Page No. 1/34

THE GAUHATI HIGH COURT

(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM & ARUNACHAL PRADESH)

WRIT PETITION (C) NO. 7378/2023

M/s Brahmaputra Television Network,

A proprietorship firm having its registered

office at Bora Bhawan, T.R. Phookan Road,

Bharalamukh, Guwahati, Kamrup [M], Assam

– 781009 represented by its sole proprietor

Ms. Anjana Bora.

………………Petitioner

- VERSUS-

1. The Union of India, Represented by the

Secretary to the Government of India,

Ministry of Finance, Department of

Revenue, North Block, New Delhi - 110001.

2. The Commissioner [Appeals] CGST, Central

Excise and Customs, GST Bhawan, Kedar

Road, Machkowa, Guwahati - 781001.

3. The Additional Commissioner, GST &

Central Excise Commissionerate, GST

Bhawan, Kedar Road, Machkowa, Guwahati

- 781001.

GAHC010287332023

Page No. 1/34

THE GAUHATI HIGH COURT

(THE HIGH COURT OF ASSAM, NAGALAND, MIZORAM & ARUNACHAL PRADESH)

WRIT PETITION (C) NO. 7378/2023

M/s Brahmaputra Television Network,

A proprietorship firm having its registered

office at Bora Bhawan, T.R. Phookan Road,

Bharalamukh, Guwahati, Kamrup [M], Assam

– 781009 represented by its sole proprietor

Ms. Anjana Bora.

………………Petitioner

- VERSUS-

1. The Union of India, Represented by the

Secretary to the Government of India,

Ministry of Finance, Department of

Revenue, North Block, New Delhi - 110001.

2. The Commissioner [Appeals] CGST, Central

Excise and Customs, GST Bhawan, Kedar

Road, Machkowa, Guwahati - 781001.

3. The Additional Commissioner, GST &

Central Excise Commissionerate, GST

Bhawan, Kedar Road, Machkowa, Guwahati

- 781001.

GAHC010287332023

Page No. 2/34

4. The State of Assam, Represented by the

Principal Secretary to the Government of

Assam, Information and Public Relations

Department, Janata Bhawan, Dispur –

781006, Assam.

5. The Director, Directorate of Information and

Public Relations, Dispute, Guwahati –

781006, Assam.

……………….Respondents

Advocates :

Petitioner : Mr. D. Das, Senior Advocate

: Ms. S. Sarma, Advocate

Respondent no. 1 : Ms. K. Phukan, Central Government Counsel

Respondent nos. 2 & 3 : Mr. S.C. Keyal, Standing Counsel, GST

Respondent nos. 4 & 5 : ––

Date of Hearing : 19.04.2024 & 23.04.2024

Date of Judgment & Order : 21.06.2024

BEFORE

HON’BLE MR. JUSTICE MANISH CHOUDHURY

JUDGMENT & ORDER

The petitioner has instituted the instant writ petition under Article 226 of the Constitution

of India to assail the original proceedings which was initiated by a Demand-cum-Show

Cause Notice bearing no. C.No. V[15]75/ADJ/CGST-HQRS/GHY/ST/2021/1421 dated

26.04.2021 resulting into an Order-in-Original no. 61/Addl. Commr./ST/GHY/2021-22 dated

01.03.2022 passed by the Additional Commissioner, O/o the Principal Commissioner, GST

& Central Excise Commissionerate, Guwahati [the respondent no. 3] and the appeal

proceedings which emanated from the appeal preferred by the petitioner as appellant

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against the Order-in-Original dated 01.03.2022 culminating in an Order-in-Appeal bearing

no. 528/GHY[A]/COM/ST/GHY/ 2023 dated 21.09.2023 of the Commissioner [Appeals],

CGST, Central Excise & Customs, Guwahati [the respondent no. 2].

1.1. The Order-in-Original no. 61/Addl. Commr./ST/GHY/2021-22 [‘the Order-in-Original’, for

short] dated 01.03.2022 passed by the respondent no. 3 [hereinafter referred to as ‘the

Adjudicating Authority’, for easy reference] was against the interests of the petitioner. By

the Order-in-Appeal bearing no. 528/GHY[A]/COM/ST/GHY/2023 [‘the Order-in-Appeal’, for

short] dated 21.09.2023 of the respondent no. 2 [hereinafter referred to as ‘the Appellate

Authority’, for easy reference], the appeal preferred by the petitioner as the appellant

under Section 85 of the Finance Act, 1994 against the Order-in-Original was dismissed,

thereby, upholding the Order-in-Original passed by the Adjudicating Authority.

2. It has been stated that the petitioner, M/s Brahmaputra Television Networks is a

proprietorship firm having its registered office at Guwahati. It is mentioned that the

petitioner is engaged in providing taxable service in the nature of ‘advertising agency

services’ since the year 2000 and as part of its business, it provides advertising services to

the State Government agencies and private parties. For the purpose of Service Tax, the

petitioner had got itself registered with Service Tax Code [STC] Registration no.

ATTPS7285FST001 with VAT Registration Certificate no. GRN18530220383. Subsequently,

after coming into effect of the Goods and Services Tax [GST] Act, 2017 on and from

01.07.2017, the Service Tax registration and the VAT registration of the petitioner have

been migrated to the GST regime with GST Registration no. 18ATTPS7285F1ZR.

3. The events which have led the petitioner to institute the present writ petition can be

narrated, briefly, as follows :-

3.1. The petitioner was served with the Demand-cum-Show Cause Notice bearing no. C.No.

V[15]75/ADJ/CGST-HQRS/GHY/ST/2021/1421 dated 26.04.2021 [‘the Demand-cum-Show

Cause Notice’, for short] whereby the petitioner was called upon to show cause within

thirty days from the receipt of the Demand-cum-Show Cause Notice as to why :-

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[i] Service Tax amounting to Rs. 1,34,54,383/- [Rupees one crore thirty four lakhs fifty

four thousand three hundred eighty three] only for the period 2015-2016 should not

be demanded and recovered from the petitioner under the proviso to Section 73[1] of

the Finance Act, 1994 read with Section 174[2] of the CGST Act, 2017;

[ii] Applicable interest on the amount of unpaid Service Tax should not be demanded and

recovered from the petitioner under Section 75 of the Finance Act, 1994.

[iii] Penalty should not be imposed under Section 77 of the Finance Act, 1994 for failure

to furnish information and produce documents requisitioned by the department; and

[iv] Penalty should not be imposed upon the petitioner under Section 78 of the Finance

Act, 1994 for failure to pay the Service Tax by the due dates and for suppression of

vital facts from the department with intent for evade payment of Service Tax by

various acts of omission and commission as explained therein.

3.2. In the Demand-cum-Show Cause Notice, it was mentioned that it appeared to the

authorities that the noticee-assessee [the petitioner] had provided taxable services other

than those specified in the Negative List of services under Section 66D of the Finance Act,

1994 during the Financial Year : 2015-2016. It was alleged that the noticee-assessee had

suppressed the actual value of services provided during the said Financial Year : 2015 –

2016; did not fully disclose its liability in ST-3 returns for the said year; and had

consequently short-paid Service Tax dues to the tune of Rs. 1,34,54,383/- in violation of

the provisions contained in Section 66B, Section 67, Section 68 and Section 70 of the

Finance Act, 1994 r/w Rule 6 of the Service Tax Rules, 1994. It was further mentioned that

from the data shared by the Central Board of Direct Taxes [CBDT], it was apparent that

the noticee-assessee received monetary considerations and made required declarations

under various sections of the Income Tax Act, 1961 relating to provision of services and

TDS deductions. Those were found reflected in the Income Tax Returns of the noticee-

assessee but the noticee-assessee did not declare those receipts against provision of

services in the periodic ST-3 returns for the Financial Year : 2015-2016. It was mentioned

that the same had resulted into non-payment/short-payment of Service Tax.

