Mrs. Sunanda Duary V. Union of India & Ors.

WPA/13623/2024

AI Insights

The case involves Mrs. Sunanda Duary, who filed a writ petition challenging an order passed by the Additional Commissioner, CGST & CX, Haldia Commissionerate, which determined her tax liability under the Finance Act, 1994. The petitioner argued that the show cause notice was barred by limitation and that she was entitled to benefits under the Mega Exemption Notification due to executing government contracts. The CGST authorities contended that the order was appealable and that the petitioner had been given ample opportunity to present her case. The court found procedural irregularities and perverse findings by the authorized officer, leading to the remand of the case for fresh consideration.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 818234 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 27-06-2024
• Assessment Year: misc
• Laws Referred To: Finance Act, 1994
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K K MAITI; TAPAN BHANJA
• Assessee Lawyers: AMITAVA GHOSH; TAPAS DEY; SOURAV CHATTERJEE
• Keywords: Government contracts; Mega Exemption Notification; Procedural irregularity; Show cause notice; Tax liability
• Section: 73; 93(1)

Judgement Text

"Form No.J(2) IN THE HIGH COURT AT CALCUTTA CONSTITUTIONAL WRIT JURISDICION APPELLATE SIDE Present: The Hon’ble Justice Raja Basu Chowdhury W.P.A 13623 of 2024 Mrs. Sunanda Duary Versus Union of India & Ors. For the petitioner : Mr. Amitava Ghosh Mr. Tapas Kumar Dey Mr. Sourav Chatterjee For the CGST authority : Mr. K. K. Maiti Mr. Tapan Bhanja Heard on : 27th June, 2024 Judgment on : 27th June, 2024 Raja Basu Chowdhury, J: 1. Affidavit of service filed in Court today is taken on record. 2. The present writ petition has been filed, inter alia, challenging the order passed by the Additional Commissioner, Headquarter, Central Tax CGST (Central Excise), Haldia Commissionerate on 29th February, 2024, under Section 73 of the Finance Act, 1994 (hereinafter referred to as the “said Act”), thereby determining tax 2 liability of the petitioner in terms of the show cause cum demand notice dated 20th April, 2021. 3. According to the petitioner, the aforesaid show cause is barred by limitation. Independent of the aforesaid, it is submitted that since the petitioner had executed Government contracts, the petitioner is entitled to the benefit of Mega Exemption Notification dated 20th June, 2012 issued in exercise of powers conferred under Section 93 (1) of the said Act. 4. By drawing attention of this Court to the payment certificate, appearing at pages 42 and 43 of the writ petition, it is submitted that despite the Executive Engineer, Diamond Harbour Division and the Additional Accounts Officer confirming the factum of payments made by issuing payment certificates on 1st September, 2016, in respect of the works executed by the petitioner, the same had been glossed over by the authorized officer. 5. It is still further submitted that in a contract of this nature ordinarily no bills are submitted. It is the Public Works Department (PWD) who prepare the bills as per the procedure laid down and the petitioner is required to sign the same. 6. Admittedly, in this case, the factum of payment by the governmental authorities in connection with the works executed by the petitioner had been confirmed by the Additional Accounts 3 Officer, PWD. Notwithstanding the aforesaid, the same had not at all been considered. 7. It is still further submitted that although, the show cause notice was issued by the Joint Commissioner of Central Tax, CGST & CX, Kolkata South Commissionerate, the final order had been passed by the Additional Commissioner CGST & CX, Haldia Commissionerate. The aforesaid, according to Mr. Ghosh, is an irregularity in procedure adopted by the respondents and has the effect of vitiating the entire proceeding, on such ground the same should be set aside. 8. Mr. Maiti, leaned advocate representing CGST authorities on the other hand submits that the order impugned is an appealable order and ordinarily when an efficacious alternative remedy is provided for, the Hon’ble Court is loathe to take up the matter. He submits that the petitioner was given ample opportunity by the Additional Commissioner of CGST & CX, Haldia Commissionerate to appear before him. Notwithstanding the aforesaid, the petitioner chose not to appear. In the facts as noted hereinabove, the order passed by the Additional Commissioner, CGST & CX on 29th February, 2024 cannot be said to be irregular. 