WP(C)/1847/2023 on 9 January, 2026

[Cites 39, Cited by 0]

Gauhati High Court

WP(C)/1847/2023 on 9 January, 2026

IN THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM & ARUNACHAL PRADESH)
PRINCIPAL SEAT
W.P(C) NO. 1847/2023
Nirmal Kumar Sharma
Proprietor of M/S N.K. Sharma and M/S Sidharth
Enterprise, Son of Radheshyam Sharma aged about 60
years, resident of 4E, Jagdishwar Enclave, Zoo Road,
Bihing Times Square Mall, Guwahati-781005, Assam

........Petitioner

-Versus-

1. Union of India
Represented by Secretary to the Government of
India, Ministry of Finance, Department of Revenue,
New Delhi-110 001
2. The Principal Commissioner, GST & Central
Excise Commissionerate, Guwahati, GST Bhawan,
Kedar Road, Machkhowa, Guwahati-781 001, Assam
3. The Superintendent, Anti-Evasion, Office of the
Commissioner, Goods & Service Tax, Dibrugarh
Commissionerate, Milan Nagar, Lane; 'F', P.O C.R.
Building, Dibrugarh-786003, Assam
4. The Addl. Commissioner, Central Goods &
Services, Dibrugarh, Office of the Commissioner,
Central Goods & Service Tax, Milan Nagar, Lane: 'F',
P.O C.R. Building, Dibrugarh-786003, Assam
5. The Additional Commissioner, Goods &
Services Tax, Aizawl, Office of the Commissioner,
Goods & Service Tax, Aizawl, Mizoram

Page 1 of 78
6. The Superintendent (A/E), Office of the
Assistant/Joint Commissioner, Central Goods &
Service Tax, Aizawl, Mizoram

........Respondents
-BEFORE-
HON'BLE MR. JUSTICE SOUMITRA SAIKIA

Advocate for the petitioner :Dr. Ashok Saraf, Sr. Advocate
Assisted by Mr. A Goyal, Advocate

Advocate for the respondents :Mr. S.C Keyal, Standing Counsel, GST

Dates of hearing :10.12.2024; 12.12.2024; 19.03.2025;
24.04.2025; 27.05.2025; 06.08.2025;
16.09.2025; 28.10.2025

Date of Judgment & Order: : 09.01.2026

JUDGMENT AND ORDER

This writ petition is filed by the petitioner who is the proprietor of

the Proprietorship firms namely, M/S N.K Sharma and M/S Sidharth

Enterprise. The petitioner is registered under the Service Tax net

vide Service Tax Code (Registration No.) AIIPS4609P. The petitioner

is engaged in the business of providing transportation service and

supply of tangible goods. For the Financial Year 2014-15 (October,

2014 to March, 2015) to Financial Year 2017-18 (upto June, 2017)

for services rendered by the petitioner, a summons dated 10.05.2018

was issued by Superintendent, Anti-Evasion, Goods & Services Tax,

Dibrugarh Commissionarate under Section 14 of the Central Excise

Act 1944 read with Section 80 of the Finance Act, 1994. The

petitioner was asked to appear in person or through authorized

Page 2 of 78
representatives on 30.05.2018 for recording statements and

submission of certain documents such as copies of Form 26AS,

balance-sheet with profit and loss for the period 2012-13 to 2016-17,

copies of contract agreements, work orders etc. The petitioner

initially sought for extension of time to submit the relevant papers

and documents sought for and eventually submitted all its

documents in support of his case. Thereafter, a show cause notice

dated 31.12.2020 was issued by the competent authority which

although initially stated to have been not received by the petitioner

but upon personal appearance before the competent authority,

copies thereof were served by the respondent authorities. It was

alleged in the show cause notice that the petitioner had willfully

suppressed material facts providing taxable services to service

receiver during the period from 2014-15 to 2017-18 with an intent to

evade payment of service tax amounting to Rs.1,44,82,015/- in

contravention of the provisions of Section 66B and 68 of the Finance

Act, 1994 read with Rule 6 of the Service Tax Rules, 1994.

2. It was alleged that on scrutiny of Form 26AS collected from the

Income Tax Department, TDS was seen to be deducted by the

various service recipients and since the petitioner did not submit any

documents regarding the services provided, there is a reason to

believe that the income amount on which the petitioner paid income

Page 3 of 78
tax collected against the services provided by him, the petitioner had

rendered taxable services amounting to Rs. 1,66,86,568/- and as

such the service tax on the value of such services provided

amounting to Rs. 1,44,82,015/- was required to be paid by the

petitioner to the government exchequer and as the same was

willfully not paid and the information thereto was also suppressed by

the writ petitioner, the show cause notice was issued by invoking the

extended period of time under Section 73(1) for recovery of the

amount mentioned in the show cause along with the interest at the

appropriate rate under Section 75 of the Finance Act, 1994. Thirty

(30) days time was granted from the date of receipt of the show

cause to the writ petitioner to show cause as to why the action

contemplated in the show cause notice will not be initiated. The

petitioner subsequently appeared before the respondent authority

and submitted that no claim under Service Tax is liable to be paid by

the petitioner. The petitioner being a service provider, the service tax

liability for services rendered for transportation of goods by road

provided to Indian Oil Corporation was discharged by the IOC under

the reverse charge mechanism. The service liability for services

provided to ONGC has also been duly paid by the petitioner and the

challans showing the payment of service tax to the tune of Rs.

38,60,514/- were also produced before the respondent authorities. It

Page 4 of 78
was also submitted that an amount of Rs.41,87,500/- reflected in the

gross receipt as per Form 26AS was related to sale of flat and as

such the said amount was not related to service tax and relevant sale

agreement and payment particulars were also submitted as proof

thereof.

3. However, the respondent authorities did not consider these

submissions of the petitioner and vide the impugned order-in-original

No. V(15)104/ADJ/ST/COMMR/DIB/2020/330-334 dated 23.05.2022

had assessed an amount of Rs. 1,17,27,034/- as service tax payable

by the petitioner. The demand of service tax raised was confirmed

for the Financial Year 2014-15 (Oct-March) to 2017-18 (April-June) in

terms of Section 73(1) and 68 of the Finance Act 1994 and Rule 6 of

the Service Tax Rules, 1994 read with Section 174(2) of the CGST

Act, 2017 and also imposed an equal amount of penalty of Rs.

1,17,27,034/- under Section 78 besides imposing penalty of Rs.

10,000/- under Section 20 of the Act. Being aggrieved, the present

writ petition has been filed putting a challenge to impugned order-in-

original No. V(15)104/ADJ/ST/COMMR/DIB/2020/330-334 dated

23.05.2022 passed by the Additional Commissioner, Goods and

Services Tax, Aizawl (respondent No. 5).

Page 5 of 78
4. Opening the arguments on behalf of the writ petitioner, Dr.

Ashok Saraf, learned Senior Counsel has urged before the Court

submits that pursuant to receipt of summon preceeding the show

cause notice, all the necessary documents were furnished before the

respondent authorities. The documents pertaining to the relevant

year notwithstanding they were almost six (6) years old, the same

were submitted before the authorities in support of the claims of the

petitioner. Thereafter, further documents were sought for which

again were placed before the authorities concerned. Upon these

documents being furnished, the petitioner did not receive any

communication from the respondents and as such the petitioner was

under a bona fide belief that the respondent authorities were

satisfied with the documents furnished by the petitioner and the

matter was ultimately laid to rest. However, the petitioner was

surprised thereafter to receive a notice from the Additional

Commissioner, Goods and Services Tax, Aizawl namely, respondent

No. 5 calling upon the petitioner for personal hearing to be scheduled

on 14.03.2022. On the said date, the petitioner appeared before the

said authority and informed that the petitioner did not receive any

show cause notice. On such information being furnished before the

respondent authority, a copy of the demand cum show cause notice

dated 31.12.2020 was issued by the respondent No. 5. As such the

Page 6 of 78
show cause notice dated 31.12.2020 was essentially served on the

writ petitioner only on 14.03.2022. Therefore, the conclusion of the

respondent authorities in the impugned order that inspite of repeated

notices, there was no response received from the writ petitioner on

the face of it is contrary to the actual facts.

5. The learned Senior counsel for the petitioner further submits

that the entire proceedings were conducted on the basis of

information available on Form 26AS collected from the Income Tax

Department. From the said Form 26AS, the Department proceeded

that in so far as the TDS shown to have been deducted by the

various service recipients, the writ petitioner therefore having not

submitted any documents regarding the services provided by him,

the respondent authorities perfunctorily came to the conclusion that

the writ petitioner had rendered taxable services amounting to Rs.

10,66,86,568/- and on such value of services, service tax amounting

to Rs. 1,44,82,015/- was required to be paid by the petitioner to the

Government exchequer which they allegedly failed to pay and this

information was also suppressed and therefore the amount was to be

recovered by the demand cum show cause notice under proviso to

Section 73(1) of the Finance Act, 1994 by invoking the extended

period of limitation along with interest at appropriate rate under

Section 75 of the Finance Act, 1994. The petitioner was therefore

Page 7 of 78
called upon to show cause as to why the service tax amounting to

Rs. 1,44,82,015/- for the Financial year 2014-15 (October, 2014 to

March, 2015) to Financial Year 2017-18 (upto June 2017) should not

be demanded for recovered from the writ petitioner under the

appropriate sections mentioned in the show cause notice.

6. The learned Senior counsel for the petitioner strenuously

submits that the very basis of issuance of the demand cum show

cause notice was on a mistaken belief of the department that any

service tax is due from the writ petitioner whereas for the services

rendered by the writ petitioner in respect of IOC, Marketing Division

IOC and ONGC, no service tax was outstanding from the petitioner

and in respect of sale of flat the amounts received were not at all

related to service tax. The learned Senior counsel for the petitioner

strenuously submits that as per notice for personal hearing, the

authorized representative of the petitioner appeared before the

Additional Commissioner, Goods & Services Tax, Aizwal on

23.03.2022 through online mode and submitted that there was no

service tax liability pending to be discharged by the petitioner. The

service tax liability for services of transportation of goods by road

provided to the Indian Oil Corporation Limited by the petitioner was

discharged by Indian Oil Corporation Limited as a recipient of

services under reverse charge mechanism as per Notification No.

Page 8 of 78
30/2012-St dated 20.06.2012. Further, it was also submitted that

the service tax liability for the services provided to ONGC was also

duly paid and 74 numbers of challans showing payment of service

tax to the tune of Rs. 38,60,514/- was also produced as a proof

thereof. It was further submitted that an amount to the tune of

Rs.41,87,500/- reflected in the gross receipt as per Form 26AS was

related to sale of flat and as such, the said amount was not related

to service tax and relevant sale agreement and payment particulars

were also submitted as a proof thereof. The representative of the

petitioner once again submitted all the relevant documents as sought

for by the authorities, both physical copies and scanned copies vide

mail dated 23.03.2022.

7. It is submitted that the petitioner thereafter vide letter dated

15.05.2022 addressed to the Superintendent (A/E), Central Goods &

Service Tax, Aizawl informed that the petitioner had already paid the

applicable amount of service tax on taxable services provided by him

and the challans for such payments were provided to the authorities.

It was stated in the said letter that the petitioner rendered two types

of services. As regards services provided to the ONGC, service tax

was applicable and payable by the petitioner, whereas with regards

to services provided to the IOC Ltd. service charge was payable by

the service recipient on reverse charge basis. It was also stated in

Page 9 of 78
the said letter that only taxable services provided by the petitioner

wherein the petitioner is liable to make payment of service tax was

the services provided to ONGC and ONGC releases payment only

after service tax is paid and service tax challan is presented before

them. It was stated that as per the notice issued, department has

calculated service tax liability on the entire amount of services

provided by the petitioner which is not correct. The petitioner also

annexed a table of calculation of service tax wherein it reflected that

the petitioner has made payment to the tune of Rs. 38,60,514/- in

respect of service tax, which was substantiated by challans. This

goes to mean that the petitioner made some excess payment of

service tax leave alone any short payment as alleged by the

respondent Department.