3.3. As per the contents of the Demand-cum-Show Cause Notice, it appeared to the

Adjudicating Authority that the noticee-assessee had rendered taxable services under

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Section 65B of the Finance Act, 1994 and it had mis-declared the actual value of services

provided and corresponding Service Tax liability in its periodic ST-3 returns. Post

introduction of Negative List regime in the Service Tax, which became effective from

01.07.2012, the services provided by the noticee-asssessee fell under the definition of

‘Service’, defined under Section 65B[44] of the Finance Act, 1994, as any activity carried

out by a person for consideration and included declared service. Mention was also made to

the effect that as per Clause [51] of Section 65B of the Finance Act, 1994, ‘Taxable

Service’ was any service on which Service Tax was leviable under Section 66B of the

Finance Act, 1994. A tax @ 14% [effective rate 14.5% including cess] was leviable on the

value of all services, other than those services specified in the Negative List, as per Section

66B of the Finance Act, 1994 and it appeared to the Adjudicating Authority that the

noticee-assessee was providing services which were taxable in terms of Section 66B of the

Finance Act, 1994 on the value determinable in terms of Section 67 thereof. The noticee-

assessee was under obligation to self-assess the tax due on the services provided by it and

to furnish correct returns in terms of Section 70 of the Finance Act, 1994.

3.4. On receipt of the Demand-cum-Show Cause Notice, the petitioner submitted a Reply to the

Demand-cum-Show Cause Notice on 17.02.2022. The petitioner had claimed that in the

said Reply, it had provided explanations along with facts and figures by stating inter

alia that during the Financial Y ear : 2015-2016, its gross sales/turnover was Rs.

40,38,06,352/-. It was stated that out of Rs. 40,38,06,352/-, the gross value of services

was Rs. 31,18,68,087/- on which Service Tax was payable and the gross value was Rs.

9,19,38,265/- on which VAT was payable. The remaining sum, Rs. 1,165/- was bank

interest. It was contended in the Reply that as the petitioner had already paid VAT in

respect of Rs. 9,19,38,265/- there was no question of paying Service Tax against the same

amount as it would result in double taxation. It was further mentioned that when the

petitioner noticed a difference of Rs. 8,50,586/- in the value of services as per the Income

Tax Return and the ST-3 returns, it deposited the said amount on 26.07.2016.

3.5. In the proceedings before the Adjudicating Authority, initiated with the Demand-cum-Show

Cause Notice dated 26.04.2021, the petitioner was represented by its Tax Consultant and

Authorized Representative. The petitioner has stated that in the course of personal

Page No. 6/34

hearing, held on 17.02.2022, it was contended that the liability on Service Tax had been

discharged on the actual value of services amounting to Rs. 31,18,68,087/- by presenting

a break-up and by placing the supporting documents.

3.6. The Adjudicating Authority had passed the Order-in-Original confirming the demand of

Service Tax including cess amounting to Rs. 1,34,54,383/- under Section 73[2] of the

Finance Act, 1994, by rejecting the grounds urged on behalf of the petitioner. The

Adjudicating Authority had ordered payment of interest on the afore-mentioned confirmed

amount at the rates applicable in terms of Section 75 of the Finance Act, 1994. In addition,

the Adjudicating Authority had also imposed a penalty of Rs. 1,34,54,383/- in terms of

Section 78 of the Finance Act, 1994. The Adjudicating Authority had further imposed a

penalty of Rs. 10,000/- in terms of the provisions contained in Section 77 of the Finance

Act, 1994 for alleged failure on the part of the petitioner to furnish information and

produce documents requisitioned by the departmental authorities. The Adjudicating

Authority while confirming as above, had given an option to the noticee-assessee, that is,

the petitioner to pay reduced penalty equivalent to 25% of the amount of the penalty

imposed under Section 78 of the Finance Act, 1994, subject to the condition that the

noticee-assessee would have to deposit the amount of Service Tax and cess confirmed

under Section 73 along with interest in terms of Section 75 and penalty under Section 77

of the Finance Act, 1994 as well as reduced penalty under the proviso to Section 78 within

30 [thirty] days of the date of receipt of the Order-in-Original.

3.7. Aggrieved by the passing of the Order-in-Original dated 01.03.2022 against it, the

petitioner preferred an appeal before the Appellate Authority, that is, the Commissioner of

Central Excise [Appeals] under Section 85 of the Finance Act, 1994 on 06.05.2022 by

depositing an amount of Rs. 10,09,079/- as pre-deposit. Before the Appellate Authority,

the dates of personal hearing were on 25.05.2023, 10.07.2023 and finally, on 13.09.2023.

The Appellate Authority had passed the Order-in-Appeal on 21.09.2023. In the Order-in-

Appeal, the Appellate Authority had observed that the appellant-petitioner had failed to

substantiate its claim. The Appellate Authority in the Order-in-Appeal by holding that the

demand of Service Tax including cesses had been rightly confirmed by the Adjudicating

Page No. 7/34

Authority in the Order-in-Original, has dismissed the appeal preferred by the petitioner

finding no merits therein.

4. Aggrieved by and dissatisfied with the Order-in-Appeal dated 21.09.2023 whereby the

Order-in-Original dated 01.03.2022 has been upheld and the appeal preferred by the

petitioner has been dismissed, the petitioner has instituted the instant writ petition by

seeking to invoke the extra-ordinary and discretionary jurisdiction under Article 226 of the

Constitution of India to assail both the Order-in-Original and the Order-in-Appeal.

5. I have heard Mr. D. Das, learned Senior counsel assisted by Ms. S. Sarma, learned counsel

for the petitioner; Ms. K. Phukan, learned Central Government Counsel [CGC] for the

respondent no. 1; and Mr. S.C. Keyal, learned Standing Counsel, CGST for the respondent

nos. 2 & 3. None has appeared for the respondent nos. 4 & 5.

6. Mr. Das, learned Senior Counsel appearing for the petitioner has contended that the

principles of natural justice have been violated by both the Adjudicating Authority and the

Appellate Authority during the course of the proceedings leading to the passing of the

Order-in-Original and the Order-in-Appeal respectively.

6.1. In elaboration, reference has been to the Demand-cum-Show Cause Notice wherein the

Adjudicating Authority had mentioned that the noticee-assessee [the petitioner] was asked

to submit certain documents vide a Letter bearing no. C.No.IV[18]01/ST/3

rd

party/IID/20

dated 04.09.2020 for ascertaining the petitioner’s actual Service Tax liability during the

Financial Year : 2015-2016. In that connection, the Adjudicating Authority had also

recorded that the petitioner had failed to submit the documents till the date of issuance of

the Demand-cum-Show Cause Notice. It has been contended that no such Letter dated

04.09.2020 was ever served on the noticee-assessee [the petitioner]. It has, thus, been

urged that had such Letter been received by the petitioner, the petitioner could have

responded to such a Letter appropriately and no occasion for issuance of the Demand-

cum-Show Cause Notice would have arisen.

Page No. 8/34

6.2. As regards the obligation on the part of the Adjudicating Authority to issue such a Letter

dated 04.09.2020 prior to issuance of any Demand-cum-Show Cause Notice under Section

73[1], Mr. Das has referred to Section 83 of the Finance Act, 1994 whereby certain

provisions of the Central Excise Act, 1944 including Section 14 thereof, have been made

applicable in relation to Service Tax. By referring to the provisions of Section 14 of the

Central Excise Act, 1944, he has submitted that the officer empowered to issue the

Demand-cum-Show Cause Notice under sub-section [1] of Section 73 of the Finance Act,

1994 is not only obligated to issue such a letter like the Letter dated 04.09.2020 but is also

obligated to serve the same duly upon the noticee-assessee to afford the noticee-assessee

due opportunity to produce the specified documents. It has been submitted that such

obligation is cast due to the provisions of Section 77[c] of the Finance Act, 1994. It has

been contended that when the matter of non-service of the Letter dated 04.09.2020 was

raised in the appeal by the petitioner, the Appellate Authority in his Order-in-Appeal did

not even deal with the issue. It has, thus, been contended that the principles of natural

justice have clearly been violated both by the Adjudicating Authority and the Appellate

Authority.

6.3. He has further contended that the Demand-cum-Show Cause Notice was without

jurisdiction in that the Adjudicating Authority had illegally invoked the jurisdiction under the

proviso to sub-section [1] of Section 73 of the Finance Act, 1994 to extend the period of

issuing the Demand-cum-Show Cause Notice from thirty months to five years.

