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2025 (6) TMI 1971 - HC - Service TaxMaintainability of petition - petitioner has not invoked remedy of appeal before the appellate authority under Section 86 of the Finance Act 1994 - time limitation - violation of Section 73 (4-B) of the Act 1994 - HELD THAT - Time and again Courts have held that delay and laches is required to be examined by the Writ Courts and so also in not exhausting alternative statutory remedy. In the present case cause of action accrued to the petitioner on 31.10.2014 whereas the writ petition was filed in the month of June 2019. Petitioner had a statutory remedy of appeal before the appellate tribunal under Section 86 of the Act 1994 and the same has not been exhausted. Statutory appeal is required to be filed within the time limit stipulated. To overcome the filing of appeal the present writ petition has been filed after about five years from the date of cause of action accrued to the petitioner. The writ petitioner ought to have been non-suited or in other words writ petition ought to have been dismissed on the ground of delay and latches itself. An applicant who approaches the court belatedly or in other words sleeps over his rights for a considerable period of time wakes up from his deep slumber ought not to be granted the extraordinary relief by the writ courts. This Court time and again has held that delay defeats equity. Delay or latches is one of the factors which should be born in mind by the High Court while exercising discretionary powers under Article 226 of the Constitution of India. In a given case the High Court may refuse to invoke its extraordinary powers if laxity on the part of the applicant to assert his right has allowed the cause of action to drift away and attempts are made subsequently to rekindle the lapsed cause of action. For filing of a writ petition there is no doubt that no fixed period of limitation is prescribed. However when the extraordinary jurisdiction of the writ court is invoked it has to be seen as to whether within a reasonable time same has been invoked and even submitting of memorials would not revive the dead cause of action or resurrect the cause of action which has had a natural death. In such circumstances on the ground of delay and latches alone the appeal ought to be dismissed or the applicant ought to be non-suited. If it is found that the writ petitioner is guilty of delay and latches the High Court ought to dismiss the petition on that sole ground itself in as much as the writ courts are not to indulge in permitting such indolent litigant to take advantage of his own wrong. It is true that there cannot be any waiver of fundamental right but while exercising discretionary jurisdiction under Article 226 the High Court will have to necessarily take into consideration the delay and latches on the part of the applicant in approaching a writ court. Therefore on the ground of laches petitioner has not made out a case - petition dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Jurisdiction and legality of the Demand cum Show Cause Notice and subsequent notices The petitioner challenged the Demand cum Show Cause Notice dated 23/04/2013 and the attachment notice dated 10/05/2019 issued under Section 87 of the Finance Act, 1994, alleging illegality, lack of jurisdiction, and violation of fundamental rights and principles of natural justice. The petitioner contended that the notices were issued without proper registration and calculation of service tax, and that the notices violated constitutional protections. The Court noted the existence of a contract between the petitioner and the Bihar Shiksha Pariyojna Parishad for provision of goods and services during 2007-2012, and the petitioner's failure to register and remit service tax as required. The Department issued the Demand cum Show Cause Notice and passed a final order on 31/10/2014. The petitioner did not challenge this order within the prescribed statutory appeal period. The Court did not find merit in the petitioner's contention on jurisdiction and legality at this stage, as the statutory mechanism for appeal was available and had not been availed. The Court emphasized that the legality and jurisdictional questions are ordinarily to be examined through the statutory appellate process and not by way of writ petition, especially when delay and laches are present. Issue 2: Delay and laches in filing writ petition and non-exhaustion of statutory remedy under Section 86 of the Finance Act, 1994 The respondents contended that the writ petition was barred by limitation and laches, as the petitioner delayed filing the writ petition for nearly five years after the cause of action arose on 31/10/2014. The petitioner also failed to file an appeal under Section 86 of the Act within the prescribed period of three months from receipt of the order. The Court extensively analyzed the statutory appeal provision under Section 86, which mandates that any appeal against orders passed by the Commissioner of Central Excise must be filed within three months of receipt of the order. The Court also noted the provisions for cross-objections and condonation of delay by the Appellate Tribunal if sufficient cause is shown. The Court relied on authoritative precedents from the Supreme Court, including:
Specifically, the Court cited decisions holding that delay defeats equity and that an aggrieved party sleeping over its rights cannot invoke extraordinary writ jurisdiction after an inordinate delay. The Court also noted that while no fixed limitation period applies to writ petitions, the discretion to entertain such petitions depends on the facts and circumstances, including delay and laches. Applying these principles, the Court found that the petitioner had not provided any satisfactory explanation for the delay of nearly five years in approaching the writ court, nor had the statutory appeal remedy been exhausted. The Court thus held that the writ petition was barred by delay and laches and was not maintainable. Issue 3: Applicability of Section 73(4-B) of the Finance Act, 1994 and pending Supreme Court decision The petitioner submitted that Section 73(4-B) of the Finance Act, 1994, which deals with limitation periods for recovery of service tax demands, was violated. This provision prescribes a dual limitation regime: a 12-month period for general cases and a 5-year period where misrepresentation or fraud is involved. The petitioner also contended that a similar issue was pending before the Supreme Court in a Special Leave Petition and sought to defer adjudication until the Supreme Court's decision. The Court acknowledged the pendency of the Supreme Court matter but declined to defer the present case on that ground. It reasoned that the petitioner's inordinate delay and failure to act promptly disentitled it from seeking indulgence. The Court emphasized that the question of limitation under Section 73(4-B) could not be entertained in the writ jurisdiction after such delay and non-exhaustion of statutory remedies. Issue 4: Principles governing exercise of writ jurisdiction under Article 226 in presence of alternative remedies The Court referred to a recent Supreme Court decision analyzing the circumstances under which writ jurisdiction may be exercised despite the existence of alternative remedies. The exceptions include cases involving:
The Court observed that the petitioner failed to approach the writ court within a reasonable time and did not demonstrate any exceptional circumstances warranting exercise of writ jurisdiction. The petitioner did not establish violation of natural justice or jurisdictional infirmity that would justify bypassing the statutory appeal mechanism. 3. SIGNIFICANT HOLDINGS The Court held:
The Court's final determination was that the writ petition was barred by delay and laches, and non-exhaustion of statutory appeal remedy under Section 86 of the Finance Act, 1994. The Court declined to entertain the writ petition on merits or defer the matter pending the Supreme Court decision on a similar issue. The petition was dismissed accordingly.
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