8. The learned Senior counsel submits that the Additional

Commissioner, Goods & Services Tax, Aizawl however did not

consider any of the submissions of the Petitioner and vide the

impugned Order-in-Original dated 23.05.2022 assessed an amount of

Rs. 1,17,27,034/- as service tax payable by the Petitioner. In the said

Order-in-Original dated 23.05.2022, the Additional Commissioner,

Goods & Services Tax, Aizawl so confirmed the demand of service tax

of the said amount of Rs. 1,17,27,034/- for the Financial Year 2014-

15 (Oct-March) to 2017-18 (April-June) in terms of Section 73(1) and

Page 10 of 78
68 of the Finance Act, 1994 and Rule 6 of ST Rules, 1994 read with

Section 174(2) of CGST Act, 2017 and also imposed an equal amount

of penalty of Rs. 1,17,27,034/- under Section 78 besides imposing

penalty of Rs. 10,000/- under Section 20 of the Act. While passing

the said impugned Order-in-Original dated 23.05.2022, the Additional

Commissioner, Goods & Services Tax, Aizawl stated that the Noticee

failed to reply to the show cause Notice dated 31.12.2020 within

stipulated time and as such, it could not be ascertained whether the

services provided by the petitioner was exempted from payment of

service tax holding that the services provided by the Petitioner would

fall under the definition of service, the Additional Commissioner,

Goods & Services Tax, Aizawl only on the basis of Form 26 AS, came

to a conclusion that the Petitioner was required to pay to the

Government exchequer a sum of Rs. 1,17,27,034/- as short paid

service tax. As regard the invocation of extended period of limitation,

it was alleged by the Additional Commissioner, Goods & Services

Tax, Aizawl that the Noticee willfully did not mention his Service Tax

liability in their periodic ST-3 Return and did not discharge his service

tax liability to the Government exchequer with malafide intention to

evade payment of service tax. It was also stated that the Noticee i.e.

the petitioner deliberately suppressed the material facts from the

department with the intent to evade payment of tax and therefore,

Page 11 of 78
extended period of limitation of five years as envisaged under the

proviso of sub-section (1) of section 73 of the Finance Act, 1994 was

invokable. Therefore by the aforesaid impugned Order-in-Original

dated 23.05.2022, the Respondent No.5 confirmed the demand of

service tax amounting to Rs. 17,27,034/- and imposed an equal

amount of penalty of Rs. 1,17,27,034/- under Section 78 besides

imposing penalty of Rs. 10,000/- under Section 20 of the Act.

9. It is therefore submitted that no service tax is due from the

petitioner further services rendered and these information were

already supplied to the respondent No. 5 by way of the writ

petitioner both pursuant to issuance of summons as well as pursuant

to issuance of notice of demand cum show cause notice and also

during the personal hearing.

10. It is strenuously urged by the learned senior counsel that there

was absolutely no application of mind by the respondent authorities

nor did they consider the materials which were placed before the

authorities concerned before passing the impugned order in original

imposing the demand of service tax and penalty. It is submitted that

these information being placed before the authorities concerned

pursuant to the summons issued itself, there was no case for

suppression made out against the petitioner as sought to be alleged

Page 12 of 78
against the petitioner and thereby issuing the demand cum show

cause notice by extending the prescribed period of time under

Section 73 of the CGST Act.

11. The learned Senior counsel for the petitioner submits that for

imposition of tax, there must be a declaration of liability under the

statute and which the assessee is required to comply with. It is

submitted that tax cannot be imposed on an analogy and inferences

based on Form 26AS statement received from the Income Tax

Department. In support of his contention, the learned Senior Counsel

has pressed into service Judgment of the Apex Court rendered in

Chatturam Horilram Ltd. Vs. Commissioner of Income Tax, reported

in 1955 (2) SCR 290. It is submitted that in the said Judgment, the

Apex Court by referring to a Judgment of the Federal Court held that

there are three stages of imposition of taxes. There must be a

declaration of liability which is the part of the statute which

determines the liability in respect of the assessee, next there must be

an assessment. The liability does not depend on the assessment it is

already fixed under the statute but the assessment particularizes the

exact sum which a person liable is required to pay and lastly there

must be modes of recovery of tax, in the event the assessee who is

taxed does not pay voluntarily.

Page 13 of 78
12. The learned Senior counsel for the petitioner also presses into

service the Judgment of the Apex Court rendered in A.V Fernandez

Vs. State of Kerala, reported in (1957) 8 STC 561. It is submitted

that before any assessment is made levying any tax there must be a

liability to tax. If there is no liability to tax the question of making an

assessment in respect of the same does not arise. In the present

case, there was no liability to pay the taxes inasmuch as either the

services liability to pay tax was on the recipient of the services on

reverse charge basis and whichever tax was payable in respect of

services rendered to ONGC the same was paid by the petitioner and

thereby the adjudicating authority overstepped its jurisdiction in

passing the order by levying tax on such services purely on analogy

and inferences which is not permissible in law.

13. The learned Senior counsel submits that the Judgments of the

Apex Court cited are subsequently followed in Commissioner of

Income Tax Vs. Provident Investment Company Ltd. reported in

(1957) 32 ITR 190. The learned Senior counsel also presses into

service Judgments in support of his contention by referring to

Venkateswara Stainless Steel and Wire Industries Vs. Union of India,

reported in (1987) 27 ELT 648 and M/S N.E Logistics & Anr. Vs.

Union of India & 2 Ors. [W.P(C) No. 1870/2020]. It is submitted that

in N.E Logistics (Supra) , similar show cause notice was issued based

Page 14 of 78
on information collected from the Income Tax Department through

Form 26AS. It is submitted that the High Court remanded the matter

back to the authorities on the ground that the department had

proceeded on a presumption that the assessee therein was liable to

pay tax. It was held that the liability to pay tax of a service tax is not

based on presumption nor can it be based upon the State of

indeterminateness on the part of the authorities. Liability to pay the

tax has to be conclusively determined for a given transaction for

which the tax is imposed and for which the noticee has been held to

be liable to pay tax as the same determination has not been made,

the matter was remanded back to the Principal Commissioner, CGST

for fresh determination and the assesses therein were given a

opportunity to produce any relevant materials to show cause that the

contract works for the service tax has been imposed for which the

noticee is not liable to pay for such transaction.

14. It is submitted on behalf of the petitioner that by the said

Judgment directed that after arriving at a conclusive determination

reasoned order or a further demand notice as the case may be

issued by the authorities. However, if on the other hand in the

conclusion arrived at that the petitioner is not liable to pay service

tax appropriate reason order is to be passed. It is submitted that the

Page 15 of 78
order has attained finality as no appeal has been preferred against

the said Judgment.

15. The learned Senior Counsel for the petitioner also pressed into

service Judgment rendered in Luit Developers Private Limited Vs.

Commissioner of CGST & Central Excise, Dibrugarh (Service Tax

Appeal No. 75792 of 2021) by the Customs, Excise & Service Tax

Appellate Tribunal, Kolkata. While dealing with the imposition of

service tax levied on the basis of entries in Form 26AS of the Income

Tax Act. The Tribunal held that Form 26AS cannot be used to

determine service tax liability unless there is any evidence shown

that it was due to a taxable service. The Tribunal also came to the

conclusion that there was no mala fide intention and therefore

extended period of limitation cannot be invoked on the ground and

service tax, interest and penalty was not sustainable and the same

was accordingly set aside.

16. The learned Senior counsel for the petitioner submits that in

the present case the Service Tax has been levied on the basis of the

information reflected in the 26AS statement of the Income Tax. The

26AS statement only reflects the Income Tax deducted at source and

the amount from which the said tax has been deducted. The said

26AS statement cannot determine the liability of the Service Tax of

Page 16 of 78
the petitioner inasmuch as only because Income Tax was deducted

at source from certain receipts in respect of the various services

rendered, it cannot be said that the said services were taxable under

the Finance Act of 1994. A particular receipt on account of services

rendered though may be liable to Income Tax under the Income Tax

Act, 1961, the same may not be liable for payment of service tax

because of the exemptions granted under the Finance Act of 1994,

or because the liability for payment of service tax may have been

fastened on the service recipient on reverse charge basis. As such

the information contained in the 26AS statement cannot by any

stretch of imagination be said to be indicative of the fact that the

services in respect of which the amount was received and the income

tax was deducted at source on the said receipt were also taxable

under the Finance Act of 1994 and liable to Service Tax. The

Adjudicating Authority simply on the basis of inferences and analogy

levied Service Tax on the entire receipts as reflected in the 26AS

statement without examining the fact as to whether those Services

were liable to Service Tax under the Finance Act of 1994. Without

undertaking such an exercise and examination, the Adjudicating

Authority cannot levy the Service Tax on the said receipts as has

been held by the Apex Court that Tax cannot be imposed on the

basis of Inferences and analogy. Since in the present case the entire

Page 17 of 78
Service Tax liability has been imposed any on inferences and analogy

without coming to a finding that the said services were liable to

Service Tax under the Finance Act of 1994 the impugned

Adjudication Order is absolutely illegal, without jurisdiction, and the

same is liable to be set aside and quashed.

17. It is further submitted by Dr. Saraf, learned Senior Counsel that

in the present case the adjudicating authority has levied service tax

without examining the facts and without coming to a finding that the

said services were taxable and simply on the basis of the information

available in Form 26AS statement of the Income Tax, has levied the

service tax on the entire amount received, on pure inferences and

analogy which is not permissible in law, and thereby the said order

passed by the adjudicating authority is absolutely illegal, without

jurisdiction and the same is liable to be set aside and quashed.

18. The impugned order in original is further assailed on the

ground that the extended period of limitation is illegal as there was

no suppression, fraud, collusion or willful misstatement or

suppression of facts or contravention of any of the provisions of the

Act. Dr. Saraf, learned Senior counsel submits that Section 73

specifies recovery of service tax not levied or paid or short-levied or

short paid or erroneously refunded and in such an event, the

Page 18 of 78
extended period of five (5) years is applicable. It is submitted that a

section itself prescribes that the provisions of the section would be

applicable for recovery of Service Tax not levied or paid or short

levied or short paid or erroneously refunded by reasons of -

(a) Fraud; or

(b) Collusion; or

(d) Suppression of facts; or

(e) Contravention of any of the provisions of this Chapter or of

the rules made there under with intent to evade payment of service

tax.

19. It is submitted that for initiating any proceeding under Section

73 of the Act, there must be tax levied or paid or short-levied or

short paid or erroneously refunded. Further the Notice has to be

issued within a period of eighteen (18) months from the relevant

date on the person chargeable with the service tax which has not

been levied or paid or erroneously refunded. The Proviso to the said

sub-section (1) also specifies that such notice can be issued within

such extended period of five years only if such short-levy or short-

payment or erroneous refunds were by reasons of fraud, collusion,

willful misstatement, suppression of facts or contravention of any of

Page 19 of 78
the provisions of the Act or the Rules made thereunder with the

interest to evade payment of tax.

20. It is submitted by the learned Senior counsel that assuming

though not admitting that there was a failure to furnish correct

information, however, the same does not constitute suppression

unless the failure/omission to furnish information or failure to pay

taxes are made willfully in order to evade payment of tax. In support

of his contentions, the learned Senior counsel has referred to the

Judgment of the Apex Court rendered in Continental Foundation Joint

Venture Holding Vs. CCE, reported in (2007) 10 SCC 334. It is

submitted that the Apex Court in the said Judgment held that mere

omission to give correct information did not constitute suppression

unless that omission was made willfully in order to evade duty.