6.4. Learned Senior Counsel has further submitted that as per sub-section [1] of Section 73 of

the Finance Act, 1994, it is ordinarily within a period of thirty months from the relevant

date a Demand-cum-Show Cause Notice like the one involved here can be issued. To

invoke the extended period of five years under the proviso to sub-section [1] of Section 73

of the Finance Act, 1994, proper reason is to be recorded on the basis of actual materials

on record and such reason must have to be relatable to any of the five grounds,

mentioned therein. The wilful mis-statement and/or suppression of facts, allegedly

attributed to the petitioner, were relatable to the Financial Year : 2015-2016. By the time

the Demand-cum-Show Cause Notice stood issued on 26.04.2021, a period of thirty

months had already elapsed subsequent to the Financial Year : 2015-2016 and the

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Adjudicating Authority in order to obviate the bar of thirty months, had illegally resorted to

the proviso to sub-section [1] of Section 73 of the Finance Act, 1994 and as such, the

proceedings initiated by the respondent authorities are clearly without jurisdiction.

6.5. Detail information about the total Income Tax including Form 26AS, filed by the petitioner

way back in the Year : 2015-2016, and the periodical ST-3 returns filed in the Year : 2015-

2016 were very much within the knowledge of the respondent authorities. Therefore, the

allegation of suppression of facts brought by the respondent authorities against the

petitioner is wholly misconceived, without any basis and without any jurisdiction. It has

been submitted that the allegation of differential taxable amount, Rs. 9,27,88,851/-,

brought in by the respondent authorities against the petitioner, is baseless and erroneous

as the petitioner had already paid the VAT against the said amount of Rs. 9,27,88,851/-. If

the petitioner is penalized despite paying the VAT, it would amount to double taxation

which, in turn, would cause serious prejudice.

6.6. It has been further contended that when during the course of the proceedings before the

Appellate Authority the petitioner as the appellant submitted an application on 15.09.2023

seeking time to produce a vital document in support of the case of the petitioner-appellant,

the Appellate Authority without considering the said application, had proceeded to pass the

Order-in-Appeal on 21.09.2023. Not granting time to the petitioner-appellant to produce a

document having a vital bearing by the Appellate Authority is a clear case of not affording

proper opportunity and such action in haste is an action in violation of the principles of

natural justice.

6.7. It has been contended in view of the grounds urged, that is, violation of the principles of

natural justice and lack of jurisdiction to initiate the proceedings by the Demand-cum-Show

Cause Notice, a writ petition is maintainable, despite availability of statutory remedy in the

form of an appeal. Lastly, it has been submitted that present writ petition has been filed

within the period a statutory appeal is required to be filed.

7. Mr. Keyal, learned Standing Counsel, CGST has submitted that the question here, in

essence, is about maintainability and entertainability of a writ petition against the Order-in-

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Original and the Order-in-Appeal. As the two orders are self-sufficient, there is no necessity

to file any response. He has contended that against the Order-in-Original, the petitioner as

the noticee-assessee had already availed the remedy of appeal under Section 85[1] of the

Finance Act, 1994. The Appellate Authority by the Order-in-Appeal has upheld the Order-

in-Original and against the Order-in-Appeal, an appeal lies under Section 86 of the Finance

Act, 1994 to the Customs, Excise and Service Tax Appellate Tribunal [CESTAT]. The

petitioner herein instead of preferring such a statutory appeal, has preferred the present

writ petition seeking to invoke the extra-ordinary and discretionary writ jurisdiction under

Article 226 of the Constitution of India. As such, the writ petition is not maintainable and

the petitioner should be relegated to prefer the statutory remedy of appeal.

7.1. As regards the Letter dated 04.09.2020, he has contended that a reference of the said

Letter was made in the Demand-cum-Show Cause Notice dated 26.04.2021. The noticee-

assessee had submitted a Reply to the Demand-cum-Show Cause Notice on 17.02.2022. In

the said Reply, the noticee-assessee did not make any whisper as regards non-receipt of

the Letter dated 04.09.2020. After passing of the Order-in-Original, the petitioner preferred

an appeal before the Appellate Authority and it was only in its Memorandum of Appeal, the

petitioner had taken any plea as regards non-receipt of the Letter dated 04.09.2020. Thus,

at the stage of preferring a second appeal which the petitioner has sought to avert by filing

this writ petition, it is not open for the petitioner to raise any further plea as regards non-

receipt of the Letter dated 04.09.2020. For not raising any objection as regards non-receipt

of the Letter dated 04.09.2020 at the time of submitting its Reply on 17.02.2022 during

the original proceedings the petitioner is precluded from raising it again by the doctrine of

waiver and acquiescence.

7.2. It is further contended that reference to the provisions of Section 14 of the Central Excise

Act, 1944 and Section 83 of the Finance Act, 1994 is misconceived and untenable as the

said provision has not cast any obligation on the Adjudicating Authority to issue any kind of

notice prior to issuance of any Demand-cum-Show Cause Notice under Section 73 [1] or

under the proviso to sub-section [1] of Section 73 of the Finance Act, 1994.

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7.3. On the issue of requirement to serve a notice/summon of the nature contemplated in

Section 14 of the Central Excise Act, 1944 as a precursor to the Demand-cum-Show Cause

Notice under Section 73[1] of the Finance Act, 1994, Mr. Keyal has contended that such a

requirement is not mandatory in view of the clarificatory instruction contained in Circular

No. 1079/03/2021-CX dated 11.11.2021 of the Central Board of Indirect Taxes and

Customs, Department of Revenue, Ministry of Finance, Government of India. By referring

to the Circular [supra], he has submitted that a pre-show cause notice consultation is not

mandatory in respect of those cases under Section 73[1] of the Finance Act, 1994 where

the proviso to sub-section [1] has been invoked for extending the period.

7.4. Refuting the contention advanced on behalf of the petitioner with regard to the application,

stated to have been filed by the petitioner on 15.09.2023 before the Appellate Authority,

such a plea of granting time to produce a document cannot be considered to be in

violation of the principles of natural justice. The materials on record have clearly indicated

that by that time, the petitioner was provided with sufficient opportunities of hearing. The

document sought to be produced by the application dated 15.09.2023, was not produced

during the course of entire original proceedings which was initiated on 26.04.2021 with the

issuance of the Demand-cum-Show Cause Notice. It is further contended by him that if the

document for which the application dated 15.09.2023 was filed, is of vital bearing the

same can be produced before the CESTAT and such a plea is not available to the petitioner

to be taken in the present writ petition.

8. Ms. Phukan, learned Central Government Counsel [CGC] representing the respondent no. 1

has submitted that she would adopt the submissions made by the learned Standing

Counsel, GST.

9. During the course of hearing, the learned counsel for the parties have referred to a

number of authorities in support of their submissions.

9.1. Learned Senior Counsel for the petitioner in support of his submissions, has referred to the

following decisions :-

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[i] Maharashtra Chess Association vs. Union of India , reported in [2020]

13 SCC 285;

[ii] Godrej Sara Lee Ltd. vs. Excise and Taxation Officer-cum-Assessing

Authority and others, reported in [2023] 3 SCR 871;

[iii] Magadh Sugar and Energy Ltd. vs. the State of Bihar and others ,

reported in [2021] 9 SCR 284.

[iv] Simplex Infrastructure Ltd. vs. Commissioner of Service Tax,

Kolkata, reported in 2016 SCC OnLine Cal 571; and

[v] Kellogg India Pvt. Ltd. vs. Union of Indi a, reported in 2005 SCC

OnLine Bom 1692.

9.2. The learned Standing Counsel, CGST has referred to the following decisions of the Hon’ble

Supreme Court of India to buttress his contentions :-

[i] Thansing Nathmal vs. the Superintendent of Taxes, Dhubri and

others, reported in AIR 1964 SC 1419.

[ii] The Commissioner of Income Tax and others vs. Chhabil Dass Agarwal ,

reported in [2014] 1 SCC 603;

[iii] M/s South Indian Bank Ltd. and others vs. Naveen Mathew Philip and

another, reported in [2023] 4 SCR 18;

[iv] PHR Invent Educational Society vs. UCO Bank and others , reported in

[2024] 4 SCR 541;

[v] Writ Appeal no. 188/2022 [M/s Sailaja Commercial Construction

Private Ltd. vs. the Union of India and others] , decided on

20.02.2023, by a Division Bench of this Court; and

[vi] W.P.[C] no. 6942/2023 [Smti. Ajitha Krishnan vs. Union of India

and others], decided on 04.12.2023, by a Single Bench of this Court.

10. I have given due consideration to the submissions made by the learned counsel for the

parties. I have also gone through the materials available on record; the written synopses

submitted by the learned counsel for the parties; and the decisions cited at the Bar by the

learned counsel for the parties in support of their contentions.

