and 3.3) is not assisting the petitioner.
21. In the light of these facts and circumstances, the petitioner has statutory remedy of appeal before the Appellate Tribunal under Section 86 of the Finance Act. Alternative remedy can be overlooked only on certain principles like principles laid down in the Godrej case (supra). The petitioner has not made out a case that petitioner's case would fit into the Godrej (supra) case so as to overcome the alternative remedy of appeal before the Appellate Tribunal.
22. Learned counsel for the respondents relied on Constitution Bench decisions cited (supra) would assist the Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 15/16 respondents insofar as interpretation of exemption notification for the reasons that (para 5.0) of Master Circulation dated 10.03.2017 reads as under:
"5.0 - Consultation with the noticee before issue of Show Cause Notice: Board has made pre show cause notice consultation by the Principal Commissioner/ Commissioner prior to issue of show cause notice in cases involving demands of duty above Rs. 50 lakhs (except for preventive/offence related SCN's) mandatory vide instruction issued from F No. 1080/09/DLA/MISC/15 dated 21st December, 2015. Such consultation shall be done by the adjudicating authority with the assessee concerned. This is an important step towards trade facilitation and promoting voluntary compliance and to reduce the necessity of issuing show cause notice."
23. Insofar as (except for preventive/offences related to show cause notice SCN's) the authorities have to determine whether petitioner has suppressed or played any fraud or not? That cannot be examined under Article 226 of the Constitution of India. Further there is a non-cooperation on behalf of the petitioner insofar as whatever information sought by the official respondents have not been provided by the petitioner. In the light of these facts and circumstances, the petitioner has not made out a case so as to interfere with the impugned order.
Patna High Court CWJC No.5130 of 2024 dt.29-04-2025 16/16 Accordingly, the present CWJC No. 5130 of 2024 stands dismissed.
24. Petitioner is at liberty to invoke remedy before the Appellate Tribunal. In the event of approaching the Appellate Tribunal, the Appellate Tribunal is hereby requested to condone the delay. In other words, time spent in the present litigation shall be taken note of for the purpose of condonation of delay in filing appeal under Section 14 of the Limitation Act, 1963. .
(P. B. Bajanthri, J) ( S. B. Pd. Singh, J) sushma/-
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