Suppression would mean failure to disclose full and true information

with the intent to evade payment of duty. When the facts are known

to both the parties, omission by one party would not constitute

suppression. An incorrect statement cannot be equated with a willful

mis-statement. The latter implies making of an incorrect statement

with the knowledge that the statement made was not correct. It was

further held therein that a mere omission to give correct information

is not suppression of facts unless it was deliberate to stop the

payment duty in order to evade duty.

Page 20 of 78
21. Referring to the Judgment of Apex Court rendered in CCE Vs.

Chemphar Drugs & Liniments, reported in (1989) 2 SCC 127 , the

learned Senior Counsel, Dr Saraf, submits that the Apex Court while

interpreting the provisions of Section 11A of the Central Sales Tax

Act, 1944 held that something positive other than mere inaction or

failure on the part of the manufacture or producer or conscious or

deliberate withholding of information when the manufacturer knew

otherwise, is required before it is saddled with any liability of

invoking the extended period of limitation.

22. Reliance is also placed upon the Judgment of the Apex Court

rendered in Cosmic Dye Chemical Vs. CCE., reported in (1995) 6 SCC

117, it is submitted that the Apex Court therein held that the words

"contravention of an of the provisions of the Act or Rules" are

qualified by the immediately following words "with intent to evade

payment of duty", and therefore it was not correct to say that there

can be a suppression or misstatement of fact, which was not willful

and yet constitutes a permissible ground for the purpose of the

proviso to Section 11A. It is submitted that the law laid down by the

Apex Court in this Judgment are squarely applicable in the present

case inasmuch as there is no such finding the adjudicating authority

while invoking the powers under Section 73 by invoking the extended

period of limitation. It is submitted that the intent to evade payment

Page 21 of 78
of tax cannot be established by peering into the minds of the tax

payer but has to be established through evaluation of the tax

behavior.

23. Referring to the Judgments pressed into service in support of

his contention, Dr. Saraf urges that from the law laid down by the

Apex Court and referred to by him, it is clear that without examining

the fact as to whether there was any suppression, mis-statement,

fraud, collusion, or contravention of any of the provisions if the Act

and the rules with the intent to evade payment of any tax, the

Adjudicating Authority simply on the basis of the tax behavior has

invoked the extended period of limitation without fulfilling the

preconditions laid down in proviso to Section 73(1) of the Act and

thereby the impugned show cause notice is clearly barred by

limitation and consequently the impugned order in original as well as

the show cause notice are liable to be set aside and quashed.

The learned Senior counsel therefore submits that the order-in-

original has been passed by invoking extended period of limitation of

five (5) years without providing any tangible evidence to show that

any material fact or information was willfully suppressed from the

Revenue with the intent to evade payment of any tax and thereby

the issuance of the show cause notice itself is barred by the

Page 22 of 78
limitation and consequently the impugned show cause as well the

order in original are liable to be set aside and/or quashed.

24. It is further submitted by the learned Senior counsel that if an

authority while acting within its jurisdiction makes an error of law

which is revealed on the face of its recorded determination, then the

Court, in the exercise of its supervisory function, may correct the

error unless there is some provision preventing a review by a Court

of law. In support of his contentions, the learned Senior counsel

refers to the Judgment rendered in Anisminic Ltd. Vs. Foreign

Compensation Commission and another, reported in (1969) 2 WLR

163.Referring to the said Judgment, it is submitted that lack of

jurisdiction may also arise if the authority in the intervening stage,

while engaged on a proper enquiry, departs from the roots of natural

Justice, or ask itself a wrong questions or takes into accounts

matters which it was not directed to take into account. In such a

situation it would amounts to a steps outside it jurisdiction.

25. The further limb of argument of the learned Senior Counsel for

the petitioner is that the levy of interest in the instant case is

absolutely illegal and without jurisdiction inasmuch as where service

tax itself is not payable by the petitioner as the same has been levied

illegally therefore the interest levied in the instant case is also liable

Page 23 of 78
to be set aside and quashed. It is submitted that in so far as the levy

of the penalty is concerned, it is a settled law that in order to justify

imposition of penalty the authority concerned must find out not only

that there has been a default but should also consider the question

whether there were good and sufficient reasons for the default and

only when such grounds are available the authorities can proceed to

impose penalty. Referring to the finding of the Adjudicating

authority, it is submitted that it clear that the adjudicating authority

has imposed penalty most mechanically without considering as to

whether the assessee had acted deliberately in defiance of law or

was guilty of conduct contumacious or dishonest or acted in

conscious disregard of its obligation. In support of his contention, the

learned Senior counsel refers to the Judgments rendered in

Hindustan Steel Ltd. Vs State of Orissa, reported in (1972) 83 ITR

26; B.D Khaitan Vs. Income Tax Officer, reported in (1978) 113 ITR

556 (Cal) and Brajalal Banik Vs. State of Tripura and Ors, reported in

(1989) 2 GLR 220. Referring to the Judgments, the learned Senior

Counsel submits that the adjudicating authority has not applied its

mind to the facts and circumstances of the case but has acted

mechanically while imposing penalty and the order does not contain

any reason legally sustainable whatsoever as to why the officer

concerned had decided to levy penalty and also why he has levied

Page 24 of 78
the maximum amount of penalty. It is submitted that the maximum

amount of penalty cannot be imposed in all the cases inasmuch as

the authority has to decide the relevant factors such as the period of

delay conduct of dealer and such other considerations and the levy

of maximum penalty without stating any reasons may not be

sustainable. It is therefore submitted that the imposition of interest

and penalty in the instant case is absolutely illegal without

jurisdiction and thereby the same is liable to be set aside and

quashed. Such a non-speaking order is not maintainable in law and

same is liable to be set aside and quashed.

26. In so far as the question of maintainability of the writ petition is

concerned in view of the statutory remedy of appeal being provided

under the Act, the learned Senior counsel submits that the existence

of other adequate legal remedy will not per se act a bar for issuance

of a writ of certiorari and in an appropriate case it may issue

prerogative writs. The duty of the superior Court to issue a writ of

certiorari to correct the errors of an inferior court or tribunal called

upon to exercise judicial or quasi-judicial functions and not to

relegate the petitioner to other legal remedies available to him and a

Superior Court in a proper case exercise its jurisdiction in favour of a

petitioner who has allowed the time to appeal to expire or has not

preferred his appeal. It cannot then be laid down as an inflexible rule

Page 25 of 78
that the superior Court must deny the writ when an inferior Court or

tribunal by discarding the principles of natural justice and all

accepted principle of procedure arrive at a conclusion which shocks

the sense of justice and fair play.

27. Referring to the Judgment of this Court rendered in Hardeodas

Jagannath Vs. Income Tax Officer, reported in (1961) 47 ITR 56, it

is submitted that there is no inflexible rule that the existence of an

alternative remedy is a bar to the issue of a writ of certiorari. The

issue of various writs or directions is in the discretion of the Court

and the Court while exercising its jurisdiction may take into

consideration the existence of an alternative remedy as a mater of

policy, but the existence of an alternative remedy and it is not per so

as bar to the issue of a writ of certiorari. It is submitted by the

learned Senior counsel that this position laid down by the Assam

High Court has also summarised by the Apex Court in the case of

Hari Vishnu Kamath Vs. Ahmed Ishaque, reported in AIR 1955 SC

233.

28. Similar views have been laid down by the Apex Court in TELCO

Vs Assistant Commissioner, reported in AIR 1967 SC 1401; State of

U.P. Vs. Mohd. Nooh, reported in 1958 SCR 595; Bhopal Sugar

Page 26 of 78
Industries Vs. D.P. Dubey, reported in AIR 1967 SC 549 and Altafur

Rahman Vs. Union of India, reported in (1986) 1 GLR 14.

29. The learned Senior Counsel submits that a very recent decision

of the Apex Court consistently has held that exhaustion of alternative

remedy is not an inflexible rule. Where the Court finds that there has

been violation of natural justice or the invocation of the jurisdiction

itself is contrary to the provision of law, a writ Court is not denuded

of it's powers to invoke the prerogative writs notwithstanding the

availability of statutory alternative remedy.

30. The learned Senior counsel for the petitioner further fortifies

his submissions by referring to the Judgments of the Apex Court

rendered in Whirlpool Corporation Vs. Registration of Trade Mark,

reported in (1998) 8 SCC 1; Union of India Vs. Parashotam Dass,

reported in 2023 SCCOnline SC 314; State of Tripura Vs. Monoranjan

Chakraborty, reported in (2001) 10 SCC 740; Assistant Commissioner

of State Taxes Vs. Commercial Steel Co. Ltd., reported in 2021

SCCOnline SC 884 and Godrej Sara Lee Ltd. Vs. Com. Assessing

Officer, reported in 2023 SCCOnline SC 9695.

31. The learned Senior counsel therefore submits that the writ

petition be allowed. The impugned order-in-original be interfered

Page 27 of 78
with and set aside interfering with the demand of service tax as well

as the imposition of penalty imposed on the writ petitioner.

32. Mr. S.C Keyal, learned counsel appearing for the Respondents

has strongly disputed the contentions made on behalf of the writ

petitioner. On the question of maintainability of the writ petition, it is

submitted that where there is elaborately prescribed statutory

provisions providing for alternative remedy, the petitioner assessee

should not be permitted to invoke the writ jurisdiction without first

availing of the statutory prescribed remedies. The GST is a complete

code in itself and elaborate provisions are prescribed for ventilating

grievances of the assesses who are aggrieved by any orders passed

by the GST authorities. Therefore the writ petition should be

dismissed and the petitioner should be relegated to avail of the

statutory alternative remedies prescribed. Unless the petitioner had

availed of these remedies, there is no scope for entertaining the

instant writ petition. Therefore, since the petitioners did not avail

statutory remedy, the petition should be dismissed on this limited

ground and the parties be relegated to the avail of the statutory

remedy prescribed. In support of his contentions, the learned

counsel for the respondent relies upon the following Judgments:

1. GNRC Limited Vs. Union of India, reported in 2024 0 Supreme (Gau)
973;

Page 28 of 78
2. PHR Invent Educational Society Vs. UCO Bank and Ors, reported in 2024
0 Supreme SC 333;
3. Brahmaputra Television Network Vs. Union of India, reported in 2024 0
Supreme (Gau) 855
4. M/S Sailaja Commercial Construction Pvt. Ltd. Vs Union of India & Ors,
(W.A. No. 188/2022)
5.Bekem Infra Projects Ltd Vs. Deputy Commissioner of State Tax, [SLP(C)
No. 27712/2024];
6. Sanjib Das Vs. Union of India, reported in 2022 0 Supreme (Gau) 284;
7. Sunil Gulati Vs. Additional Commissioner, CGST, Delhi South
Commissioner & Anr. [W.P(C) No. 4383/2025];
8. M/S Vishwanath Traders Vs. Union of India and Ors [SLP(C) No.
15594/2023];
9. Union of India and Ors. Vs. Coastal Container Transpiration Association
and ors, reported in 2019 0 Supreme (SC) 215.

33. The respondents refers to the judgment of rendered in GNRC

Limited vs Union of India reported in (2024) 0 Supreme (Gau) 973.

The learned counsel for the respondents also pressed into service the

judgment rendered in PHR Invent Educational Society Vs. UCO Bank

and Ors, reported in 2024 0 Supreme SC 333. Pressing these

judgments into service, the learned counsel for the respondents

submit that in the face of well anointed procedures prescribed under

the GST providing for appeals, the petitioner should be relegated for

filing appeal before the appropriate authority.

34. Heard learned counsel for the parties. Pleadings available on

records have been carefully perused as also the service tax, demand

made by the show cause notice which ultimately came to be

Page 29 of 78
confirmed by the impugned order in original which is the issue in the

present proceedings has been assailed primarily on two grounds.

35. The first ground urged before this Court by the writ petitioner

assessee is that there were no dues of service tax payable by the

petitioner in respect of the services rendered. The petitioner

rendered services to three public sector undertakings besides the

services rendered towards construction of flats/apartments.