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11. The Order-in-Original was passed by the Adjudicating Authority in exercise of powers

conferred under Section 73[2] of the Finance Act, 1994 whereas the Order-in-Appeal has

been passed by the Appellate Authority in exercise of powers conferred on it under Section

85 of the Finance Act, 1994. The learned counsel for the parties are not in disagreement

on the fact that against the Order-in-Appeal, an appeal lies under Section 86 of the

Finance Act, 1994. As per sub-section [1] of Section 86 of the Finance Act, 1994, save as

otherwise provided therein, an assessee aggrieved by an Order passed by a Commissioner

[Appeals] under Section 85[4] of the Finance Act, 1994, may appeal to the Appellate

Tribunal against such Order within three months from the date of receipt of the Order. The

Order-in-Appeal has also mentioned that an appeal against the Order-in-Appeal would lie

under Section 86 of the Finance Act, 1994 to the Customs, Excise and Service Tax

Appellate Tribunal [CESTAT] within three months from the date on which the Order sought

to be appealed against is communicated. It is in such backdrop, the rival contentions made

by the parties are to be considered in the present writ petition.

12. Before making any deliberation on the merits of the respective contentions of the parties, it

is appropriate to refer to the propositions laid down and observations made in some of the

forenamed judgments, referred to by the parties.

13. The decision in Godrej Sara Lee Ltd. [supra] has lucidly explained the distinct concepts

of ‘maintainability’ of a writ petition and ‘entertainability’ of a writ petition on the premise

of availability of alternative remedy provided by the relevant statutes. It has been observed

that Article 226 of the Constitution of India does not, in terms, impose any limitation or

restraint on the exercise of power to issue writs. Exercise of writ powers despite availability

of a remedy under the very statute which has been invoked and has given rise to the

action impugned in the writ petition ought not to be made in a routine manner, yet, the

mere fact that the petitioner before the High Court, in a given case, has not pursued the

alternative remedy available to him/it cannot be construed as a ground for its dismissal. It

has been observed that the High Courts, bearing in mind the facts of each particular case,

have a discretion whether to entertain a writ petition or not. One of the self-imposed

restrictions on the exercise of power under Article 226 that has evolved through judicial

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precedents is that the High Courts should normally not entertain a writ petition, where an

effective and efficacious alternative remedy is available. At the same time, it is required to

be remembered 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 been

pursued, would not oust the jurisdiction of the High Court and render a writ petition ‘not

maintainable’. Availability of an alternative remedy does not operate as an absolute bar to

the ‘maintainability’ of a writ petition. It has, thus, been observed that ‘entertainability’ and

‘maintainability’ of a writ petition are distinct concepts. While an objection to the

‘maintainability’ goes to the root of the matter, the question of ‘entertainability’ is entirely

within the realm of discretion of the High Courts. Being otherwise maintainable, it has been

enunciated, dismissal of a writ petition by a High Court on the ground that the petitioner

has not availed the alternative remedy, without examining the aspect whether an

exceptional case has been made out for such entertainment, would not be proper.

14. The issue involved in Maharashtra Chess Association [supra] was whether a private

agreement entered into between the appellant and the second respondent in the form of

the constitution and bye-laws of the later could, by conferring exclusive jurisdiction on the

courts of a particular place, oust the writ jurisdiction of a High Court which does not have

territorial jurisdiction over the courts of that particular place, under Article 226 of the

Constitution of India. It has been observed that the existence of an alternative remedy,

whether adequate or not, does not alter the fundamentally discretionary nature of the High

Court’s writ jurisdiction and therefore, does not create an absolute legal bar on the

exercise of the writ jurisdiction by a High Court. The decision whether or not to entertain

an action under its writ jurisdiction remains a decision to be taken by the High Court on an

examination of the facts and circumstances of a particular case. The mere existence of an

alternate forum where the aggrieved party may secure relief does not create a legal bar on

a High Court to exercise its writ jurisdiction. Existence of alternative forum is a factor to be

taken into consideration by the High Court amongst several factors. The High Court has to

take a holistic view of the facts as submitted in the writ petition and make a determination

on the facts and circumstances of each particular case. It has been held that the scrutiny

to be applied to every writ petition under Article 226 by the High Court is a crucial

safeguard of the rule of law under the Constitution. The Courts have themselves imposed

Page No. 15/34

certain restrictions on the exercise of their writ jurisdiction to ensure that the jurisdiction

does not become an appellate mechanism for all disputes within a High Court’s territorial

jurisdiction. The intention behind the self-imposed rule is if the High Courts are to exercise

their writ jurisdiction widely so as to regularly override appellate procedures, they would

themselves become inundated with a vast number of cases to the detriment of the litigants

in those cases. The same would defeat the legislature’s intention in enacting statutory

appeal mechanisms to ensure the speedy disposal of cases.

15. The statute involved in Thansingh Nathmal vs. The Superintendent of Taxes, Dhubri

and others, AIR 1964 SC 1419, was the Assam Sales Tax Act, 1947, which had provided

a hierarchy of taxing tribunals competent to decide question as to the liability of the tax-

payer under the said Act, with a right to have questions of law arising out of the order

decided by the jurisdictional High Court. It is in the above fact situation, the Constitution

Bench in Thansingh Nathmal [supra] has observed as under :-

7. ……The jurisdiction of the High Court under Article 226 of the

Constitution is couched in wide terms and the exercise thereof

is not subject to any restrictions except the territorial

restrictions which are expressly provided in the Articles. But

the exercise of the jurisdiction is discretionary: it is not

exercised merely because it is lawful to do so. The very

amplitude of the jurisdiction demands that it will ordinarily be

exercised subject to certain self-imposed limitations. Resort to

that jurisdiction is not intended as an alternative remedy for

relief which may be obtained in a suit or other mode prescribed

by statute. Ordinarily the Court will not entertain a petition

for a writ under Article 226, where the petitioner has an

alternative remedy, which without being unduly onerous, provides

an equally efficacious remedy. Again the High Court does not

generally enter upon a determination of questions which demand

an elaborate examination of evidence to establish the right to

enforce which the writ is claimed. The High Court does not

therefore act as a court of appeal against the decision of a

court or tribunal, to correct errors of fact, and does not by

Page No. 16/34

assuming jurisdiction under Article 226 trench upon an

alternative remedy provided by statute for obtaining relief.

Where it is open to the aggrieved petitioner to move another

tribunal, or even itself in another jurisdiction for obtaining

redress in the manner provided by a statute, the High Court

normally will not permit by entertaining a petition

under Article 226 of the Constitution, the machinery created

under the statute to be bypassed, and will leave the party

applying to it to seek resort to the machinery so set up.

16. The decision in Commissioner of Income Tax and others vs. Chhabil Dass Agarwal ,

reported in [2014] 1 SCC 603, arose out of an order of assessment passed by the

Assessing Authority under Section 146 of the Income Tax Act, 1961. The Hon’ble Supreme

Court of India made a survey of a number of decisions available on the point of

entertainability of writ petition by the High Court, despite availability of an efficacious and

alternative remedy. The observations are made in the following manner :-

11. Before discussing the fact proposition, we would notice the

principle of law as laid down by this Court. It is settled law

that non-entertainment of petitions under writ jurisdiction by

the High Court when an efficacious alternative remedy is

available is a rule of self-imposed limitation. It is

essentially a rule of policy, convenience and discretion rather

than a rule of law. Undoubtedly, it is within the discretion of

the High Court to grant relief under Article 226 despite the

existence of an alternative remedy. However, the High Court must

not interfere if there is an adequate efficacious alternative

remedy available to the petitioner and he has approached the

High Court without availing the same unless he has made out an

exceptional case warranting such interference or there exist

sufficient grounds to invoke the extraordinary jurisdiction

under Article 226 [See : State of U.P. vs. Mohammad Nooh, AIR

1958 SC 86; Titaghur Paper Mills Co. Ltd. vs. State of Orissa,

[1983] 2 SCC 433; Harbanslal Sahnia vs. Indian Oil Corpn. Ltd.,

Page No. 17/34

[2003] 2 SCC 107; and State of H.P. vs. Gujarat Ambuja Cement

Ltd., [2005] 6 SCC 499].

