Gujarat High Court
Mita Jitesh Mehta vs Union Of India on 24 January, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 14695 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
================================================================
Approved for Reporting Yes No
No
================================================================
MITA JITESH MEHTA
Versus
UNION OF INDIA & ANR.
================================================================
Appearance:
MR JIMI S PATEL(10578) for the Petitioner(s) No. 1
DEEPAK N KHANCHANDANI(7781) for the Respondent(s) No. 1,2
================================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 24/01/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Jimi S. Patel for the petitioner and learned advocate Mr.Deepak Khanchandani for the respondents. Page 1 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025
NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined
2. Rule, returnable forthwith. Learned advocate Mr.Deepak Khanchandani waives service of notice of rule for and on behalf of the respondents.
3. Having regard to the controversy in narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing.
4. By this petition under Article 227 of the Constitution of India, the petitioner has prayed for the following reliefs :
"(A) this Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing notice issued u/s 73(1) dated 20.09.2020 at Annexure-I Page 2 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined and Order In Original u/s 73 of FA, 1994 passed u/s 73 dated.27.04.2022 at Annexure-J. (B) this Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of prohibition or any other appropriate writ, order or direction against the recovery of Service Tax, Penalty and Interest arising out the Order In Original u/s 73 of FA, 1994 passed u/s 73(1) dated 27.04.2022 at Annexure-J."
5. The brief facts of the case are as under :
5.1. The petitioner is a proprietor of proprietary concern M/s. Source India and engaged in business of export of service. As the petitioner has provided services outside the India i.e. taxable territory, the services provided by the petitioner is not chargeable Page 3 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined to service tax as per the provisions of Section 66B of the Finance Act, 1994 (for short 'the Act, 1994'). The petitioner therefore did not obtain the service tax registration.
5.2. The petitioner thereafter obtained the registration under the provisions of the Central/State Goods and Service Tax Act, 2017 (for short 'the GST Act') and accordingly, GST Registration Certificate was issued to the petitioner in Form GST REG-06 dated 06.07.2018.
5.3. It is the case of the petitioner that the registration was obtained on the principal place of business situated at 504, Rajvi Arcade, Opp. Gurukul Mandir, Drive In Road, Ahmedabad-380052, Gujarat which was later on Page 4 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined amended, as the petitioner shifted the place of business and moved to new premises situated at 7th Floor, B-707, Times Square Arcade-II, Nr.Avalon Hotel, Bodakdev, Ahmedabad. The petitioner had preferred an application for amendment of the principal place of business in the business of Registration to the GST Department by filing Form GST REG-14 on 18th February, 2019 which was accepted by the respondent-Authority by passing an order in Form GST REG-15 dated 07.03.2019 showing new principal place of business as requested by the petitioner.
5.4. It is the case of the petitioner that in the month of December, 2022, Chartered Accountant of the petitioner who was handling GST related work, received call from the respondent for payment of the outstanding Page 5 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined demand related to the petitioner in respect of service tax proceedings. As the Chartered Accountant was not handling the work of Service Tax of the petitioner, he arranged to obtain the copy of the Order-in-Original passed under Section 73 of the Act, 1994 by the respondent on 15.02.2023. 5.5. On receipt of the Order-in-Original, the petitioner made inquires in the Office about receipt of any show-cause notice or not from the respondents. The petitioner addressed a letter to the respondent No.2-Deputy Commissioner of Goods and Service Tax, Division-VII, Ahmedabad-North Commissionerate submitted on 06.04.2023 requesting him to provide the proof of service of impugned show-
cause notice and the Order-in-Original as the same were not received by the petitioner. The petitioner thereafter, filed an application Page 6 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined under Section 6(1) of the Right to Information Act, 2005 on 06.05.2023 with a request to provide the details sought for by the petitioner in the letter dated 06.04.2023 regarding the proof of service of the impugned show-cause notice and Order-in-Original. The respondent No.2 provided the requisite details by letter dated 30th May, 2023. The petitioner therefore came to know that the impugned show- cause notice was issued under Section 73(1) of the Act, 1994 for financial years 2014-15 and 2015-16 as the copy of the show-cause notice provided along with the reply letter dated 30th May, 2023 under RTI and in the said letter, the respondent No.2 has admitted that the show-cause notice issued under Section 73(1) of the Act, 1994 dated 20th September, 2020 and notice of personal hearing dated 07.04.2022 were not served upon the petitioner Page 7 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined and the same have been returned back. It was also admitted that the impugned Order-in- Original dated 27.04.2022 also remained unserved.
5.6. Being aggrieved, the petitioner has preferred this petition challenging the impugned show-cause notice and Order-in- Original as the same was issued without jurisdiction by the respondent No.2 as it remained unserved upon the petitioner. 6.1. Learned advocate Mr.Jimi Patel for the petitioner submitted that in absence of service of the show-cause notice as well as the impugned Order-in-Original, both are liable to be quashed and set aside as the respondent No.2 could not have passed the impugned Order-in-Original without service of the show-cause notice contrary to the Page 8 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined provision of Section 37C(1) of the Central Excise Act, 1944 (for short 'the Act, 1944'). 6.2. It was further submitted that even on merits, the impugned show-cause notice and the Order-in-Original are based upon the information available in Form 26AS under the Income Tax Act, 1961 by drawing an inference that the export services provided by the petitioner are liable to service tax though as per provisions of Section 66B of the Act, 1994, the export services are out of the scope of levy of the service tax.
6.3. It was further submitted that even the letter dated 07.04.2022 issued by the respondent for personal hearing fixing the three dates i.e 19.04.2022, 21.04.2022 and 25.04.2022 was never received by the petitioner and therefore, the impugned ex- Page 9 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025
NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined parte Order-in-Original passed by the respondent based upon the show-cause notice issued without jurisdiction is liable to be quashed and set aside.