36. In so far as the services rendered to IOC and IOC Marketing

Division are concerned, the service tax liability of these two public

sector undertakings have been paid under the reverse charge

mechanism prescribed. In so far as the services rendered towards

ONGC is concerned, it is the claim of the petitioner that the same has

also been paid and the challans making the service tax deposit in the

Government Exchequer has also been produced before the assessing

authority. The service tax demand of the amount to the tune of Rs.

41,87,500/- which is reflected in the gross receipts as per Form

26AS, was related to sale of flat and the said amount therefore is

outside the purview of the service tax. The relevant sale agreement

and payment particulars for payment of flats had also been

submitted as a proof thereof before the Competent authority.

Page 30 of 78
37. Upon a perusal of the pleadings available before the Court, it is

seen that the service tax liability of services of transportation of

goods by road provided to Indian Oil Corporation Limited by the

petitioner was stated to have been discharged by the Indian Oil

Corporation Limited as a recipient of the services under reverse

charge mechanism as per Notification No. 30/2012 dated

20.06.2012. Similar discharge of service tax liability in respect of the

services rendered by the writ petitioner towards IOC Marketing

Division was also discharged by the recipient of the services under

the reverse charge mechanism. In so far as the service tax liability of

the services provided to ONGC is concerned, the same has also been

duly paid by the petitioner and 74 numbers of challans showing

payment of service tax to the tune of Rs. 38,60,514/- was produced

as a proof thereof and the further amount of Rs.41,87,500/- which is

reflected as gross receipt as per Form 26AS are related to sale of

flats and apartments by the petitioner and therefore, the said

amount is not relatable to service tax. All the relevant documents,

both scanned copies thereof and physical copies were stated to have

been submitted by the petitioner before the appropriate authorities.

It is therefore claimed by the petitioner before this Court that the

demand of service tax and penalty raised by the respondent

authorities is completely erroneous and on non-appreciation of the

Page 31 of 78
facts and materials which have been placed before the assessing

authority by the writ petitioner. In the pleadings, the gross receipts

as per From 26AS are reflected below in a tabular form:

FY FIRM GROSS RECEIPT AS

PER 26AS

2014-15 ONGC LTD 8337843

TOTAL 8337843

2015-16 ONGC LTD 10860143

IOC MARKETING 1435179

DIVISION

IOC LTD 338099

TOTAL 25550040

2016-17 ONGC LTD 9409330

IOC LTD 18080803

TOTAL 27490133

2017-18 ONGC LTD 11062223

IOC LTD 14438735

TOTAL 25500958

GRAND TOTAL 86878974

38. In this context a reference to the Notification No. 30/2012-

Service Tax dated 20.06.2012 in exercise of powers conferred on it

Page 32 of 78
by Sub-section (2) of Section 68 of the Finance Act, 1994 notified

certain taxable services and the extent of service tax payable thereon

by the petitioner liable to pay service tax. The relevant portion of the

said notification is extracted below:

1. The taxable services,--
(A) (i) provided or agreed to be provided by an insurance agent to any
person carrying on the insurance business;
(ii) provided or agreed to be provided by a goods transport agency in
respect of transportation of goods by road, where the person liable to pay
freight is,-
(a) any factory registered under or governed by the Factories Act, 1948 (63
of 1948),
(b) any society registered under the Societies Registration Act, 1860 (21 of
1860) or under any other law for the time being in force in any part of
India;
(c) any co-operative society established by or under any law:
(d) any dealer of excisable goods, who is registered under the Central
Excise Act, 194 (1 of 1944) or the rules made thereunder,
(e) anybody corporate established, by or under any law, or
(f) any partnership firm whether registered or not under any law including
association of persons;
(iii) provided or agreed to be provided by way of sponsorship to anybody
corporate or partnership firm located in the taxable territory;
(iv) provided or agreed to be provided by,
(A) an arbitral tribunal, or
(B) an individual advocate or a firm of advocates by way of support
services, or
(C) Government or local authority by way of support services excluding,
(1) renting of immovable property, and
(2) services specified in sub-clauses (i), (ii) and (iii) of clause (a) of section
66D of the Finance Act, 1994, to any business entity located in the taxable
territory;
(v) provided or agreed to be provided by way of renting of a motor vehicle
designed to carry passengers to any person who is not in the similar line of

Page 33 of 78
business or supply of manpower for any purpose or service portion in
execution of works contract by any individual, Hindu Undivided Family or
partnership firm, whether registered or not, including association of
persons, located in the taxable territory to a business entity registered as
body corporate, located in the taxable territory;
(B) provided or agreed to be provided by any person which is located in a
non-taxable territory and received by any person located in the taxable
territory;
(II) The extent of service tax payable thereon by the person who provides
the service and the person who receives the service for the taxable services
specified in (1) shall be as specified in the following Table, namely:
Sl.No Description of a service Percentage of Percentage of
service tax service tax
payable by payable by any
the person person liable
providing for paying
service service tax
other than the
service
provider]
(1) (2) (3) (4)]
1 in respect of services provided or agreed to be Nil 100%
provided by an insurance agent to any person
carrying on insurance business
2 in respect of services provided or agreed to be Nil 100%
provided by a goods transport agency in
respect of transportation of goods by road
3 in respect of services provided or agreed to be Nil 100%
provided by way of sponsorship
4 in respect of services provided or agreed to be Nil 100%
provided by an arbitral tribunal
5 in respect of services provided or agreed to be Nil 100%
provided by an individual advocate or firm of
advocates by way of legal services, directly or
indirectly ]
6 in respect of services provided or agreed to be Nil 100%
provided by Government or local
authority 29[*omitted*] excluding,- (1) renting
of immovable property, and (2) services
specified in sub-clauses (i), (ii) and (iii) of
clause (a) of section 66D of the Finance
Act,1994

Page 34 of 78
7 (a) in respect of services provided or agreed Nil 100 %
to be provided by way of renting of a motor
vehicle designed to carry passengers on abated
value to any person who is not engaged in the
60% 40%
similar line of business

(b) in respect of services provided or agreed
to be provided by way of renting of a motor
vehicle designed to carry passengers on non
abated value to any person who is not
engaged in the similar line of business

8. in respect of services provided or agreed to be 25% 75%
provided by way of supply of manpower for
any purpose
9. in respect of services provided or agreed to be 50% 50%
provided in service portion in execution of
works contract
10 in respect of any taxable services provided or Nil 100%
agreed to be provided by any person who is
located in a non-taxable territory and received
by any person located in the taxable territory
Explanation-I. - The person who pays or is liable to pay freight for the
transportation of goods by road in goods carriage, located in the taxable
territory shall be treated as the person who receives the service for the purpose
of this notification.

Explanation-II. - In works contract services, where both service provider and
service recipient is the persons liable to pay tax, the service recipient has the
option of choosing the valuation method as per choice, independent of valuation
method adopted by the provider of service.

39. A perusal of the same reveals that services provided or agreed

to be provided by a goods transport agency in respect of

transportation of goods by road, where the petitioner liable to pay

freight is as mentioned in the notification by or, is a taxable service.

Part II of the said notification specify the extent of service tax

payable thereon by the petitioner who provides the services and the

Page 35 of 78
person who receives the service for the taxable services specified in

Part (1) of the Notification. It is stated in the Part (II) that in respect

of services provided or agreed to be provided by a goods

transporting agency in respect of transportation of goods by road,

100% of service tax accrued thereon is liable to be paid by the

person receiving the service. Explanation I of the Notification dated

20.06.2012 states that the person who pays or is liable to pay freight

for the transportation of goods by road in goods carriage located in '

the taxable territory shall be treated as the person who receives the

service for the purpose of this notification.

In the present case, it is apparent from the above that the IOC

Ltd. and IOC Marketing being the service recipient, 100 percent

service tax was liable to be paid by them and no liability was vested

upon the service provided i.e. the petitioner in this case. That being

the case, there was no liability of service tax on the petitioner for the

amount received by it from the IOC Ltd and IOC Marketing Division.

The respondent authorities calculated the service tax liability of the

petitioner including the whole amount of receipts from IOC Ltd and

IOC Marketing Division as if the service tax liability was on the

petitioner. The petitioner after receipt of the order-in-original, sent a

mail to the IOC Ltd. on 16.06.2022 seeking clarification regarding the

said issue of service tax liability. The IOC Ltd. vide its email dated

Page 36 of 78
16.06.2022 clarified the position reproducing a clarification from the

finance team of IOC Ltd. on a similar query, which is reproduced

below for ready reference:

"As per clause (2) of Notification No 30/2012 -ST dated
20.06.2012, service tax in respect of services of transportation of
goods by road provided by goods transport agency is payable by
recipient of service.
Para 2 of the aforesaid notification provides that service tax
is payable by the person who pays or is liable to pay freight by
himself or through agent for transportation of goods by toad in
goods carriage located in taxable territory shall be treated as
person who receives service for the purpose of this notification.
Therefore, Indian Oil being recipient pf service of goods

transport is liable to discharge the tax liability under reverse charge.

The transporter being provider of service is not liable to discharge

the service tax. IOCL has discharged the applicable service tax on

such transportation service on reverse charge basis.

In the running transportation bills, there is a separate column

which shows the amount of service tax amount to be paid and the

same was deposited in the Government exchequer by the IOC Ltd.,

being the service recipient.

From the aforesaid, it is clear that the service tax liability for

receipt of Rs. 4,72,09,426/- from IOC Ltd for providing of

transportation service by road was already discharged by the service

Page 37 of 78
recipient IOC Ltd and IOC Marketing Division by depositing the same

in the Government exchequer.

40. Similarly in so far as the receipts from ONGC, it is seen that out

of the total receipts that was reflected in 26AS, Rs.83,37,843/- for

the assessment year 2014-15, Rs. 1,08,60,143/- for the assessment

year 2015-16, Rs. 9409330/- for the assessment year 2016-17 and

Rs. 11062223/- for the assessment year 2017-18 were received from

ONGC for services provided to them. It is seen that only when the

petitioner or any vendor for that matter pays the service tax liability

and produce the challan of payment of service tax to the authorities,

only then the ONGC releases the payment to the vendor. The

discharged the service tax liability assessed by the ONGC is received

by the service provider by first paying the amount so assessed in the

Government exchequer and submitting the Payment Challan to the

ONGC and only thereafter the ONGC releases the payment to the

petitioner. In the present case, ONGC made payment of the amount

reflected in the Form 26AS of Income Tax Department, only after

production of the challans showing payment of service tax by the

petitioner to the Government Exchequer and as such, the question of

liability to pay service tax on the said amount does not arise at all.

The petitioner has made payments of service tax to the tune of Rs.

Page 38 of 78
38,60,514/- on various dates for the services provided to ONGC. This

position on facts has not been disputed by the respondents.

41. It is seen that the service tax amount paid by the petitioner

directly to the Government exchequer i.e. Rs. 38,60,514/- and the

amount withheld by way of deduction by ONGC on account of service

tax i.e. Rs. 12,77,000/-. In total, the petitioner therefore has paid Rs.

51,37,514/- towards service tax which is more than the amount of

service tax payable by the petitioner for providing service of supply

of tangible goods to ONGC.

42. The payment of service tax directly to the Government

exchequer to the tune of Rs.38,60,514/- by the petitioner was also

reflected in the portal of the Central Board of Indirect Taxes and

Customs for each assessment year and the same was available to the

respondent authorities at the time of making the assessment and

passing the Order-in-original dated 23.05.2022. It is seen that for the

amount received by the petitioner for providing services of

transportation of goods by road to IOC Ltd and IOC Marketing

Division, the service tax was payable by the service recipient i.e. IOC

Ltd. It is also not disputed by the respondent authorities. The IOC

Ltd also had clarified that they had paid service tax on reverse

charge basis.

