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
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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
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Approved for Reporting Yes No
No
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MITA JITESH MEHTA
Versus
UNION OF INDIA & ANR.
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Appearance:
MR JIMI S PATEL(10578) for the Petitioner(s) No. 1
DEEPAK N KHANCHANDANI(7781) for the Respondent(s) No. 1,2
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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.
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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
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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
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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
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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
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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
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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
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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
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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-
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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
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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
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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, -
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(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
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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
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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
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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
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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.
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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
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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
