Calcutta High Court
Clifford Facilites Services Private ... vs Union Of India & Ors on 8 May, 2025
OD-1
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
ORIGINAL SIDE
WPO/1071/2024
CLIFFORD FACILITES SERVICES PRIVATE LIMITED AND ANR.
VERSUS
UNION OF INDIA & ORS.
BEFORE :
THE HON'BLE JUSTICE RAJA BASU CHOWDHURY
Date: 8th May, 2025
Appearance :
Mr. Pranit Bag, Adv.
Mr. Anuj Kumar Mishra, Adv.
Ms. Amani Kayan, Adv.
Mr. Anousko Das, Adv.
Mr. Balram Patra, Adv.
...for the petitioners
Mr. Uday Shankar Bhattacharya, Adv.
Mr. Bhaskar Prosad Banerjee, Adv.
Mr. Tapan Bhanja, Adv.
...for the CGST Authority
The Court :- 1. Challenging the show cause notice dated 31 st
December, 2020 issued under the provision of Section 73(1) of the first
proviso to the Finance Act, 1994 (hereinafter referred to as 'the said Act')
whereby the respondents have proceeded to invoking the extended
period, as also challenging the order in original dated 11 th July, 2024
issued by the respondent no.3, the instant writ petition has been filed.
2. Mr. Bag, learned Advocate representing the petitioners by
drawing attention of this Court to the showcause notice dated 31 st
December, 2020 would submit that the said showcause has been issued
for the financial year 2015-16, 2016-17 and 2017-18 (April, 2017 to
June, 2017) beyond the ordinary period of limitation by invoking the
extended period.
3. According to the petitioners, the petitioners are service
providers and are engaged in manpower services, security agency
services and housekeeping services in various entities including several
state entities such as the Government of India Press, Public Health
Engineering, Satyajit Ray Film Institute, Visva-Bharati, Shantiniketan,
Executive Engineer, Salt Lake, Indian Institute of Foreign Trade,
Rajasthan Skill and Livelihood Development Corporation, Commanding
Officer, ICGS, Kolkata, West Bengal Cooperative Bank Limited, Rail Vikas
Nigam Limited etc. In ordinary course of business, the petitioners upon
providing service while raising invoices had never raised such invoices by
including the component of service tax and had never charged service tax
from any of the entities. According to the petitioners, the petitioners are
not required to pay service tax by virtue of an exemption notification
being no.25/2012/ST dated 20 th June, 2012. Accordingly, the petitioners
from time to time had filed returns in form ST3 by disclosing therein
their total income on the basis of the benefits available to the petitioners
under the exemption noted hereinabove.
4. Mr. Bag by drawing attention of this Court to the show cause
notice and the grounds for invocation of the extended period would
submit that the only ground of invocation of the extended period is the
alleged mis-declaration of correct income details in the periodical returns
of the petitioners as assessee for availing the exemption notification.
This, according to Mr. Bag, does not and cannot form the basis for
invoking the extended period.
5. It is the petitioners' case that the petitioners had appeared
before the adjucating authority and had placed their aforesaid case but
no response was filed to the show cause notice though, the notification
referred to above was duly placed by the petitioners before the authority.
6. Mr. Bag would submit that the order passed by the
adjudicating authority is without jurisdiction and has no basis. The
showcause is also without jurisdiction. He would submit that the tests
laid down by the Hon'ble Supreme Court for invoking the extended period
does not stand satisfied. In support of his contention, he has placed
reliance on the following judgments:-
I. Gopal Zarda Udyog & Ors. v. Commissioner of Central Excise,
New Delhi reported in (2005) 8 SCC 157.
II. Escorts Limited v. Commissioner of Central Excise, Faridabad
reported (2015) 9 SCC 109.
III. Phawa Chemicals Pvt. Ltd. v. Commissioner of Central Excise,
Delhi reported in (2009) 4 SCC 658.
7. Reliance is also placed in the judgment delivered by the
Hon'ble Supreme Court in the case of Pushpam Pharmaceuticals
Company vs. Collector of Central Excise, Bombay reported in 1995 Supp
(3) SCC 462 on the issue as to whether the assessee can be held guilty of
suppression when the law itself is not certain
8. Per contra, Mr. Bhattacharya, learned Advocate representing
the respondents at the very outset would submit that the aforesaid writ
petition may not be maintainable having regard to the efficacious
alternative remedy available to the petitioners in the form of a statutory
appeal provided under the scheme of the Finance Act, 1994. In any
event, he would submit that it is not a case of confusion or certainty of
the law but a case of admission. In this case the petitioners' managing
director had clearly admitted to have wrongfully availed the exemption in
respect of the security service provided to Viswa Bharati Shantiniketan,
up to August, 2019 and had not claimed GST from the Viswa Bharati. He
would submit that the Managing Director also acknowledged the fact
that since 2019 the petitioners have started raising GST bills. This apart
he would submit that although the petitioners were issued a showcause
notice, petitioners chose not to respond to the same. The ST3 returns
filed by the petitioners are incomplete. The petitioners intentionally held
back information and having regard thereto no relief should be afforded
to the petitioners.
