Challenge to the show cause notice invoking extended period of limitation - Renting of immovable property - Suppression of facts - Intention to evade tax - failure to comply with the requirements of the statutory provisions of the Finance Act, 1994 - Audit of accounts by CAG of non-government company which is not operated out of the funds of the Union of India or any State Government or any Union territory or any entity owned and/or financed by them - Held that:- there is no provision in Chapter V of the Finance Act, 1994, or for that matter in the CAG Act which empowers the CAG to audit the accounts of an assessee which is a non-government company, not in receipt of aid or assistance from any Government or Government entity. Sub-section (2) of Section 94 also does not empower the Central Government to frame rules for audit of the accounts of an assessee by any audit team under the Comptroller and Auditor-General of India. There can be no doubt that statutory rules, framed in exercise of power conferred by statute cannot introduce something not contemplated in the statute, from which it derives its rule making power.
On a harmonious reading of Rule 5A of the Service Tax Rules with the provisions of Chapter V of the Finance Act, 1994, as amended, it may be deduced that any officer authorized by the Commissioner would have to be interpreted to include the members of an audit team, an auditor or an accountant authorized by the Commissioner, and they would all have access to any premises registered under the Rules, for the purpose of carrying out scrutiny, verification and checks as might be necessary, including auditing of accounts, to safeguard the interest of Revenue.
The obligation to provide records to the audit party deputed by the Comptroller and Auditor-General is to be construed as an obligation to provide documents and records, when those documents and records are necessary for audit in accordance with law, subject to the provision of the CAG Act, for example, audit of the receipts of the Government meant for deposit in the Consolidated Fund of India or, may be, an audit on the request of the Governor or the President as indicated above.
Maintainability of writ petition - Held that:- It is well settled that existence of an alternative remedy is not in itself a bar to entertaining a writ petition. A writ petition can certainly be entertained when a notice is impugned as without jurisdiction.
Extended period of limitation - Held that:- Finance Act, 2011, whereby the provisions of the Finance Act, 1994, relating to the service of renting of immovable property have been amended, does not contain any provision which enables the Service Tax Authorities to make any demand beyond the period of limitation prescribed in Section 73(1) of the Finance Act, 1994.
Commissioner proceeded on the basis that there had been contravention, as a result of which, some tax payable had not been paid. The Commissioner of Service Tax did not address the issues, which were required to be addressed, for issuing a notice by invoking the extended period of limitation. - Demand raised by issuance of the impugned show cause notice has been pre-determined. When a demand is pre-determined the same does not remain in the realm of a show cause notice as held by the Supreme Court in Siemens Ltd. v. State of Maharashtra reported in [2006 (12) TMI 203 - SUPREME COURT OF INDIA].
When a notice is issued in support of transactions spread over a period of time and it is found that the extended period of invocation has been invoked, the notice cannot be treated as within limitation for some of the same transactions, once it is found that the extended period of limitation is not invocable - The entire claim except at best for, may be, four receipts is barred by limitation. It is well-settled inter alia by the decisions of the Supreme Court in M/s. Raza Textiles Ltd. (1972 (9) TMI 15 - SUPREME Court), Calcutta Discount Company Ltd. (1960 (11) TMI 8 - SUPREME Court) and Shrisht Dhawan (1991 (12) TMI 271 - SUPREME COURT) that an authority cannot invoke jurisdiction to exercise power by deciding jurisdictional facts wrongly. In exercise of the power of judicial review under Article 226 of the Constitution of India, this Court might examine the existence and/or correctness of the jurisdictional facts on the basis of which jurisdiction to exercise power is invoked.
Conditions precedent for exercise of jurisdiction to invoke the extended period of limitation were wholly absent. The Commissioner has not properly and independently applied his mind to the question of whether the conditions for invoking the extended period of limitation existed, but has acted mechanically, swayed by the report of the CERA team, which in itself appears to be illegal and unsustainable. The Commissioner of Service Tax has not properly applied his mind to the issues required to be addressed for invoking the extended period of limitation. The impugned show cause notice has been issued by wrongful invocation of jurisdiction. - Decided in favour of assessee.