12. The Constitution Benches of this Court in K.S. Rashid and Sons

vs. Income Tax Investigation Commission, AIR 1954 SC

207; Sangram Singh vs. Election Tribunal, Kotah, AIR 1955 SC

425; Union of India vs. T.R. Varma, AIR 1957 SC 882; State of

U.P. vs. Mohd. Nooh, AIR 1958 SC 86; and K.S. Venkataraman and

Co. [P] Ltd. vs. State of Madras, AIR 1966 SC 1089, have held

that though Article 226 confers a very wide powers in the matter

of issuing writs on the High Court, the remedy of writ is

absolutely discretionary in character. If the High Court is

satisfied that the aggrieved party can have an adequate or

suitable relief elsewhere, it can refuse to exercise its

jurisdiction. The Court, in extraordinary circumstances, may

exercise the power if it comes to the conclusion that there has

been a breach of the principles of natural justice or the

procedure required for decision has not been adopted [See : N.T.

Veluswami Thevar vs. G. Raja Nainar, AIR 1959 SC 422; Municipal

Council, Khurai vs. Kamal Kumar, [1965] 2 SCR 653; Siliguri

Municipality vs. Amalendu Das, [1984] 2 SCC 436; S.T. Muthusami

vs. K. Natarajan, [1988] 1 SCC 572; Rajasthan SRTC vs. Krishna

Kant, [1995] 5 SCC 75; Kerala SEB vs. Kurien E. Kalathil, [2000]

6 SCC 293; A. Venkatasubbiah Naidu vs. S. Chellappan, [2000] 7

SCC 695; L.L. Sudhakar Reddy vs. State of A.P., [2001] 6 SCC

634; Shri Sant Sadguru Janardan Swami [Moingiri Maharaj]

Sahakari Dugdha Utpadak Sanstha vs. State of Maharashtra, [2001]

8 SCC 509; Pratap Singh vs. State of Haryana, [2002] 7 SCC 484;

and GKN Driveshafts [India] Ltd. vs. ITO, [2003] 1 SCC 72].

13. In Nivedita Sharma vs. Cellular Operators Assn. of India, [2011]

14 SCC 337, this Court has held that where hierarchy of appeals

is provided by the statute, the party must exhaust the statutory

remedies before resorting to writ jurisdiction for relief :

Page No. 18/34

13. In Titaghur Paper Mills Co. Ltd. vs. State of Orissa,

[1983] 2 SCC 433, this Court observed : [SCC pp. 440-41,

para 11]

11. …… It is now well recognised that where a right or

liability is created by a statute which gives a special

remedy for enforcing it, the remedy provided by that

statute only must be availed of.

14. In Mafatlal Industries Ltd. vs. Union of India, [1997] 5

SCC 536, B.P. Jeevan Reddy, J. [speaking for the majority

of the larger Bench] observed : [SCC p. 607, para 77]

77. …… So far as the jurisdiction of the High Court

under Article 226—or for that matter, the jurisdiction

of this Court under Article 32—is concerned, it is

obvious that the provisions of the Act cannot bar and

curtail these remedies. It is, however, equally obvious

that while exercising the power under Article

226/Article 32, the Court would certainly take note of

the legislative intent manifested in the provisions of

the Act and would exercise their jurisdiction

consistent with the provisions of the enactment [See

: G. Veerappa Pillai vs. Raman & Raman Ltd., AIR 1952

SC 192; CCE vs. Dunlop India Ltd., [1985] 1 SCC

260; Ramendra Kishore Biswas vs. State of Tripura,

[1999] 1 SCC 472; Shivgonda Anna Patil vs. State of

Maharashtra, [1999] 3 SCC 5; C.A. Abraham vs. ITO,

[1961] 2 SCR 765; Titaghur Paper Mills Co. Ltd. vs.

State of Orissa, [1983] 2 SCC 433; Excise and Taxation

Officer-cum-Assessing Authority vs. Gopi Nath and Sons,

1992 Supp [2] SCC 312 ; Whirlpool Corpn. vs. Registrar

of Trade Marks, [1998] 8 SCC 1; Tin Plate Co. of India

Ltd. vs. State of Bihar, [1998] 8 SCC 272; Sheela Devi

Page No. 19/34

vs. Jaspal Singh, [1999] 1 SCC 209; and Punjab National

Bank vs. O.C. Krishnan, [2001] 6 SCC 569].

14. In Union of India vs. Guwahati Carbon Ltd., [2012] 11 SCC

651, this Court has reiterated the aforesaid principle and

observed : [SCC p. 653, para 8]

8. Before we discuss the correctness of the impugned

order, we intend to remind ourselves the observations

made by this Court in Munshi Ram vs. Municipal

Committee, Chheharta, [1979] 3 SCC 83. In the said

decision, this Court was pleased to observe that : [SCC

p. 88, para 23].

23. … [when] a revenue statute provides for a person

aggrieved by an assessment thereunder, a

particular remedy to be sought in a particular

forum, in a particular way, it must be sought in

that forum and in that manner, and all the other

forums and modes of seeking [remedy] are excluded.

17. In the 3-Judge Bench decision in M/s Magadh Sugar & Energy Ltd. vs. the State of

Bihar & Others, reported in [2021] 9 S.C.R. 284, the observations are made in the

following manner :-

19. While a High Court would normally not exercise its writ

jurisdiction under Article 226 of the Constitution if an

effective and efficacious alternate remedy is available, the

existence of an alternate remedy does not by itself bar the High

Court from exercising its jurisdiction in certain contingencies.

This principle has been crystallized by this Court in Whirpool

Corporation vs. Registrar of Trademarks, Mumbai, [1998] 8 SCC 1;

and Harbanslal Sahni vs. Indian Oil Corporation Ltd, [2003] 2

SCC 107. Recently, in Radha Krishan Industries vs. State of

Himachal Pradesh & Ors, reported in 2021 SCC OnLine SC 334, a

Page No. 20/34

two judge Bench of this Court of which one of us was a part of

[Justice DY Chandrachud] has summarized the principles governing

the exercise of writ jurisdiction by the High Court in the

presence of an alternate remedy. This Court has observed :

28. The principles of law which emerge are that :

[i] The power under Article 226 of the Constitution to issue

writs can be exercised not only for the enforcement of

fundamental rights, but for any other purpose as well;

[ii] The High Court has the discretion not to entertain a writ

petition. One of the restrictions placed on the power of

the High Court is where an effective alternate remedy is

available to the aggrieved person;

[iii] Exceptions to the rule of alternate remedy arise where [a]

the writ petition has been filed for the enforcement of a

fundamental right protected by Part III of the

Constitution; [b] there has been a violation of the

principles of natural justice; [c] the order or

proceedings are wholly without jurisdiction; or [d] the

vires of a legislation is challenged;

[iv] An alternate remedy by itself does not divest the High

Court of its powers under Article 226 of the Constitution

in an appropriate case though ordinarily, a writ petition

should not be entertained when an efficacious alternate

remedy is provided by law;

[v] When a right is created by a statute, which itself

prescribes the remedy or procedure for enforcing the right

or liability, resort must be had to that particular

statutory remedy before invoking the discretionary remedy

under Article 226 of the Constitution. This rule of

exhaustion of statutory remedies is a rule of policy,

convenience and discretion; and

[vi] In cases where there are disputed questions of fact, the

High Court may decide to decline jurisdiction in a writ

petition. However, if the High Court is objectively of the

Page No. 21/34

view that the nature of the controversy requires the

exercise of its writ jurisdiction, such a view would not

readily be interfered with.

The principle of alternate remedies and its exceptions was also

reiterated recently in the decision in Assistant Commissioner of

State Tax vs. M/s Commercial Steel Limited [Civil Appeal No.

5121 of 2021].

In State of HP vs. Gujarat Ambuja Cement Ltd, reported in [2005]

6 SCC 49, this Court has held that a writ petition is

maintainable before the High Court if the taxing authorities

have acted beyond the scope of their jurisdiction. This Court

observed :

23. Where under a statute there is an allegation of

infringement of fundamental rights or when on the

undisputed facts the taxing authorities are shown to have

assumed jurisdiction which they do not possess can be the

grounds on which the writ petitions can be entertained. But

normally, the High Court should not entertain writ

petitions unless it is shown that there is something more

in a case, something going to the root of the jurisdiction

of the officer, something which would show that it would be

a case of palpable injustice to the writ petitioner to

force him to adopt the remedies provided by the statute. It

was noted by this Court in L. Hriday Narain vs. ITO [(1970)

2 SCC 355] that if the High Court had entertained a

petition despite availability of alternative remedy and

heard the parties on merits it would be ordinarily

unjustifiable for the High Court to dismiss the same on the

ground of non-exhaustion of statutory remedies; unless the

High Court finds that factual disputes are involved and it

would not be desirable to deal with them in a writ

petition.