9. Heard the learned advocates appearing for the respective
parties and considered the materials on record. Prime facie it would
transpire that the petitioners had provided certain services which the
petitioners claim are exempted by virtue of the exemption notification
no.25/2012 dated 20th June 2012. Proceeding on such premise the
petitioners did not include the service tax component in the invoices
raised by the petitioners on their clients. The service tax returns filed by
the petitioners in form ST3 also did not include the aforesaid service tax.
Admittedly, no showcause was issued by the respondents during the
ordinary period for making an enquiry to ascertain short deposit of such
service tax in terms of Section 73(1) of the said Act. It was only after the
aforesaid period was over that the respondents invoked the proviso to
Section 73(1) of the said Act to include the extended period within the
scope of inquiry.
10. I find from the showcause notice dated 31 st December 2020
that ground for invocation of the extended period is misdeclaration of the
incomes in the periodical returns, and availing irregular exemption
benefits while discharging liability. The respondents have also submitted
that although the petitioners claimed to be exempted such exemption
was not disclosed by the petitioners in the ST3 returns and that the
showcause was also not responded to. Mr. Bag, learned Advocate
representing the petitioners would, however, submit that by reason of
covid pandemic the petitioners could not respond to the showcause.
11. In this context, I find from the order impugned that the
petitioners were given ample opportunity of personal hearing on 15 th
February 2024 as also on 26th February 2024. Although, the petitioners'
Managing Director had sought for further extension, in the facts of the
case no further extension was granted after 5 th March 2024. Having
regard thereto it cannot be said that the petitioners did not have ample
opportunity to respond to the showcause or by reason of the covid
pandemic could not respond to the showcause. Ordinarily when a
showcause notice forms the subject matter of challenge, the Court is
loath to accept such challenge, unless it could be demonstrated that the
showcause notice itself is without jurisdiction. The case that the
petitioners seek to make out, in my view, is an issue which deals with the
merits of the case especially having regard to the fact that no response
had been filed by the petitioners to the showcause notice. However, the
fact that reliance was placed on the exemption notification dated 20 th
June 2012 cannot also be lost sight of as well.
12. I find in the judgment delivered in the case of Escorts
Limited (supra) the Hon'ble Supreme Court has taken a view that if there
is a bona fide error or the assessee had proceeded on the basis of a bona
fide belief or information, ordinarily the same cannot tantamount to
wilful misstatement by suppression of facts. In the case of Gopal Zarda
Udyog (supra) the Hon'ble Supreme Court has went on to note that mere
failure or negligence on the part of the manufacturer either not to take
out the licence or not to pay the due in cases where there is a scope for
doubt does not attract the extended period of limitation.
13. The same view has been reiterated in Phawa Chemicals
(supra) when the Hon'ble Supreme Court observed in paragraph 6 that it
is settled law that mere failure to declare does not amount to wilful
misdeclaration or wilful suppression and that there must be some
positive act on the part of the party to establish either wilful
misdeclaration or wilful suppression. Again in the case of Pushpam
Pharmaceuticals Company (supra) the Hon'ble Supreme Court proceeds
on the premise that uncertainty on the question of disclosure of
exempted goods cannot be a ground for suppression.
14. Having regard to the law laid down in the above judgments
it cannot be said that the petitioners have no case at all or the matter
may not require any consideration as regards the jurisdictional issue of
invocation of the extended period. However, the fact that the petitioners
had not filed any response to the showcause and waited and watched
the proceeding for more than four years and even after the order
was passed no steps were taken to challenge such order within the
statutory period of limitation cannot be ignored as well.
15. Be that as it may, since a jurisdictional issue has been
raised, I am of the view that the writ petition shall be heard. However,
considering the conduct of the petitioners as noted hereinabove, I am of
the view that the petitioners should be put to terms.
16. There shall be an unconditional stay of the order impugned
for a period of four weeks. If the petitioners deposit 10% of the amount of
the tax in dispute within the aforesaid period of four weeks, the interim
order shall continue till the disposal of the writ petition or until further
order whichever is earlier. It is made clear that in the event the
petitioners succeed, the petitioners will be entitled to the benefit of the
aforesaid sum and the claim for interest shall be considered at the time
of final hearing.
17. Let affidavit-in-opposition to the present writ petition be
filed within one week after the summer vacation. Reply may be filed on or
before the matter is taken up next. List this matter in the monthly list of
July, 2025.
(RAJA BASU CHOWDHURY, J.)
AKG/R. Bose
