2016 (4) TMI 548 - CALCUTTA HIGH COURT

Maintainability of Writ petition - Show cause notice issued without jurisdiction - Held that:- it is trite law that an authority cannot confer on itself jurisdiction to do a particular thing by wrongly assuming the existence of a certain set of facts, existence whereof is a sine qua non for exercise of jurisdiction by such authority. An authority cannot assume jurisdiction to do a particular thing by erroneously deciding a point of fact or law. Here, since the petitioner has challenged the jurisdiction of the authority to issue the impugned show cause notice, the Writ Petition cannot be rejected at the threshold. Whether or not the petitioner will ultimately succeed on merits is a different question altogether. However, it cannot be said that the Writ Petition is not maintainable at all and should not be entertained for adjudication.

Period of limitation - Suppression of facts - Whether Department was justified in invoking extended period of limitation for the purpose of issuing impugned show cause notice - Held that:- a mere mechanical reproduction of the language of the proviso to Section 73(1) of the Finance Act, 1994 does not per se justify invocation of the extended period of limitation. A mere ipse dixit that the noticee wilfully suppressed the material facts with intent to evade payment of service tax is not sufficient. The notice must contain particulars of facts and circumstance in support of such allegation. Even if such particulars are not included in the notice, the Department should be in a position to justify and/or substantiate its allegation of suppression of material facts on the part of the noticee.

Any suppression on the part of the Petitioner as would entitle the Department to invoke the extended period of limitation was not found. Petitioner was diligent in responding to all the notices issued by the Department and in its replies, the Petitioner clearly explained the nature and scope of its business. Specimen copies of contracts entered into by the petitioner when its clients were also made available to the Department. So, there was full and sufficient disclosure of the nature of petitioner’s business to the Department and it cannot be said that the Petitioner suppressed material facts to keep the Department in the dark with an intent to evade payment of service tax. Also it is stated in the impugned show cause notice itself that the same has been issued on the basis of the records submitted by the Petitioner. Hence, there appears to be no basis in the Department’s contention that the Petitioner suppressed material facts with an intent to evade payment of service tax. The Petitioner suppressed nothing and maintained all through out that it did not carry on business as consulting engineer and as such was not liable to pay service tax under that head.

The Petitioner furnished all information that was called for by the Department from time to time. Once the information is supplied pursuant to the directions of the revenue authority and information so supplied has not been questioned, a belated demand has to be held to be barred by limitation. Therefore, the impugned show cause notice is hopelessly barred by limitation. There was absolutely no ground or justification for issuing such notice by invoking the extended period of limitation. None of the preconditions necessary for taking recourse to the extended period of limitation exists in the facts of this case and by wrongfully invoking the extended period of limitation the Commissioner conferred on himself a jurisdiction which he otherwise did not have. Hence, the impugned show cause notice and consequently, the impugned notice of hearing are unsustainable.

Sustainability of two show cause notice for same period - Show cause notice dated 21st April, 2006 pertains to the period 1st October, 2000 to 31st September, 2009. Subsequently, the department issued another show cause notice dated 7th September, 2009 covering the period 10th September, 2004 to 15th June, 2005 - Held that:- there cannot be double assessment for the period, overlapped to an appreciable extent. This is not permissible in law as held by this court in the case of Avery India Ltd. vs. Union of India [2010 (3) TMI 778 - CALCUTTA HIGH COURT] following the decision of the Hon’ble Supreme Court in the case of Dankan Industries Ltd. vs. Commissioner of Central Excise, New Delhi [2006 (8) TMI 185 - SUPREME COURT OF INDIA]. Therefore, two show cause notices could not have been issued in relation to the same period and the impugned show cause notice cannot be sustained.

Demand of Service tax - Consulting engineering service and architect service - Held that:- the language of the notice suggests that the demand raised therein is per-determined. It is quite evident that the Commissioner issued the impugned show cause notice at the instance of CERA without any independent application of mind and, thereby, abdicated his powers and duty, which is not permissible in law. Service contracts simpliciter and not composite works contracts come within the service tax net under the provisions of the Finance Act. The petitioner is involved in performance of composite works contracts and vivisection of such contracts to segregate the service element and impose service tax on the same is not permissible. - Decided in favour of petitioner