6.4. In support of his submissions, reliance was placed on the decision of this Court in case of Vadilal Industries Limited versus Union of India reported in [2006] 197 ELT 160 (Gujarat). It was submitted that while considering the provisions of Section 37C(1) of the Act, 1944, it was held by this Court that in absence of service of show-cause notice contrary to the provisions of Section 37C(1)(a) of the Act, 1944, the respondent No.2 would not have any jurisdiction to proceed further by passing the ex-parte Order- in-Original.
7.1. On the other hand, learned advocate Page 10 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined Mr.Deepak Khanchandani for the respondents relied upon the averments made in the affidavit-in-reply filed on behalf of the respondents to submit that the show-cause notice was issued by registered speed post upon the petitioner which is also born out from the despatch register placed on record along with the additional affidavit-in-reply. 7.2. It was submitted that the notice was issued upon the old address of the petitioner which has remained undelivered and unfortunately, the Department is not having the receipt for the same. It was submitted that similarly, the Order-in-Original was also served upon the old address and has remained undelivered. It was further submitted that as the notice was not served upon the petitioner, provisions of Section 37C(c) of the Act, 1944 was not duly followed by affixing a copy on Page 11 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined the notice board of the Officer or the Authority who passed such Order. However, on a query raised by the Court, learned advocate Mr.Deepak Khanchandani fairly submitted that there is nothing on record in the original file as to when such copy was affixed on the notice board.
8. Considering the above submissions, it would therefore be germane to refer to the provisions of Section 37C of the Act, 1944 which is amended with effect from 10.05.2013 by Act 17 of 2013 as under :
"37C.Service of decisions, orders, summons, etc.-
(1) Any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served, -Page 12 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025
NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined
(a) by tendering the decision, order, summons or notice, or sending it by registered post with acknowledgment due 2 [or by speed post with proof of delivery or by courier approved by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963)] to the person for whom it is intended or his authorised agent, if any;
(b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case maybe, is intended;
(c) if the decision, order, summons or notice cannot be served in the Page 13 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined manner provided in clauses (a) and
(b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order or issued such summons or notice."
9. On perusal of the above provision, it is clear that the decision or order passed or any summons or notice issued under the Act is to be served by various modes as prescribed in clause (a) by tendering or by registered post or by speed post with proof of delivery or by courier, failing which, by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case maybe, is intended and on failure of the modes prescribed in clauses
(a) and (b), by affixing a copy thereof on the Page 14 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined notice board of the Officer who passed such decision or order or issued summons or notice.
10. However, in the facts of the case, the show-cause notice issued by speed post by the respondent-Department is stated to have been not delivered but there is no proof of such return of the show-cause notice. Therefore, admittedly the show-cause notice was never served upon the petitioner. Similarly, the letter dated 07.04.2022 fixing the personal hearing as well as the Order-in-Original were also sent by speed post as contended in the reply dated 30th May, 2023 given under the RTI Act, however, the same also met with the same fate of not delivering upon the petitioner. Therefore, the respondent-Authority was required to take recourse to clauses (b) and
(c) of Sub-section (1) of Section 37C of the Page 15 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined Act, 1944, however, it is admitted in the affidavit-in-reply that as the petitioner had changed the place of the business, it was not possible to follow the provisions of Section 37C(b) of the Act, 1944 as at the time of delivery, the address of the premises was not in existence but the provisions of Section 37C(c) was followed by affixing copy thereof on the notice board but as fairly submitted by learned advocate Mr.Deepak Khanchandani, no document or details are available even for compliance of clause (c) of Section 37C(1) of the Act, 1944.
11. In view of the above facts, it is clear that neither the show-cause notice nor the Order-in-Original was ever been served upon the petitioner at any point to time and when there is non service of the show-cause notice Page 16 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined and the Order-in-Original, both are liable to be quashed and set aside.
12. In ordinary course we would have remanded the matter back to the respondent-Authority for adjudicating the show-cause notice a fresh de-novo, however, considering the facts of the case, the respondent No.2 could not have assumed the jurisdiction on the basis of data available in Form 26AS comprising the total amount paid/credited under Sections 194C, 194I, 194H, 194J of the Income Tax Act, 1961 for the year under consideration on the ground that the petitioner failed to disclose the liability to pay service tax by invoking the extended period of limitation as per the first proviso to Sub-section (1) of Section 73 of the Act, 1994 read with Notification dated 27.06.2020.
Page 17 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025
NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined
13. On perusal of the Order-in-Original, it also appears that the respondent-Assessing Officer has failed to record the aspect of service of notice or communication vide letter dated 07.04.2022 fixing the date of personal hearing and has passed the ex-parte Order-in- Original considering that the petitioner failed to respond to the show-cause notice and failed to remain present in the personal hearing ignoring the fact that the notice was never served upon the petitioner.
14. In such circumstances, even on merits, the matter is required to be considered in favour of the petitioner as petitioner was never liable to pay the service tax on the export services under the provisions of the Act, 1994 and hence, no further orders are required to Page 18 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025 NEUTRAL CITATION C/SCA/14695/2023 JUDGMENT DATED: 24/01/2025 undefined be passed.
15. The petition therefore succeeds and is accordingly, allowed. The impugned show-cause notice dated 20.09.2020 and the Order-in- Original dated 27.04.2022 are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No orders as to cost.
(BHARGAV D. KARIA, J) (D.N.RAY,J) PALAK Page 19 of 19 Uploaded by PALAK BRAHMBHATT(HC01391) on Mon Feb 03 2025 Downloaded on : Fri Feb 07 23:09:41 IST 2025