Page 39 of 78
43. From this it appears that the petitioner actually had made an

excess payment of Rs. 1,74,817.07 towards service tax. Therefore,

there does not appear to be any short paid or short levied or non-

payment of service tax as alleged in the show cause notice as well as

by the impugned order in original which had confirmed the demand

raised in the show cause notice.

44. The first limb of argument by the learned Senior counsel for

the petitioner before this Court is imposition of tax on solely on the

basis of data available in Form 26AS which is obtained from the

Income Tax Department. In Chatturam Holiram Ltd (Supra) , the

Apex Court held that there are three stages in the imposition of tax.

There has to be a declaration of liability, which is the part of the

statute which determines what persons in respect of what property

are liable to pay the tax. Then there has to the assessment. The

liability to pay taxes does not depend on the assessment which has

already been fixed by the statute. But the assessment specifies the

exact sum which a person is found to be liable to pay and finally the

modes of recovery of taxes which are assessed in the event the

assessee refuses to pay voluntarily. The relevant paragraphs of this

Judgments are extracted below:

"As has been pointed out by the Federal Court in Chatturam Vs.
Commissioner of Income-tax, Bihar [(1947) F.C.R. 116 at 126; 15 ITR

Page 40 of 78
302, at 302] (quoting from the judgment of Lord Dunedin in Whitney Vs.
Commissioners of Inland Revenue [(1926) A.C. 37] 'there are three
stages in the imposition of a tax. There is the declaration of liability, that
is the part of the statute which determines what persons in respect of
what property are liable. Next, there is the assessment. Liability does not
depend on assessment. That, ex-hypothesi, has already been fixed. But
assessment particularses the exact sum which a person liable has to pay.
Lastly, come the methods of recovery, if the person taxed does not
voluntarily pay"
45. Again in A.V Fernandez Vs. State of Kerala, reported in (1957)

8 STC 561, the Apex Court held that the three stages in the

imposition of tax which are laid down predicate, in the first instance,

a declaration of liability as the starting point. If there is a liability to

pay tax which is imposed in terms of the taxing statute, then the

provisions with regard to the assessment of such liability is to be

followed. If there is no liability to tax there cannot be any

assessment either. Sales or purchases in respect of which there is no

liability to tax imposed by the statute cannot at all be included in the

calculation of turnover for the purpose of assessment and the exact

sum which the dealer is liable to pay must be ascertained without

any reference whatever to the same.

It was further held that if under the statute, it is found that the

assessee is not liable to tax, no tax can be levied or imposed on

them and they do not come under the purview of such a statute. The

Apex Court went on to hold that no tax can be imposed by inference

or by analogy or by trying to probe into the intentions of the

Page 41 of 78
legislature and by considering what was the substance of the matter.

It was held that regard must be had to the actual provision of the Act

and the Rules made thereunder before any conclusion can be arrived

at that the assessee is liable to assessment as contended by the

revenue authorities. The relevant provisions this Act are extracted

below:

"The three stages in the imposition of a tax which are laid down
here predicate, in the first instance, a declaration of liability as the
starting point. If there is a liability to tax, imposed under the terms of
the taxing statute, then follow the provisions in regard to the
assessment of such liability. If there is no liability to tax there cannot be
any assessment either. Sales or purchases in respect of which there is
no liability to tax imposed by the statute cannot at all be included in the
calculation of turnover for the purpose of assessment and the exact sum
which the dealer is liable to pay must be ascertained without any
reference whatever to the same.
The legislature cannot enact a law imposing or authorizing the
imposition of a tax thereupon and they are not liable to any such
imposition of tax. If they are thus not liable to tax, no tax can be levied
or imposed on them and they do not come within the purview of the Act
at all. The very fact of their non-liability to tax is sufficient to exclude
them from the calculation of the gross turnover as well as the net
turnover on which sales tax can be levied or imposed.
It is no doubt true that in construing fiscal statutes and in
determining the liability of a subject to tax one must have regard to the
strict letter of the law and not merely to the spirit of the statute or the
substance of the law. If the Revenue satisfies the Court that the case
falls strictly within the provisions of the law, the subject can be taxed. If,
on the other hand, the case is not covered within the four corners of the
provisions of the taxing statute, no tax can be imposed by inference or
by analogy or by trying to probe into the intentions of the legislature and
by considering what was the substance of the matter. We must of
necessity, therefore, have regard to the actual provisions of the Act and
the rules made thereunder before we can come to the conclusion that
the appellant was liable to assessment as contended by the Sales Tax
Authorities."

Page 42 of 78
46. Coming to the facts of the present case, in the absence of any

specific averments made before this Court, it is seen that in the

impugned order-in-original although at paragraph 2.2 therein, the

respondent authorities had held that the assessee had failed to the

reply to the show cause notice within the stipulated period but

subsequent paragraphs reveals that the appellant did reply and

submit all the relevant documents. There is a categorical finding by

the respondent No. 5 at Paragraph 2.8 of the impugned order-in-

original that upon scrutiny of the documents i.e. copy of the sales

agreement, payment particulars etc submitted by the noticee in

connection with the gross receipts amounting to Rs. 41,87,500/- only

as per Form 26AS, that it is not service tax related transaction. It is

also seen from the impugned order that although the Revenue did

not reject the contention of the assessee that it had submitted the

service tax payment challans in relation to ONGC and Bills received

from IOC are exclusive of GST as IOC pays service tax on behalf of

service providers on reverse charge mechanism, however, the

assessing officer concluded that it could not be ascertained whether

the services provided by the petitioner falls either in the negative list

or covered under the mega exemption notification No. 25/25012-ST

dated 20.06.2012 or any other notification or circulars which exempts

his category of services from paying tax. The respondent No. 5

Page 43 of 78
concluded that based on the available data, the noticee rendered

various services under Section 65(105) of the Finance Act, 1994 as

amended. Post negative list introduced in the service tax regime

which became effective from 1st of July, 2012, services provided by

the Noticee would fall under the definition of service as defined

under Section 65B(44) of the Finance Act, 1994 as any activity

carried out by such person or another for consideration and includes

declared service. The respondent No. 5 thereafter concluded and

confirmed the service tax liability to the tune of Rs.1,17,27,034/- and

penalty on equal amount. The relevant paragraphs of the impugned

Order-in-Original are extracted below:

2. Discussion and finding:
2.1 I have gone through the case records thoroughly and carefully,
2.2 I have seen that the noticee, Sri Nirmal Kumar Sharma, Near Lachit
Park, JP Agarwalla Path Sivasagar, Sivasagar, Assam -- 785640 failed to
reply to the Show Cause Notice dated 21/12/2020 issued to him within the
stipulated period. I have also seen that, considering the principle of natural
justice, he was requested to appear for Personal Hearing on 24/12/2021 in
person or through authorized representatives before the Additional
Commissioner, CGST Dibrugarh with a request to accompany all the
documentary evidences, if any, in support of his defence. However, the
noticee failed to appear of the PH on the scheduled date.
2.3 I have also seen that, consequent to the reassigning of
Adjudicating authority from the Additional Commissioner, CGST Dibrugarh
vide CCO's Order vide C. No. IV(11)13/CCO/GHY/ Tech-
I/ADJ/Pt.I/2019/595-97 dated 16/02/2022, the case has been transferred
to the Additional Commissioner CGST Aizawl thereby the adjudicating
authority had please to grant PH on 04/03/2022,, 07/03/2022 and
09/03/2022 and informed the notice to appear in person or through
authorized representatives on either of the scheduled dates with an option
to appear physically or through online virtual meeting. Contact numbers of

Page 44 of 78
the departmental officers and office email as well were also provided to the
notice for enabling him to make any communication in this regard from his
side to the adjudicating authority. The noticee did not appear for PH on the
scheduled dates.
2.4 I find that the SCN which was issued to the noticee on 31/12/2020
and the noticee i.e. Sri Nirmal Kumar Sharma, Near Lachit Park, JP
Agarwalla Path Sivasagar, Sivasagar. Assam -- 785640 failed to reply to the
SCN within the stipulated time. The SCN was issued on 31.12.2020 which is
more than sufficient time to defend the case. I find that sufficient
opportunity has been provided in terms Section 33A of the Central Excise
Act. 1944 as made applicable to Service Tax vide Section 83 of the Finance
act 1994. Therefore, it appears that the notice is not interest in defending
his case. When on successive occasions he did not appear and nor took
interest in disposal of his case, it is thus a clear case of casualness or
negligence on the part of the noticee.
2.5 I also find that, on 14/03/2022, the noticee, Sri Nirmal Kumar
Sharma, Near Lachit Park, JP Agarwalla Path Sivasagar, Sivasagar, Assam
-- 785640 turned up and PH through online video conference was
conducted on the same day before the Additional Commissioner CGST
Aizawl wherein he claimed that he did not received SCN meant for him and
requested for providing the same. Thereby, the adjudicating authority had
accepted his prayer and provided the soft copies of desired SCN through
email and whatsapp. The Adjudicating authority has also pleased to fixed
another date of PH on 21/03/2022 and informed the noticee according to
appear before him on same criteria as stated supra. However, instead of
appearing PH on the scheduled date, he submitted a prayer for extension
of PH which was fixed on 21/03/2022 to another date due to some
unavoidable circumstances. On the basis of his request, another date of PH
was fixed on 23/03/2022 and informed the party accordingly.
2.6 I have seen that, on 23/03/2022, Shri Abhishek Jain, CA (M/s
Agarwal Rajesh K and Associates), authorized representative of Sri Nirmal
Kumar Sharma, Near Lachit Park, JP Agarwalla Path Sivasagar, Sivasagar,
Assam -- 785640 appeared for PH before the Additional Commissioner,
CGST Aizawl through virtual meeting wherein he stated that the detailed
reply to SCN was already sent to Dibragarh CGST Office through email and
he promised to provided same to the present adjudicating authority i.e. the
Additional Commissioner, CGST Aizawl. He further submitted the following
documents for the relevant period:
1. ST Payment Challans in relation to ONGC
2. Bill received from IOC exclusive of GST as IOC directly paid ST on
behalf of Service Provideers

Page 45 of 78
3. Any other documents in relation to ST payments, Bills from the Service
receiver for ready reference of the adjudicating authority.
I have also seen that the authorized representative, further stated that
Rs.41,87,500/- reflected as Gross Receipt as per Form 26AS was related to
sale of flat by Shri Rajesh Jain so it was not Service Tax related. He also
submitted the details of Sale Agreement, payment particulars etc. However,
the notice failed to submit the reply of SCN of SCN till the filing of this
order.
2.7. Now, I find that the issue to be decided by me in terms of the SCN is
whether-
2.7.1 The notice, Sri Nirmal Kumar Sharma, Near Lachit Park, JP
Agarwalla Path Sivasagar, Sivasagar, Assam-785640 is liable to pay service
tax to the tune of Rs.1,44,82,015/- (Rupess One Crore Forty Four lakhs
Eight Two Thousand and Fifteen) only (including cess) as detailed in the
foregoing para 1.3.1 on the services rendered during the period from F.Y
2014-15 (October, 2014 to March, 2015) to FY 2017-18 (upto June, 2017)
under the proviso of Section 73(1) of the Finance Act, 1994 as amended.
2.7.2. Interest is liable to be charged and realized from them in terms of
Section 75 of Finance Act, 1994;
2.7.3 Penalty should not be imposed on them separately under the proviso
of Section 78 (1) of the Finance Act, 1994 as amended for non-payment
and short payment of Service Tax (including Cesses) as stated above.
2.7.4 Penalty should not be imposed on them under Section 77 read with
Section 70 of the Finance Act, 1994 as amended read with Rule 7C of
Service Tax Rules, 1994 for non-filing of periodical electrically ST-3 return
from FY 2014-15 to FY 2017-18 (April 2017 to June 2017).
2.8 I find further, on scrutiny of the documents i.e. copy of Sales
Agreement, Payment particulars etc. submitted by the noticee in
connection with the Gross Receipt amounting to Rs. 41,87,500/- (Rupees
Forty-one lakh eighty seven thousand and five hundred) only as per the
Form 26AS by Rajesh Jais, that it is not service tax related transaction.
2.9 1 find further that the noticee, Sri Nirmal Kumar Sharma, Near Lachit
Park, JP Agarwalla Path Sivasagar, Sivasagar, Assam - 785640, instead of
submitting the reply of SCN to the Adjudicating Authority and the
documents related work contract order, Contract Agreement etc. with M/s
IOCL and M/s ONGC as well, he submitted only the following documents:
ST Payment Challans in relation to ONGC
2. Bill received from IOC exclusive of GST as IOC directly paid ST on behalf
of Service Providers.