Page No. 22/34

18. M/s South Indian Bank Ltd. and others vs. Naveen Mathew Philip and another ,

reported in [2023] 4 SCR 18, has observed as under :-

14. A writ of certiorari is to be issued over a decision when the

Court finds that the process does not conform to the law or

statute. In other words, courts are not expected to substitute

themselves with the decision-making authority while finding

fault with the process along with the reasons assigned. Such a

writ is not expected to be issued to remedy all violations. When

a Tribunal is constituted, it is expected to go into the issues

of fact and law, including a statutory violation. A question as

to whether such a violation would be over a mandatory

prescription as against a discretionary one is primarily within

the domain of the Tribunal. So also, the issue governing waiver,

acquiescence, and estoppel.

* * * * * *

16. Approaching the High Court for the consideration of an offer by

the borrower is also frowned upon by this Court. A writ of

mandamus is a prerogative writ. In the absence of any legal

right, the Court cannot exercise the said power. More

circumspection is required in a financial transaction,

particularly when one of the parties would not come within the

purview of Article 12 of the Constitution of India. When a

statute prescribes a particular mode, an attempt to circumvent

shall not be encouraged by a writ court. A litigant cannot avoid

the non-compliance of approaching the Tribunal which requires

the prescription of fees and use the constitutional remedy as an

alternative.

* * * * * *

19. In the recent three-Judge decision in PHR Invent Educational Society [supra], decided

on 10.04.2024, the Hon’ble Supreme Court has held as follows :-

Page No. 23/34

15. It could thus be seen that, this Court has clearly held that the

High Court will ordinarily not entertain a petition under

Article 226 of the Constitution if an effective remedy is

available to the aggrieved person. It has been held that this

rule applies with greater rigour in matters involving recovery

of taxes, cess, fees, other types of public money and the dues

of banks and other financial institutions. The Court clearly

observed that, while dealing with the petitions involving

challenge to the action taken for recovery of the public dues,

etc., the High Court must keep in mind that the legislations

enacted by Parliament and State Legislatures for recovery of

such dues are a code unto themselves inasmuch as they not only

contain comprehensive procedure for recovery of the dues but

also envisage constitution of quasi-judicial bodies for

redressal of the grievance of any aggrieved person. It has been

held that, though the powers of the High Court under Article 226

of the Constitution are of widest amplitude, still the Courts

cannot be oblivious of the rules of self-imposed restraint

evolved by this Court. The Court further held that though the

rule of exhaustion of alternative remedy is a rule of discretion

and not one of compulsion, still it is difficult to fathom any

reason why the High Court should entertain a petition filed

under Article 226 of the Constitution.

19.1. After discussing the decisions in Thansing Nathmal [supra]; Titaghur Paper Mills [supra];

Chhabil Dass Agarwal [supra]; and many other decisions, the Court has further observed

as under :-

29. It could thus clearly be seen that the Court has carved out

certain exceptions when a petition under Article 226 of the

Constitution could be entertained in spite of availability of an

alternative remedy. Some of them are thus : [i] where the

statutory authority has not acted in accordance with the

provisions of the enactment in question; [ii] it has acted in

Page No. 24/34

defiance of the fundamental principles of judicial procedure;

[iii] it has resorted to invoke the provisions which are

repealed; and [iv] when an order has been passed in total

violation of the principles of natural justice.

30. It has however been clarified that the High Court will not

entertain a petition under Article 226 of the Constitution if an

effective alternative remedy is available to the aggrieved

person or the statute under which the action complained of has

been taken itself contains a mechanism for redressal of

grievance.

20. The maintainability of the present writ petition is not in doubt. The question which requires

consideration is whether in the fact situation obtaining in the present case and on the basis

of the contentions advanced by the parties, an exceptional case has been made out for

entertaining the writ petition. A deliberation on the contentions advanced is, therefore,

necessary.

21. Section 73 of the Finance Act, 1994 contains the provision for recovery of Service Tax not

levied or paid or short-levied or short-paid or erroneously refunded. As per sub-section [1]

Section 73, where any service tax has not been levied or paid or has been short-levied or

short-paid or erroneously refunded, an Adjudicating Authority may, within thirty 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 person 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. The proviso to sub-section [1] of

Section 73 has prescribed 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] wilful mis-statement; or [d] suppression of facts; or [e] contravention of

any of the provisions of Chapter V of the Finance Act, 1994 or of the rules made

thereunder with intent to evade payment of service tax, by the person chargeable with the

Service Tax or his agent, the provisions of the sub-section shall have effect, as if, for the

words ‘thirty months’, the words ‘five years’ have been substituted.

Page No. 25/34

22. Reference has been made from the end of the petitioner to the provisions contained in

Section 83 of the Finance Act, 1994. By Section 83 of the Finance Act, 1994, a number of

Sections of the Central Excise Act, 1944, as in force from time to time, are made

applicable, so far as may be, in relation to Service Tax as they apply in relation to a duty of

excise. Section 14 of the Central Excise Act, 1944 is one of the Sections made applicable to

the Finance Act, 1994.

22.1. Section 14 of the Central Excise Act, 1944 has provided for a power to summon persons to

give evidence and produce documents in inquiries under the Central Excise Act, 1944. As

per sub-section [1] of Section 14, any Central Excise Officer duly empowered by the

Central Government in that behalf shall have power to summon any person whose

attendance he considers necessary either to give evidence or to produce a document or

any other thing in any inquiry which such officer is making for any of the purposes of the

Act. A summon to produce documents or other things may be for the production of certain

specified documents or things or for the production of all documents or things of a certain

description in the possession or under the control of the person summoned. As per sub-

section [2] thereof, all persons so summoned shall be bound to attend, either in person or

by any authorized agent, as such officer may direct; and all persons so summoned shall be

bound to state the truth upon any subject respecting which they are examined or make

statements and to produce such documents and other things as may be required. The

afore-mentioned provision is required to be read accordingly in the Finance Act, 1994 in

view of Section 83 therein.

22.2. From the provisions of Section 14 of the Central Excise Act, 1944, it is noticeable that by

Section 14, power has been vested on a duly empowered officer to summon any person

whose attendance before him is found necessary either to give evidence or to produce a

document or any other thing in any inquiry which the Central Excise Officer is making for

any of the purposes of the Central Excise Act, 1944 or the Finance Act, 1994, as the case

may be. Only because a power is vested on an empowered officer to summon persons to

give evidence and to produce documents in inquiries undertaken under the Finance Act,

1994 it does not flow, as a corollary, automatically out of it that in all cases where a

Page No. 26/34

Demand-cum-Show Cause Notice under sub-section [1] or under the proviso to sub-section

[1] of Section 73 of the Finance Act is to be issued such Demand-cum-Show Cause notice

is to be preceded by a notice/summon in terms of Section 14 of the Central Excise Act,

1944, made applicable by virtue of Section 83 of the Finance Act, 1994, as a precursor. It

can, however, be accepted that in the event a notice/summon of the nature contemplated

in Section 14 is issued by the empowered officer under the above provisions of the Finance

Act, 1994, it is also necessary to ensure service of such notice/summon on the noticee.

22.3. Moreover, by the Circular dated 11.11.2021, it has been clarified that a pre-show cause

notice consultation shall not be mandatory for those cases booked under Chapter V of the

Finance Act, 1994 for recovery of duties or taxes not levied or paid or short paid or

erroneously refunded by reason of [a] fraud; or [b] collusion; or [c] wilful mis-statement;

or [d] suppression of facts; or [e] contravention of any of the provision of Chapter V of the

Finance Act, 1994 or the rules made thereunder with the intent to evade payment of duties

or taxes.

23. Reverting back to the facts of the case in hand, it is noticed that the Adjudicating Authority

in the Demand-cum-Show Cause Notice had recorded that the noticee was asked to submit

certain documents vide Letter no. C.No.IV[18]01/ST/3

rd

party/IID/20 dated 04.09.2020 for

ascertaining the noticee’s actual Service Tax liability during the Financial Year : 2015-2016.