9. By drawing attention of this Court to paragraph 6.1 of the said order dated 29th February, 2024 it is submitted that the hearing of the show cause notice had been assigned by the Chief 4 Commissioner to the Additional Commissioner vide his order dated 16th November, 2022. Accordingly, the Additional Commissioner had taken up the matter and as such there cannot be any jurisdictional error on the part of the Additional Commissioner in passing the adjudication order. In the facts noted above, no interference is called for. 10. Heard the learned advocates appearing for the respective parties and considered the materials on record. I notice that the show-cause had been issued by invoking the extended period as provided for in the first proviso to Section 73(1) of the said Act. It appears from the aforesaid show cause that on the basis of the information received by the Department from the Central Board of Direct Taxes for the financial year 2015-16 and 2016-17 that the assessee was requested to submit certain documents, inter alia, including profit and loss account, income tax return, Form 26AS, output service bills, explanation and clarification for the mismatches in reporting “different value of services” provided to different tax authorities for the financial year 2015-16, 2016-17 and 2017-18. 11. Records reveal that the petitioner by a communication in writing dated 19th May, 2021 had offered certain clarifications including the factum of the petitioner providing service to the 5 West Bengal Government for the period 1st April, 2012 to 31st March, 2014. 12. According to the petitioner, in the light of the Megha Exemption notification dated 20th June, 2012, issued in exercise of power under Section 93(1) of the said Act, the petitioner became entitled to exemption from payment of service tax although, no such exemption was available for payment of Income Tax, hence the mismatch. Records also reveal that the petitioner had submitted bills, statements, audited report, Form 26AS and the work order issued by the Governmental authorities. According to the authorized officer, the petitioner did not submit output service bills as asked for verification with the work order. Since, the petitioner failed to submit the original work order for verifying the authenticity of the same, the authorized officer had refused to accept the contractual price received by petitioner for the work orders. It is, however, not in dispute that the payment had been disbursed in favour of the petitioner by the PWD as would corroborate from the documents appearing at pages 42 and 43 of the writ petition dated 1st September, 2016. The aforesaid, in my view, ought to have been considered by the authorised officer. To the extent of the non-consideration of the aforesaid by glossing over the payment certificate and refusing to accept the payment certificates issued by the Government since, the work orders were not disclosed in original, I am afraid and of the view that such finding 6 returned by the authorised officer is perverse. Although, there may be some dispute as to whether the petitioner had actually disclosed a particular document, without going into such dispute at this stage, I am of the view that it would be prudent to send back the petitioner before the respondents for reconsideration of the matter afresh, inasmuch as, Mr. Maiti, learned advocate representing the respondents on instruction has not denied that in appropriate cases benefit of Mega Exemption Notification dated 20th June, 2012 can be granted. Although, there is an appellate provision, however, since, the finding returned by authorised officer appears to be perverse as noted above, it shall not be proper to call upon the petitioner to avail the statutory remedy in the form of an appeal. 13. In view thereof, the petitioner is remanded back to the adjudicating authority, who shall dispose of the aforesaid show cause notice by affording an opportunity of personal hearing to the petitioner and/or her representative within a period of eight weeks from the date of communication of this order subject to payment of Rs.5,00,000/- with the respondents. 14. The aforesaid payment shall abide by the decision to be taken by the respondents. 7 15. The petitioner shall be at liberty to disclose additional documents before the adjudicating authority and all points are kept open. 16. With the above observations and directions the writ petition stands disposed of 17. There shall be no order as to costs. 18. Urgent Photostat certified copy of this order, if applied for, be made available to the parties upon compliance with the necessary formalities. (Raja Basu Chowdhury, J.) SB "