Page 46 of 78
3 Any other documents in relation to ST payments, Bills from the Service
receiver forready reference of the adjudicating authority.
Therefore, it cannot be ascertained whether the services provided by him
falls either if the negative list or covered under the Mega exemption
Notification No. 25/2012-ST dated 20.06.2012 or any other
notifications/circulars which exempts his category of services from paying
service tax.
2.10 I, therefore, find, based on the available data that, the said noticee
has rendered various services under Section 65(105) of finance Act, 1994,
as amended. Post introduction of Negative List regime in the Service Tax,
which became effective from 1st July, 2012. the services provided by the
said noticee would fall under the definition of 'Service' which is defined
under Section 65 B (44) of the Finance Act, 1994, as amended, as any
activity carried out by a person for another for consideration, and includes
declared service. Hence, as per the Section 66B, there shall be levied a tax
at the rate of 12.36 % (up to 31.03.2015 and 14% Service Tax and 0.5%
SB Cess on Service Tax (up to 31.05.2016) and 14% Service Tax, 0.5% SB
Cess on Service Tax and 0.5% KK Cess on Service Tax (thereafter) on the
value of all services, other than those services specified in the Negative list.
2.11 In view of the discussions and findings in the foregoing paras, I find
that the noticee is required to pay to the Government exchequer as
furnished below based on Form 26AS. which he failed to pay and also
suppressed the same to recovered from them under proviso to Section
73(1) of the Finance Act. 1994, as amended, by invoking extended period
of limitation along with appropriate rate of interest under as per Section 75
of the Act, ibid.
FY Firm Gross Total Taxable Rate Service ST3 Short paid

Receipt as Value for Value Tax

per 26 AS TDS

2014- ONGC Ltd 8337843

15
Total 8337843 8337843 12.36% 1030557 0 1030557

2015- IOC 14351798

16 Marketing

Division

IOC Ltd 338099

Total 25550040 25550040 25550040 14.50% 3704756 503833 3200923

2016- ONGC Ltd 9409330

Page 47 of 78
17 IOC Ltd 18080803

Total 27490133 27490133 15% 4123520 453110 3670410

2017- ONGC Ltd 11062223

18
IOC Ltd 14438735

Total 25500958 25500958 15% 3825144 0 3825144

Grand 86878974 25550040 86878974 12683977 956943 11727034

Total

2.12 I Find the tax liability from the foregoing para 2.11 that notice is
liable to pay Service tax to the tune of Rs. 1,17,27,034/- (Rupees one
crore twenty-seven thousand and thirty four) only including cess to the
Government exchequer.
...............................

............................

2.14 It appears that the notice failed to file mandatory report/returns to the Department and failed to pay his tax liability to the government exchequer. It is mandatory for service provider to take registration, declare such activities and receipt towards the same in their ST-3 returns and filed as prescribed under the relevant provision of the Act. ST-3 is prescribed under the statute so that Department can form view with regards to the taxability of the service. Failure to these shall be liable to a penalty which may extend to hundred percentage."

47. From the recital of the impugned Order-in-original, it is seen that the respondent No. 5 does not dispute that the gross receipts as reflected in the Form 26AS obtained from the Income Tax Department in so far as the writ petitioner is concerned reflects the receipt by the petitioner assessee from IOC, IOC Marketing Division and ONGC. These receipts in so far as the IOC and IOC Marketing Division are concerned have been accepted by the assessing officer that the service tax dues have been paid by the receiver of the Page 48 of 78 services under the reverse charge mechanism. In so far as the receipts from ONGC are concerned, it is seen from the impugned Order-in-Original that the petitioner has produced the payment of service tax in respect of the services rendered by the petitioner towards ONGC and it is also stated that the ONGC will make payment of the service tax only after the same has been paid by the writ petitioner. It is seen from the pleadings as is also seen in the recital in the impugned Order-in-Original that the petitioner has produced the 74 numbers of challans showing payment of service tax to the tune of Rs.38,60,514/-. That apart, an amount of Rs. 12,77,000/- on account of service tax from various bills of the petitioner have been withheld by the ONGC by deducting the same from the bills paid to the petitioner.

48. Therefore, it appears to the Court that in so far as the service tax dues of the petitioner as regards the services rendered to IOC, IOC Marketing Division and ONGC have been satisfactorily submitted before the authorities and the revenue authorities also do not dispute that the said amount has been paid by the petitioner as reflected. In so far as the amount of Rs.41,87,500/- shown as gross receipts in Form 26AS relatable to sale of flats and apartments they are not related to service tax for which the relevant agreements and payment particulars were also produced. Even assuming at this stage Page 49 of 78 that there could be some clarity to be offered from the petitioner in respect of the sale of flats and apartments and the payment of service tax thereon, the very fact that the IOC, IOC Marketing Division and the ONGC have been paid the service tax dues under the reverse charge mechanism quite clearly demonstrate that no service tax dues atleast in so for as these three entities are concerned can be demanded from the petitioner. Nowhere in the impugned order-in-original is there any finding by the respondent authority that the averments and the statements of the writ petitioner in respect of the payment of service tax dues under reverse charge mechanism by IOC, IOC Marketing Division and ONGC are found to be incorrect. It was open for the respondent authority to verify and confirm these transactions with these public sector undertakings if required. Therefore, it thus appears that the demand of service tax from the writ petitioner by way of the impugned show cause and the impugned order-in-original do not appear to have been correctly assessed. The question of levy of service tax on the basis of presumption or assumption is contrary to the scheme of the Act as well as the law laid down by the Apex Court in Chatturam Horilram Ltd (Supra) and A.V Fernandez (Supra) and other Judgments which have discussed above. Therefore, upon careful examination of the pleadings and the law as discussed above, Page 50 of 78 this Court unequivocally comes to the conclusion that any determination of liability has to be specifically made within the contours of the statute law. Unless the assessee is found to be within the parameters specified under the statute, no liability can be affixed towards payment of service tax on the assessee. It is only after the assessee is fastened with the liability to pay service tax under the statute then the question of determination on the amount of service tax along with interest and penalty if any is required to be determined by way of any assessment procedure as prescribed. The Revenue authorities as is evident from the recital of the impugned order-in-original, has proceeded to determine and fasten the liability of service tax solely on the premises of the gross receipts as is available under the Form 26AS.

49. Therefore, under such circumstances, this Court is of the considered view that the determination made by the respondent authorities by issuing the demand cum show cause notice and the confirmation in the impugned order-in-original is contrary to the provisions of the Act and the law declared by the Apex Court as well as by the High Court. The impugned order-in-original is therefore is bad and the same is liable to set aside.

Page 51 of 78

50. Coming to the question of the invocation of the extended period of limitation, it is necessary to refer to the provisions of Section 73 of the Finance Act, the same is extracted below:

Section 73: - Recovery of Service tax not levied or paid or short- levied or short-paid or erroneously refunded.-

73 (1) where any service tax has not been levied or paid or short -levied or short-paid or erroneously refunded, the Central Excise Officer may, within eighteen 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 persons 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) willful misstatement ;or

(d) suppression of facts; or

(e) contravention of any of the provisions of this chapter or of the rules made there under 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 eighteen months, the words "five years" had been substituted.

Explanation-where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of eighteen months or five years as the case may be. (1A) Notwithstanding anything contained in sub-section (1), the Central Excise Officer may serve, subsequent to any notice or notices served under that sub-section, a statement, containing the details of service tax not levied or paid or short levied or short paid or erroneously refunded for the subsequent period, on the person chargeable to service tax, then, service of such statement shall be deemed to be service of notice on such person, Page 52 of 78 subject to the condition that the grounds relied upon for the subsequent period are same as are mentioned in the earlier notices (2) The Central Excise Officer shall after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined. (3) ...................

51. A perusal of the Section 73 of the Finance Act reveals that the extended period in respect of recovery of service tax not levied or paid or short levied or short paid or erroneously refunded can be invoked only when any or more of the conditions prescribed under the proviso to the said section is present. Under the proviso to the said section, there are five situations when the extended period of limitation can be invoked. These are:

(a) Fraud; or

(b) Collusion; or

(c) Willful misstatement; or

(d) Suppression of facts; or

(e) Contravention of any of the provisions of this Chapter or of the rules made there under with intent to evade payment of service tax.

52. It is only in the event that any or more of these conditions are found to be applicable in the facts and circumstances of the case that Page 53 of 78 the provisions for extension of limitation under Section 73 can be invoked. In the event, it is invoked a notice has to be issued within a period of 18 months from the relevant date on the person chargeable with service tax.

53. In this context, it is necessary to refer to the case laws cited before this Court. In Continental Foundation Joint Venture Holding (Supra), the extended period of limitation under Section 11A of the Central Excise and Salt Act, 1944 was under consideration. The Apex Court held that mere omission to give correct information did not constitute suppression unless that omission was made willfully in order to evade duty. The Apex Court held that suppression would mean failure to disclose full and true information with the intent to evade payment of duty. When the facts are known to both the parties, omissions by one party would not constitute suppression. It was held that an incorrect statement cannot be equated with a willful mis-statement. The latter implies making of an incorrect statement with the knowledge that the statement made was not correct. The relevant paragraphs of the Judgment are extracted below:

12. The expression "suppression" has been used in the proviso to Section 11-A of the Act accompanied by very strong words as "fraud"

or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop (sic evade) the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, Page 54 of 78 omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct.

54. In CEE Vs Chemphar Drugs & Liniments (Supra), while interpreting provisions of Section 11A of the Act of 1944, the Apex Court held that something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise is required, before it is saddled with any liability, before (sic beyond) the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or willful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case.

55. In Cosmic Dye Chemical (Supra), the Apex Court again while examining Section 11 A of the Act of 1944 held that the emphasis is on the requisite intent i.e the intent to evade payment of duty which is built into the very works of section. The Apex Court held that even misstatement or suppression of fact are clearly qualified by the words "willful" preceeding the words "misstatement or suppression of facts"

which means with intent to evade duty. The Apex Court therefore Page 55 of 78 held that it will not be correct to say that there can be a suppression or misstatement of fact, which is not willful and yet constitutes a permissible ground for the purpose of the provisio to Section 11-A. Misstatement or suppression of fact must be willful. The relevant paragraph is extracted below:

"6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word 'wilful' preceding the words "misstatement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or rules" are again qualified by the immediately following words "with intent to evade payment of duty". It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11-A. Misstatement or suppression of fact must be wilful.

56. Coming to the fact and the present proceedings from the recital of the impugned order-in-original, it is seen that the respondent authorities had held that the petitioner assessee did not willfully get service tax registration nor filed their periodical ST-3 returns and therefore did not discharge their service tax liabilities to the Government Exchequer with mala fide intention to evade payment of service tax. The assessing authority therefore concluded that in the absence of the periodical ST-3 returns being not filed by the petitioner or the fact that the petitioner did not get service tax registration, there was deliberate suppression of material facts from Page 56 of 78 the department with the intent to evade payment of service tax and as a consequence thereof, the powers under Section 73 for extension of limitation of five years was invoked for the demand and recovery of service tax short paid.