It was further recorded that the noticee failed to submit those documents till the date of

issuance of the Demand-cum-Show Cause Notice. It has been argued that no such Letter

dated 04.09.2020 prior to the Demand-cum-Show Cause Notice was ever received by the

petitioner. It has, thus, been contended that recording of the fact of failure to respond to

such Letter dated 04.09.2020 by the Adjudicating Authority in the Demand-cum-Show

Cause Notice was incorrect. With such projection, it has been contended that the same has

made out a case of violation of the principles of natural justice.

23.1. On receipt of the Demand-cum-Show Cause Notice dated 26.04.2021, the petitioner had

submitted a Reply on 17.02.2022 responding to the allegations made in the Demand-cum-

Show Cause Notice. Noticeably, the petitioner in the said Reply was totally silent in respect

of the Letter dated 04.09.2020. The petitioner did not raise any contention in the said

Page No. 27/34

Reply that the Letter dated 04.09.2020 was never received. As the assertion made on

behalf of the Adjudicating Authority about issuance and service of the Letter dated

04.09.2020 was not traversed and controverted by the petitioner in the Reply dated

17.02.2022, the Adjudicating Authority in the Order-in-Original seemed to have not dealt

with the said aspect. It was only in the appeal preferred by the petitioner, the petitioner

had again raised the issue that it did not receive the Letter dated 04.09.2020.

23.2. The petitioner has, in the present writ petition, raised a ground that despite raising the

issue of non-receipt of the Letter dated 04.09.2020 in the appeal, the Appellate Authority

in the Order-in-Appeal did not give any consideration on it. It is trite to observe that this

Court in writ proceedings does not determine any question of fact. Whether the Letter

dated 04.09.2020 was issued or not and if issued, whether it was served upon or received

by the petitioner or not; etc. are questions of fact and in the fact situation obtaining in this

case due to claim and contrary claim, these are disputed questions of facts. It is settled

that all questions of facts are to be decided by the Adjudicating Authority or the appellate

authorities in the hierarchy, constituted by the statute, as such authorities are competent

to deal with and decide on disputed questions of facts. The determination of such disputed

questions of facts and to correct errors of fact fall within the province of the appellate

authorities. As the said aspect is a disputed question of fact, this Court in writ jurisdiction is

not required to embark on a fact finding exercise on the said aspect. Therefore, it is

accordingly observed. As an appeal is considered to be in continuation of the original

proceedings and a writ proceeding is not considered so, the issue as to whether a fact

which was not controverted or traversed in any manner initially, can be raised in appeal

subsequently or not, or the petitioner is precluded to raise such issue by operation of the

doctrine of waiver and acquiescence, can very well be gone into by the appellate forum as

it can go into issues of law also. The recourse is very well available for the petitioner to

approach under Section 86 of the Finance Act, 1994 in the case in hand.

24. Ordinarily, a Demand-cum-Show Cause Notice under sub-section [1] of Section 73 for

recovery of Service Tax not levied or paid or has been short-levied or short-paid or

erroneously refunded is to be issued within a period of thirty months from the relevant

date. By the proviso to sub-section [1], the Adjudicating Authority has been empowered to

Page No. 28/34

issue a Demand-cum-Show Cause Notice within a period of five years from the relevant

date, if any of the grounds mentioned therein is found to exist. Sub-section [6] of Section

73 has provided the meaning of ‘relevant date’ for the purpose of Section 73. As per

Section 73[6][i][a], ‘relevant date’ means, in the case of taxable service in respect of which

Service Tax has not been levied or paid or has been short-levied or short-paid, whereunder

the rules made under Chapter V of the Finance Act, 1994, a periodical return, showing

particulars of Service Tax paid during the period to which the said return relates, is to be

filed by an assessee, the date on which such return is so filed. Under Rule 7 of the Service

Tax Rules, 1994 framed under the Finance Act, 1994, it has inter alia been provided

that an assessee shall submit a half-yearly return in Form ST-3.

25. In the case in hand, the concerned Financial Year was 2015-2016 in respect of which the

allegations regarding suppression of actual value of services provided and short-payment

of Service Tax dues are made. The Demand-cum-Show Cause Notice dated 26.04.2021

was issued invoking the power under the proviso to sub-section [1] of Section 73 of the

Finance Act, 1994. According to the petitioner, it had duly filed its returns in Form ST-3 for

the Financial Year : 2015-2016.

26. It is a settled proposition that the extra-ordinary and discretionary jurisdiction to issue a

writ in the nature of certiorari under Article 226 of the Constitution of India is different

from appellate jurisdiction. The writ jurisdiction extends only to cases where the orders are

passed by tribunals or authorities without jurisdiction or by assuming jurisdiction where

their exists none or in excess of their jurisdiction by crossing the limits of jurisdiction or by

refusing to exercise jurisdiction vested in them or acting illegally or improperly in exercise

of their jurisdiction causing grave miscarriage. It is also no longer rest integra that in

regard to a finding of fact recorded by a tribunal or authority, a writ of certiorari can be

issued only if in recording such a finding, the tribunal or the authority has acted on

evidence which is legally inadmissible or has refused to admit an admissible evidence or if

the finding is not supported by any evidence at all, because in such cases the error

amounts to an error of law. It is also settled that a pure error of fact, however, grave,

cannot be corrected by a writ. It is not the case of the petitioner that the Demand-cum-

Show Cause Notice was issued beyond the period of five years from the relevant date,

Page No. 29/34

thereby, making it a case as one without jurisdiction. Rather, it is the case of the petitioner

that the Adjudicating Authority had issued the Demand-cum-Show Cause Notice by illegally

extending the period of thirty months to five years.

27. Having regard to the provision contained in sub-section [1] and in the proviso to sub-

section [1] of Section 73 of the Finance Act 1994, it cannot be said that the Adjudicating

Authority does not have the jurisdiction to issue a Demand-cum-Show Cause Notice within

a period of five year from the relevant date if he has reasons to believe that any of the

grounds mentioned therein exists and as a result, any Service Tax has not been levied or

paid or has been short-levied or short-paid or erroneously refunded. In the present case,

while invoking the power to extend the period to five years from the relevant date, the

Adjudicating Authority had recorded in the Demand-cum-Show Cause Notice dated

26.04.2021 the reasons as to why the case, according to it, is a case of wilful suppression

of facts and short-payment of Service Tax to invoke the power under the proviso. The

Adjudicating Authority had specifically referred to information/data collected from the

Income Tax Department pertaining to considerations received from the customers/changed

to customers under Section 194C/194H/194I/194J etc. of the Income Tax Act, 1961 for the

Financial Year : 2015-2016 and mentioned that on the basis of those information/data

collected he had reasons to believe that the petitioner-assessee had failed to pay Service

Tax to the tune of Rs. 1,34,54,383/- on the differential and undeclared value of services.

28. The question about the adequacy of reasons or its sufficiency can be raised in a tribunal of

facts and law and the issue can also be considered by an appellate tribunal which is

empowered to consider issues of both facts and law. From sub-section [2A] of Section 73

of the Finance Act, 1994, it is clearly discernible that an appellate authority can go into the

issue as to whether the power under the proviso to sub-section [1] of Section 73 for

extending the period to five years by the Adjudicating Authority has been properly

exercised or not. The appellate tribunal can very well come to a conclusion that the notice

issued under the proviso to sub-section [1] of Section 73 is not sustainable for the reason

that the charge of [a] fraud; or [b] collusion; or [c] wilful mis-statement; or [d]

suppression of facts; or [e] contravention of any of the provisions of Chapter V of the

Finance Act, 1994 or of the rules made thereunder with intent to evade payment of service

Page No. 30/34

tax; has not been established against the person chargeable with the Service Tax, to

whom the notice was issued. Thus, the appellate tribunal can go into the question as to

whether the power under the proviso to sub-section [1] of Section 73 to extend the period

to five years was properly exercised or not by the Adjudicating Authority. This Court is also

the considered view that since the case of the petitioner is not one that the Adjudicating

Authority has exercised the jurisdiction under the proviso to sub-section [1] of Section 73

without jurisdiction or in excess of jurisdiction or by assumption of jurisdiction where there

is no such jurisdiction, such issue should be decided by the appellate tribunal first.

