Court dismisses appeal challenging extended period of limitation for adjudication due to appellant's non-cooperation.
In a significant ruling, the Punjab and Haryana High Court has dismissed the appeal of Sanjay Verma against the Commissioner of Central Goods and Service Tax concerning the invocation of an extended period of limitation in a service tax dispute. The case, heard by Justice Ashwani Kumar Mishra and Justice Rohit Kapoor, revolved around the appellant's failure to respond to repeated notices and the subsequent delay in adjudication.
Sanjay Verma, engaged in providing architectural services, was registered with the Service Tax Department but had consistently filed returns showing a zero turnover. A discrepancy was discovered when the Income Tax Department revealed that Verma had received Rs. 86,21,611 for services rendered during 2015-2016, which he had not disclosed in his service tax returns.
Despite multiple notices issued by the authorities to clarify the situation, Verma remained unresponsive, resulting in a Show Cause Notice (SCN) issued on December 30, 2020, invoking the extended period of limitation. Even after this, Verma failed to appear for hearings until January 24, 2022, following which the adjudicating authority passed the order-in-original on April 29, 2022.
Verma's appeal contended that the order was invalid as it was passed beyond the prescribed period of one year from the issuance of the SCN, as per Section 73(4B) of the Finance Act, 1994. His reliance on a similar judgment from the CESTAT, Principal Bench, New Delhi, was countered by the ongoing challenge of that decision before the Supreme Court.
The High Court emphasized the legislative intent behind Section 73(4B), which aims to curb executive lethargy while allowing flexibility if justifiable reasons for delay exist. Given Verma's repeated non-compliance and delayed response, the Court ruled that the delay was attributable to his conduct, not the adjudicating authority's negligence.
Justice Mishra, delivering the judgment, highlighted that the statutory scheme does not penalize the authorities for delays caused by the appellant's actions. The court found no merit in the appeal, affirming the validity of the extended period of adjudication due to Verma's own default.
With this decision, the court has reinforced the principle that parties cannot benefit from their own wrongdoing and has set a precedent emphasizing accountability in tax proceedings. The appeal was dismissed, and all pending miscellaneous applications were also disposed of.
Bottom line:-
Service Tax - Invocation of extended period of limitation - Order passed beyond prescribed period of one year from issuance of SCN - Appellant claiming such order to be invalid - Held, statutory scheme under Section 73(4B) of the Finance Act, 1994, allows adjudicating authority to pass orders beyond the prescribed period if justifiable reasons exist for delay - Provision intended to curb executive lethargy, not to create absolute bar on delays caused by appellant's conduct.
Statutory provision(s): Finance Act, 1994 - Section 73(4B)