57. Such conclusions as have been discussed above are contrary to the facts which are evident from the pleadings. In any view of the matter for invocation of the provisions of Section 73 for extension of the period of limitation, it must necessarily be a case which falls under any or all the conditions specified under the proviso to Section 73(1) of the CGST Act. From a plain reading of the impugned Order- in-Original and the relevant portions of which have been extracted above, it is evident that there is no finding by the Adjudicating Authority that the case of the petitioner can be considered to be a case which falls under the conditions specified in proviso to Section 73(1). Under such circumstances, the impugned Order-in-Original appears to the Court to have been assumption of jurisdiction by the revenue authorities which was not otherwise vested on the said authority. For the revenue authorities to invoke powers under Section 73(1), there must be a finding and a conclusion arrived at based on the facts of the case that the petitioner assessee had willfully and deliberately resorted to fraud, collusion, willful misstatement, suppression of facts of contravention of any of the provision Page 57 of 78 thereunder with the intent to evade payment of service tax. Therefore, for invocation of the powers proviso to Section 73(1), there must be a conclusive finding arrived at by the Revenue authorities that the petitioner assessee had resorted to any or all for these acts or omissions with the sole intention to evade payment of service tax. Such finding is not discernable from the impugned Order- in-Original passed by the Revenue Authorities. Therefore, the assumption of jurisdiction of the Revenue under the proviso to Section 73(1) has to be concluded to be a jurisdiction assumed by the Revenue authorities not vested on it by the statute. Such assumption of jurisdiction therefore, being contrary to the provisions of the statute itself, the same is colourable and therefore it is held to be unauthorized.

58. Where a subordinate Tribunal and an authority is found to have assumed jurisdiction not vested on it a superior Court may invoke its extraordinary jurisdiction to correct such errors which were exercises by the authorities. The powers of a superior Court to examine the authority assumed by a Tribunal was the issue in Anisminic Ltd (Supra). It was held therein that the jurisdiction of the superior Court is to see that the inferior court has not exceeded its own, and for that very reason it is bound not to interfere in what has been done within that jurisdiction, for in so doing it would itself, in turn, Page 58 of 78 transgress the limits within which its own jurisdiction of supervision, not of review, is confined. That supervision goes to two points: one is the area of the inferior jurisdiction and the qualification and conditions of its exercise; the other is the observance of the law in the course of its exercise. If, therefore, a tribunal while within the area of its jurisdiction committed some error of law and if such error was made apparent in the determination itself (or, as it is often expressed, on the face of the record) then the superior court would certainly be competent correct that error unless it was otherwise forbidden to do so under the statute. It would be so forbidden if the determination was "not to be called in question in any court of law". If so forbidden it could not then even hear argument which suggested that error of law had been made. It could, however, still consider whether the determination was within "the area of the inferior jurisdiction.

By referring to Reg. Vs. Cotham, reported in (1898) 1 Q.B. 802, 808, it was noted that the distinction between, on the one hand, disregarding the provisions of a statute and considering matters which ought not to be considered and, on the other hand, what is called "a mere misconstruction of an Act of Parliament". This perhaps illustrates the clear distinction which exists between an error when in the exercise of jurisdiction and an error in deciding whether Page 59 of 78 jurisdiction can be assumed: in the latter case an error may have the consequence that jurisdiction was lacking and was wrongly assumed and the result would be that any purported decision would have no validity.

The Court held that lack of jurisdiction may arise in various ways. There may be an absence of those formalities or things which are conditions precedent to the tribunal having any jurisdiction to embark on an inquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or in the intervening stage, while engaged on a proper inquiry, the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account. Thereby it would step outside its jurisdiction. It would turn its inquiry into something not directed by Parliament and fail to make the inquiry which Parliament did direct. Any of these things would cause its purported decision to be a nullity.

59. Again in Bunbury Vs. Fuller, reported in (1853) 9 Exch 111, 140 on the question of excessive jurisdiction of a Court of limited jurisdiction, it was held that no court of limited jurisdiction can give itself jurisdiction by a wrong decision on a point collateral to the merits of the case upon which the limit to its jurisdiction depends; Page 60 of 78 and however its decision may be final on all particulars, making up together the subject matter which, if true, Is within its jurisdiction, and however necessary in many cases it may be for it to make a preliminary inquiry, whether some collateral matter be or be not within the limits, yet upon this preliminary question, its decision must always be open to inquiry in the superior court.

60. Again in Rex Vs. Shoreditch Assessment Committee, Ex parte Morgan, reported in (1910) 2 K.B. 859, it was held that no tribunal of inferior jurisdiction can by its own decision finally decide on the question of the existence or extent of such Jurisdiction: such question is always subject to review by the High Court, which does not permit the inferior tribunal either to usurp a jurisdiction which it does not possess, whether at all or to the extent claimed, or to refuse to exercise a jurisdiction which it has and ought to exercise. Subjection in this respect to the High Court is a necessary and inseparable incident to all tribunals of limited jurisdiction; for the existence of the limit necessitates an authority to determine and enforce it: it is a contradiction in terms to create a tribunal with limited Jurisdiction and unlimited power to determine such limit at its own will and pleasure -- such a tribunal would be autocratic,not limited -- and it is immaterial whether the decision of the inferior Page 61 of 78 tribunal on the question of the existence or nonexistence of its own jurisdiction is founded on law or fact.

61. In Pilling Vs. Abergele Urban District Council, reported in (1950) 1KB 636, it was held that where a duty to determine a question is conferred on a authority which state their reason for the decision and the reasons which they state show that they have taken into account matters which they ought not to have taken into account or that they have failed to take matters into account which they ought to have taken into account, the court to which an appeal lies can and ought to adjudicate on the matter.

62. Similar views have been expressed by Courts in India and followed in several cases in the context of examination of jurisdiction vested on Tribunals and Court of limited jurisdiction. In Dhirajlal Girdharilal Vs. CIT, Bombay, reported in AIR 1955 SC 271, the Apex Court held that when a Court of fact acts on materials partly relevant and partly irrelevant, it is impossible to say to what extent the mind of the Court was affected by the irrelevant materials used by it in arriving at its finding and such a finding is vitiated because of use of inadmissible material and thereby a question of law arises.

63. In Ram Avtar Sharma Vs. State of Haryana, reported in AIR 1985 SC 915, the Apex Court held that discretionary power must be Page 62 of 78 exercised on relevant and not on irrelevant or extraneous considerations. It means that power must be exercised taking into account the considerations mentioned in the statute. If the statute mentions no such considerations, then the power is to be exercised on considerations relevant to the purpose of which it is conferred. On the other hand, if the authority concerned pays attention to, or takes into account, wholly irrelevant or extraneous circumstances, events or matters or considerations then the action taken by it is invalid and will be quashed.

64. In Jt. Reg., Co-operative Societies Vs. Rajagopal, reported in AIR 1970 SC 992, the Apex Court held that even though an authority may act in its subjective satisfaction, there must be cogent materials on which the authority has to form its opinion.

65. In Indian Railway Construction Co. Ltd. Vs. Ajay Kumar, reported in AIR 2003 SC 1843, the Apex Court held that in the purported exercise of its discretion, the authority conferred with discretion must not do what it has been forbidden to do, nor must it do what it has not been authorized to do. It must act in good faith, must have regard to all relevant considerations, must not be influenced by irrelevant considerations, must not seek to promote Page 63 of 78 purposes alien to the letter and to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously.

66. Again in Shalini Soni Vs. Union of India, reported in (1980) 4 SCC 544, it was held by the Apex Court that it is an unwritten rule of law, constitutional and administrative, that whenever a decision- making function is entrusted to the subjective satisfaction of a statutory functionary, there is an implicit obligation to apply his mind to pertinent and proximate matters only, eschewing the irrelevant and the remote. Applying this principle in CIT Vs Mahindra & Mahindra, reported in (1983) 4 SCC 392, the Supreme Court quashed a decision under Section 72-A of the Income Tax Act, as the government was "clearly influenced by irrelevant and extraneous materials vitiating the impugned conclusion.

67. In S.R Venkataraman Vs. Union of India, reported in AIR 1979 SC 49, the Apex Court held that an administrative order which is based on reasons of facts which do not exist is infested with an abuse of power. There will be an error of fact when a public body is promoted by a mistaken belief in the existence of a non-existing fact or circumstance.

68. From a careful analysis of the judicial pronouncements as discussed above, it is clear that if an authority while making the Page 64 of 78 inquiry rejects a consideration which is relevant and/or takes into consideration materials and other information which are not relevant, the said decision can be said to be a decision in excess or without jurisdiction. In the present case the adjudicating authority took into consideration the information available in form 26AS of the Income Tax Act, the sole basis for the purpose of levy of service tax. The authority did not consider the services rendered by the petitioner were exempted from levy of service tax or the liability to pay the service tax on the said services was on the recipient on the services. Since the adjudicating authority did not take into consideration those relevant materials which it was bound to take into consideration and on the other hand it had taken into consideration factors and materials, which if not irrelevant and not germane for deciding the liability of the service tax, cannot establish the liability of the assessee, then the said actions of the adjudicating authority is certainly without jurisdiction and/or is in excess of jurisdiction and thereby the impugned actions, orders and notices issued by the adjudicating authority are liable to interfered with by this Court in exercise of its extra ordinary jurisdiction under Article 226 of the Constitution of India.

69. Coming to the question of maintainability of the writ petition in view of the availability of statutory alternative remedy, the Page 65 of 78 respondents have raised objections that whatever issues have been urged by the petitioner before this Court can very well be looked into by the appellate authority prescribed under the statute. Therefore, the question of exercise of prerogative writs by this court is not called for and the writ petition should be dismissed and the petitioners should be relegated to avail the statutory remedy. That

70. While the respondents are within their rights to raise their objections, time and again the question of issuance of prerogative writs even where statutory alternative remedies are available and/or are not availed of by the assessee, has come up before this Court as well as the Apex Court in a Catena judgments. The Assam High Court in Hardeodas Jagannath Vs. Income Tax Officer, reported in (1961) 47 ITR 56 had clearly held that there is no inflexible rule that the existence of an alternative remedy is a bar to the issue of writ of certiorari. The issuance of prerogative writs or directions is always to the discretion of the Court and the Court while exercising its discretion may take into consideration the existence of an alternative remedy as a matter of policy, but the existence of an alternative remedy is not per se a bar to the issue of writ of certiorari.

The High Court at Paragraph 42 held as under:

"42 No Tribunal and no Officer can confer jurisdiction or authority or competence upon itself or himself by misconstruing a section. An Page 66 of 78 authority cannot claim to exercise jurisdiction by construing a section erroneously and thereby contending that the section so wrongly construed gives him the necessary power. In such a case, if the section has been wrongly construed, it would be a clear case of absence of jurisdiction apparent on the face of the record because the Court has got to look at the section and to decide whether the officer construing the section was in the right or in the wrong."

71. The Apex Court in TELCO Vs. Assistant Commissioner, reported in AIR 1967 SC 1 401 held that though ordinarily High Court leaves an aggrieved party to take recourse to the remedies available under the ordinary law, if they are equally efficacious, yet there are certain exceptions and one of such exceptions pointed out is where action is being taken arbitrarily and without the sanction of law.

72. In State of U.P Vs. Mohd. Nooh, reported in 1958 SCR 595, the Apex Court held that the rule requiring the exhaustion of statutory remedies before the writ is granted is a rule of policy, convenience and discretion rather than rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies.

73. In Bhopal Sugar Industries Vs. D.P Dubey, reported in AIR 1967 SC 549, the Apex Court held that the High Court has undoubted jurisdiction to decide the writ application whether the taxing authority has arrogated to itself, powers which it does not posses or has committed serious errors of procedure which has affected the Page 67 of 78 validity of the decision or where the taxing authority threatens to recover tax on an interpretation of the statute which is erroneous.