29. In Simplex Infrastructure Limited [supra], a demand was raised by a demand-cum-

show cause notice invoking the extended period of limitation under the proviso to Section

73 of the Finance Act, 1994 on the ground of alleged suppression. Having considered the

contents of the demand-cum-show cause notice, the learned Single Bench has held the

view 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. The notice must contain particulars of facts and circumstance in support of such

allegation. The Court has found that the Department initiated an enquiry and issued letters

to the petitioner from time to time and the petitioner was found diligent in responding to

all the letters issued by the Department. It was in such backdrop, the learned Single Bench

has reached the view that 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. On perusal, the fact situation obtaining in Simplex Infrastructure Limited

[supra], with respect, is not found similar to the fact situation obtaining in the case in

hand.

30. As discussed above, the matter of issuance and service of the Letter dated 04.09.2020 is a

disputed one. In view of the contention raised, a reference to the relevant parts of Section

73 of the Finance Act, 1994 appears necessary. Sub-clause [c] of sub-section [1] of

Section 77 has inter alia prescribed that any person who fails to furnish information

called by an officer in accordance with the provisions of Chapter V or rules made

thereunder; or produce documents called for by the Adjudicating Authority in accordance

with the provisions of Chapter V or rules made thereunder; shall be liable to a penalty

Page No. 31/34

which may extend to ten thousand rupees or two hundred rupees for every day during

which such failure continues, whichever is higher, starting with the first day after the due

date, till the date of actual compliance. The petitioner has raised a question of illegal

imposition of penalty amounting to Rs. 10,000/- by the Adjudicating Authority in the Order-

in-Original and affirmed by the first Appellate Authority in the Order-in-Appeal. As this

issue is dependent on the outcome of the determination of the question regarding matter

of issuance and service of the Letter dated 04.09.2020, this issue is not required to be

decided in the present writ petition.

31. From the Order-in-Original, it is noticed that in the proceedings before the Adjudicating

Authority, the petitioner was afforded opportunity of personal hearing on 17.02.2022. On

17.02.2022, the petitioner was found to be represented by its Tax Consultant and

Authorized Representative. During the appellate proceedings, dates for personal hearing

were fixed on 25.05.2023, 10.07.2023 and 13.09.2023 respectively and the Appellate

Authority had passed the Order-in-Appeal on 21.09.2023. Prima facie, the case is not

one which falls in the category of ‘no notice’, ‘no opportunity’ and ‘no hearing’. There is a

distinction between a case where there is violation of the rule of audi alteram partem

with ‘no notice’, ‘no opportunity’ or ‘no hearing’ and a case where there is violation of a

facet of the rule of audi alteram partem where the plea is ‘no adequate notice’, or ‘no

adequate opportunity’ or ‘no fair hearing’. In the first category of cases, the order passed

could be termed as invalid on the ground of total violation of the principles of natural

justice. But it cannot be readily held so in the later category of cases as the effect of

violation of a facet of the rule of audi alteram partem would require examination from

the standpoint of prejudice. Having regard to the fact situation obtaining in the case in

hand, the Appellate Tribunal can very well examine whether the petitioner was given

adequate notice or was afforded adequate opportunity or a fair hearing in the proceedings

before the Adjudicating Authority and/or before the first Appellate Authority. The

contention of the petitioner as regards non-consideration of its Letter dated 15.09.2023 is

also to be considered from the above perspective. Since this Court is of the considered

view that neither the Order-in-Original nor the Order-in-Appeal has been passed in total

violation of the principles of natural justice, the petitioner has not been able to make out

an exceptional case on this point for entertaining the present writ petition.

Page No. 32/34

32. In Kellogg India Private Limited [supra], a show cause notice was issued to the writ

petitioner calling upon them to show cause as to why their product ‘Chocos’ should not be

classified under Chapter sub-heading no. 1084.00 of the Tariff Act and the classification

declaration filed under Rule 173B of the Central Rules, 1944. After submission of a reply by

the petitioner, the Adjudicating Authority passed an Order-in-Original. The petitioner

unsuccessfully carried an appeal before the Commissioner [Appeals]. After rejection of the

appeal by the first appellate authority, the petitioner carried the matter further by

preferring an appeal before the Customs, Excise and Gold [Control] Appellate Tribunal [‘the

Tribunal’, for short]. The Tribunal allowed the appeal and remanded the matter to the

Adjudicating Authority for consideration afresh as directed in the remand order. The

petitioner had inter alia sought for the copies of the test reports, methodology followed

for determination of chocoa content, and an opportunity to cross-examine the authority

who carried out the tests. When such prayer of the petitioner was rejected, the concerned

writ petition under Article 226 of the Constitution of India was filed. On consideration of

the background facts and circumstances of the case, the Hon’ble Court has held that the

failure on the part of the respondents to supply copies of the test reports which has denied

the petitioner of the opportunity to have the contents of the test reports relied upon by the

respondents before the Adjudicating Authority was an act clearly in breach of the principles

of natural justice and hence, the bar of alternate remedy does not stand in the way of the

petitioner. Without expressing any opinion on its merits, the matter was remitted back to

the Adjudicating Authority. The decision in Kellogg India Private Limited [supra] is

not found to be of any assistance to the cause of the petitioner for the reasons mentioned

in paragraph 31 hereinabove.

33. In M/s Sailaja Commercial Construction Private Limited [supra], an intra-court

appeal was preferred against a Judgment dated 18.04.2022 of a learned Single Bench

passed in a writ petition, W.P.[C] no. 153/2022. The writ petition was preferred by the writ

petitioner/writ appellant against an Order-in-Original dated 09.09.2021 passed by the

Principal Commissioner of Central Goods and Services Tax and Central Excise, Guwahati

whereby a demand for an amount towards Service Tax along with equivalent amount of

penalty in terms of Section 78 of the Finance Act, 1994 and penalty in terms of Section 77

Page No. 33/34

of the Finance Act, 1994 were imposed upon the writ petition/writ appellant. The learned

Single Bench had held that the statutory remedy of filing an appeal was available to the

writ petitioner/writ appellant and therefore, the writ petition was not fit to be entertained.

The Division Bench has affirmed the said expression of opinion of the learned Single

Bench. A contention was advanced on behalf of the writ petitioner/writ appellant that a

statutory pre-deposit was required to be made for filing an appeal and thus, the remedy

was not efficacious. Such contention has been held by the Hon’ble Division Bench to be

unworthy of credence because mere requirement of furnishing or making the pre-deposit

with the appeal under the Goods and Services Act would not make the remedy

inefficacious. It has been held that the remedy of appeal is an efficacious statutory remedy

and ordinarily, the writ jurisdiction should not be invoked to examine the validity of a

demand notice, if none of the exceptions curved out by the Hon’ble Supreme Court in its

decision is made out.

34. It is noticed that against an order like the Order-in-Appeal no.

528/GHY[A]/COM/ST/GHY/2023 dated 21.09.2023, an appeal lies under Section 86 of the

Finance Act, 1994 to the Customs, Excise and Central Tax Appellate Tribunal and such

appeal is required to be filed within three months from the date on which the order sought

to be appealed against has been communicated. Sub-section [5] of Section 86 has

provided that the Appellate Tribunal may admit an appeal after the expiry of such period of

limitation if it is satisfied that there was sufficient cause for not presenting it within that

period.

35. In view of the fact that a statutory, adequate and efficacious remedy of appeal has already

been provided for to assail an order like the Order-in-Appeal no. 528/GHY[A]/COM/ST/

GHY/2023 dated 21.09.2023 before the Appellate Tribunal having the power to condone

any delay, this Court is of the considered view, as also observed in Smti. Ajitha

Krishnan [supra], that the writ petition preferred under Article 226 of the Constitution of

India is not to be entertained at this stage, reserving the liberty to the petitioner to avail

the statutory remedy of appeal provided under Section 86 of the Finance Act, 1994. It is

accordingly observed. Consequently, the interim order passed earlier stands recalled.

Order downloaded on 24-12-2024 05:30:28 PMPage No. 34/34

36. It is pertinent to mention that the present writ petition against the Order-in-Appeal no.

528/GHY[A]/COM/ST/GHY/2023 dated 21.09.2023 was filed on 16.12.2023, that is, within

the statutory period of limitation of three months provided under Section 86 of the Finance

Act, 1994. As the period of three months since the Order-in-Appeal has expired in the

meantime, the petitioner is also at liberty to prefer an application before the Appellate

Tribunal showing cause as to why the appeal could not be presented within the statutory

period of limitation. It is observed that in the event such an application for condoning the

delay and an appeal are preferred by the petitioner, the Appellate Tribunal shall consider

the same in accordance with law and on its own merits.

JUDGE

Comparing Assistant