74. In Altafur Rahman Vs. Union of India, reported in (1986) 1 GLR 14, this Court held that when the challenges of the petitioner go to the root of the jurisdiction of the Controller and therefore the writ petition cannot be dismissed without disposing the contentions of the petitioner on merits.

75. In Whirlpool Corporation Vs. Registration of Trade Mark, reported in (1998) 8 SCC 1, the Apex Court on the question of alternative remedy held that exception on the existence whereof a Writ Court would be justified in entertaining a writ petition despite the party approaching it not having availed the alternative remedy provided by the statute were laid document was the exceptional land document by the Apex Court were as under :

(i) where the writ petition seeks enforcement of any of the fundamental rights.

(ii) where there is violation of principles of natural justice;

(iii) Where the order or the proceedings are wholly without jurisdiction; or

(iv) Where the vires of an Act is challenged Page 68 of 78

76. In Godrej Sara Lee Ltd (Supra), the Apex Court held that mere availability of an alternative remedy of appeal or revision, which the party invoking the jurisdiction of the High Court under Article 226 has not pursued, would not oust the jurisdiction of the High Court and render a writ petition "not maintainable". The Court made it clear that availability of an alternative remedy does not operate as an absolute bar to the "maintainability" of a writ petition and that the rule, which requires a party to pursue the alternative remedy provided by a statute, is a rule of policy, convenience and discretion rather than a rule of law. The Apex Court in further held that dismissal of a writ petition by a high court on the ground that the petitioner has not availed the alternative remedy without, however, examining whether an exceptional case has been made out for such entertainment would not be proper. The Apex Court further held that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available. The relevant paragraph is extracted below:

"9. Now, reverting to the facts of this appeal, we find that the appellant had claimed before the High Court that the suo motu revisional power could not have been exercised by the Revisional Authority in view of the existing facts and circumstances leading to the only conclusion that the assessment orders were legally correct and that the final orders impugned Page 69 of 78 in the writ petition were passed upon assuming a jurisdiction which the Revisional Authority did not possess. In fine, the orders impugned were passed wholly without jurisdiction. Since a jurisdictional issue was raised by the appellant in the writ petition questioning the very competence of the Revisional Authority to exercise suo motu power, being a pure question of law, we are of the considered view that the plea raised in the writ petition did deserve a consideration on merits and the appellants writ petiton ought not to have been thrown out at the threshold."

77. Again in Union of India Vs. Parashtom Dass, reported in 2023 SCCOnline SC 314, the Apex Court held that the provision of Article 226 of the Constitution forming part of the basic structure of the Constitution and that the self-restraint of the High Court under Article 226 of the Constitution is distinct from putting an embargo on the High Court in exercising this jurisdiction under Article 226 of the Constitution while judicially reviewing a decision arising from an order of the Tribunal. The relevant Paragraphs are extracted below:

"A High Court Judge has immense experience. In any exercise of jurisdiction under Article 226, the High Courts are quite conscious of the scope and nature of jurisdiction, which in turn would depend on the nature of the matter.

We believe that there is no necessity to carve out certain case from the scope of judicial review under Article 226 of the Constitution, as was suggested by the learned Additional Solicitor General. It was enunciated in the Constitution Bench Judgment in S.N. Mukherjee case that even in respect of courts-martial, the High Court could grant appropriate relief in a certain scenario as envisaged therein, i.e., "if the said proceedings have resulted in denial of the fundamental rights guaranteed under Part III of the Constitution or if the said proceedings suffer from a jurisdictional error or any error of law apparent on the face of the record."

There appears to be a misconception that the High Court would re- appreciate the evidence, thereby making it into a second appeal, etc. WE believe that the High Courts are quite conscious of the parameters within Page 70 of 78 which the jurisdiction is to be exercised, and those principles, in turn, are also already enunciated by this Court."

78. From a careful analysis of the judgments discussed above, it is clear that the writ Court can interfere any arbitrary action notwithstanding the availability of alternative remedy when the authorities acts within jurisdiction or in exercise of jurisdiction or there is a procedural irregularity or were the order is high handed and is palpably illegal order in as much the same would amount to violation of Article 14 of the Constitution of India. In the present case the adjudicating authority has imposed service tax most arbitrarily without considering the materials placed on record by the petitioner that the transportation services rendered by the petitioner to India Oil Corporation Ltd. were liable to service tax on reverse charge basis i.e. the recipient of service namely Indian Oil Corporation Ltd was liable to pay service Tax and in fact the Indian Oil Corporation had already discharged its liability to pay service tax and in so far as the services rendered to ONGC, the petitioner had already paid the Service tax or tax was deducted at source and thereby question of levying of any service tax on the petitioner did not arise. The adjudicating authority merely on inferences and analogy levied service Tax on the petitioner on the information available in Form Page 71 of 78 26AS obtained from the Income tax department without examining the fact as to whether the said services were taxable in the hands of the petitioner. Such action of the adjudicating authority is absolutely without jurisdiction and/or in excess of jurisdiction and gross procedural irregularity has been committed by the adjudicating authority and thereby the availability of alternative remedy cannot come in way of maintainability of the writ petition. The adjudicating authority has invoked the extended period of limitation without arriving at a conclusion that there was any suppression or misstatement or fraud or collusion and/or contravention of any of the provisions of the Act and Rules with the intent to evade payment of any tax and thereby the issuance of the show cause notice itself after the period the limitation was absolutely without jurisdiction. From a reading of the order of adjudication it is clear that gross injustice has been done to the petitioner because of the high handed and palpably illegal and arbitrary order and therefore it is held that the present writ petition is maintainable notwithstanding the availability of statutory alternative remedy and the impugned show cause notice as well as order of adjudication are liable to be set aside and quashed.

79. Although ordinarily it is the law enunciated by this court as well as by the Apex Court that an aggrieved assessee ought to avail of statutory remedies ascribed or prescribed under the statute, there is Page 72 of 78 no quarrel on this principle of law. The GST is a complete code in itself providing for filing of returns, assessments, recovery as well as for appeals before the appropriate appellate authority. The facts involved in the present proceedings are however peculiar in essence that this show cause notice and the consequential confirmation of demand by the impugned order in original was a proceeding initiated by the respondent authority after invoking the extended period of limitation under Section 73(1). Therefore, in an ordinary course of proceedings seeking recovery of tax demanded, the normal course would be to avail of the statutory remedies. However, before the authorities invoke their jurisdiction under section 73(1), it is the mandate of the statute that the authorities must come to a specific conclusion that the jurisdiction conferred on the revenue authorities under Section 73 (1) can be invoked in the facts and circumstances of the present case. As have been elaborately discussed in the preceeding paragraphs that for invocation of jurisdiction under section 73(1), the respondent authorities must come to a conclusion that the invocation of the powers under section 73 (1) is necessary as the petitioner's case falls under any of the conditions mentioned in the proviso to section 73(1) of the CGST Act. However, from the recital of the order impugned, it is seen that the primary reason for invoking the jurisdiction under section 73(1) is non furnishing of the Page 73 of 78 required documents by the petitioner assessee to be full satisfaction of the respondent authorities. This mere non furnishing of documents or information in itself cannot be construed to have given rise to a situation under any or all of these five conditions under proviso to section 73(1) in order to levy service tax by extending limitation by the revenue authorities who have invoked this powers under section 73(1). Under such circumstances, ordinarily the revenue authorities could not have issued the impugned notice in demand followed by the order in original as it would have been hit by limitation. It is only by invocation of Section 73(1) under the GST Act that the revenue authorities have assumed powers for issuance of the show cause and the consequential confirmation by the impugned order in original by extension of the limitation. Therefore, the parameters prescribed under the proviso to section 73 (1) are to be scrupulously and diligently followed by the revenue authorities. It does not depend on the ipse dixit of the revenue authorities. They must certainly arrive at a specific conclusion that the non-furnishing of documents leading to non-payment of GST is a deliberate and willful attempt by the petitioner assessee to evade from payment of the taxes due. The revenue authorities were within their rights to issue appropriate notices and carry out proceedings within the ordinary period of limitation prescribed, if it was their conclusion on Page 74 of 78 due examination of the materials before them that there was any shortfall in the payment of GST and the same was required to be recovered. However, this process for demand and recovery was not initiated within the period of limitation ordinarily prescribed under the provisions of the Act. Therefore, the revenue authorities invoked the provisions under Section 73(1) to issue the demand cum show cause notice and the consequential impugned order in original confirming the demand and imposition of penalty and interest. It is the view of this Court that while demand and recovery of taxes as ordinarily prescribed under the provisions of the Act requires careful consideration of the facts and circumstances and satisfaction of all the parameters prescribed upon, the demand and recovery under the extended period of limitation under section 73(1) being an exception to the General Rule, requires a higher degree of responsibility and diligence on the part of the revenue authorities before they can proceed to invoke the powers conferred under section 73(1).

80. It is a trite law that greater the power prescribed under the statute greater will be the responsibility on the authorities on whom it has been bestowed to ensure that no infraction of the provisions of the Act and the Rules are made and no injustice is caused to the assessee during the process of demand and recovery. This Court while examining the facts and circumstances in minute detail and the Page 75 of 78 exposition of the law laid down by various Courts including this Court as well as the Apex court of the country has held that for the Revenue authorities to invoke the powers under section 73(1), there must be a conclusive finding by the Revenue authorities that the petitioner assessee under the facts and circumstances, had wilfully and deliberately evaded or neglected to pay the GST. This conclusion by the Revenue authorities is not apparent and discernible from a plain reading of the impugned order in original. It is not a case that the petitioner assessee never responded to the notices. It is not a case that the documents which were called for required to be submitted were not furnished. The ST-3 Returns filed by the petitioner assessee were available in the records of the revenue authorities and which would have given a complete picture of the services rendered by petitioner assessee and/or whether such services come within the ambit of service taxes or are excluded by any circular or notification issue. However, there is no finding by the revenue authorities as to why this aspect was not examined. There is no conclusion of the revenue authorities in this aspect of the matter as is evident from the impugned order in original.

81. Therefore, under such circumstances the invocation of extended period of limitation under section 73(1) has been held by this Court to be invalid and contrary to the prescriptions mandated Page 76 of 78 by law. This being a position, it is a clear case of assumption of jurisdiction by the Revenue authorities where the statutes did not confer them such jurisdiction by default. A Writ Court while exercising its powers under Article 226 can certainly examine whether the Tribunal or the quasi-judicial authority by exercising its jurisdiction mandated under the statute has fulfilled the necessary pre-conditions prescribed by the statute itself.

82. In the facts and circumstances of the case, it is the conclusion arrived at by this Court that such preconditions mandated by law under section 73(1) having not been fulfilled by the Revenue authorities, their assumption of jurisdiction under section 73(1) of the GST Act was completely unwarranted and revenue authorities could not have assumed the jurisdiction under section 73(1) unless these pre-conditions mandated and a conclusion thereto has been arrived at by the Revenue authorities before assumption of such jurisdiction. It is under these circumstances that notwithstanding the availability of statutory alternative remedy, this Court considers it an appropriate case to invoke its jurisdiction under Article 226 to interfere with the impugned order in original and to set aside and quash the order-in-original. Under these circumstances, the case laws referred to by the respondents will have no bearing in the facts and circumstances of the present proceedings. There is also no Page 77 of 78 quarrel with the general proposition of law that in the face of statutory alternative remedy being available, a Writ Court would ordinarily not invoke its power of issuance of prerogative Writs. Since this Court has held that the levy of service tax on the petitioner by extending the limitation is contrary to the provisions of law, the natural corollary that would follow is that the levy of all penalty, surcharge and interest are also not leviable on the petitioner, this Court therefore issues a writ of certiorari setting aside the impugned order in original and it is ordered accordingly.

83. Therefore the writ petition stands accordingly allowed. However no order as to cost. Pending I.A.s are also dismissed and the interim order if any stands merged.

JUDGE Comparing Assistant Page 78 of 78

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