ORDER
SHEET WP NO.470 OF2014IN THE HIGH COURT AT CALCUTTA Constitutional Writ Jurisdiction ORIGINAL SIDE SIMPLEX INFRASTRUCTURES LTD.Versus COMMISSIONER OF SERVICE TAX & ANR.
………… BEFORE: The Hon'ble JUSTICE I.P.MUKERJ.Date : 14th January, 2015.
Mr.J.K.Mittal, Ms.N.Banerjee Pal…for petitioner.
Mr.K.K.
Maity…for respondents.
The Court : This writ challenges a show cause notice dated 7th January, 2014.
It is issued to the writ petitioner by the Commissioner, Service Tax Commissionarate, Kolkata.
By this show cause notice there is a huge demand of service tax upon the petitioner amounting to about Rs.34 crores together with additional cess, H.E.cess, interest and penalty under sections 73[1]., 75 and 78 of the Finance Act, 1994.
It appears from the said show cause notice that the computation sheets thereof were prepared on 11th October, 2010.
This show cause notice for the period 1st October, 2008 to 31st March, 2010.
Mr.Mittal, learned advocate appearing for the writ petitioner challenged this show cause notice on jurisdictional grounds.
He submitted that the Commissioner had no jurisdiction whatsoever to issue the show cause notice, invoking the longer period of limitation.
The period of limitation at the relevant point of time was one year.
Invoking the ground of wilful suppression on the part of the petitioner the longer period of limitation of five years has been invoked.
He submitted that on a mere look at the documents appended to the writ petition the court would be able to form an opinion that the show cause notice was hopelessly barred by limitation, without jurisdiction and nonest.
The grounds urged by Mr.Mittal are shortly these.
Earlier, three show cause notices had been issued by the department.
They were issued on 2nd August, 2007, 25th June, 2008 and 17th September, 2009.
The case of the department in these show cause notices, to put it very briefly, was that the writ petitioner was acting as a works contractor providing services to service recipients.
These service recipients had been providing certain materials free of cost to the writ petitioner.
They allegedly did not add the value of these materials and had paid service tax accordingly.
For the self-same period for which the impugned show cause notice was issued, a fourth show cause notice had been issued by the same Commissionarate to them on 26th June, 2012.
The impugned show cause notice charged the writ petitioner with not having paid service tax, educational cess, H.E.cess leviable on taxable service i.e.“Commercial or Industrial Construction Service” and “Construction of Residential Complex Service”.
It appears from a perusal of the impugned show cause notice that one of the bases for issuing the same is the same as the said other three show cause notices namely receipt of materials free of cost by the petitioner from service recipients.
It also appears that this tax charged as not paid in the impugned show cause notice is payable at a later stage of the construction process.
The impugned show cause notice alleged that the assessee had continued to avail of benefits under the notifications specified in the show cause notice improperly.
They had availed abatement of Rs.268,78,48,460/-.
The question of payment of service tax on the materials supplied to the service recipients is a relevant factor taken into account for the purpose of calculation of this abatement.
Mr.Mittal submitted that the above issue was known to the department, while issuing the earlier three show cause notices on 2nd August, 2007, 25th June, 2008 and 17th September, 2009.
It was negligence, if at all, on the part of the department in not issuing the impugned show cause notice within time.
The writ petitioner could not be charged with suppression.
He cited 2006[197].ELT465[SC].[Nizam Sugar Factory versus Collector of Central Excise, A.P.].where the Hon’ble Supreme Court held the following in paragraph 9 : “Allegation of suppression of facts against the appellant cannot be sustained.
When the fiRs.SCN was issued all the relevant facts were in the knowledge of the authorities.
Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities.
We agree with the view taken in the aforesaid judgments and respectfully following the same, hold that there was no suppression of facts on the part of the assessee/appellant.” He also showed me paragraph 19 page 175 of the Central Excise Intelligence and Investigation manual, which states that – “no plea of suppression of facts, mis-statement etc.as such can be alleged for issuing another Show Cause Notice for extended period on the same issue to the same party.” Mr.Mittal said that the department could not act against its circular and issue the show cause notice invoking the longer period of limitation Finally he submitted that the fourth show cause notice covered the same period as the impugned show cause notice.
It had been adjudicated upon on 30th November, 2012.
There could not be two assessments with regard to the self-same period.
No one can doubt the accepted principle that the department cannot act contrary to its own circular.
The rule of estoppel prevents them from doing so.
But as far as application of the above Supreme Court decision is concerned, Mr.Maity, learned advocate for the respondents submits that the issue covered by this impugned show cause notice is completely different from the earlier three show cause notices.
It relates to a different heading of tax.
He submitted that the writ petitioner had challenged all the earlier show cause notices by filing writ applications in this court, which are pending.
The writ petitioner is a habitual defaulter in the payment of service tax.
All these writ applications should be heard together.
In my opinion, it is difficult to think that the subject matter of the three earlier show cause notices and the impugned show cause notice are totally different.
Both relate to service tax.
One tax appears to be payable at a later stage than the other.
There can be no argument that the issue whether the writ petitioner as a works contractor availed of free materials from the service recipients and failed to include them in their assessment of service tax, is a relevant factor in the computation of service tax on Commercial or Industrial construction services and to determine the issue whether they have improperly availed of abatement of Rs.268,78,48,460/- under the subject notification.
If one applies the ratio of the Supreme Court case, it is for the department to investigate whether the issue of a works contractor not including the value of the materials supplied to them to the service recipients is related to the subject matter of the impugned show cause notice.
The two issues may not be identical but are related to each other.
But this question of fact as to the extent to which the subject matter of the earlier three show cause notices was a factor in the issuance of the impugned show cause notice, with all data and necessary details have to be gone into by the Commissioner and not by this court.
If it is found by him that the facts, data and factORS.which were the basis of the earlier show cause notices were relevant in issuing the impugned show cause notice, then the show cause notice would be clearly hit by the above judgment of the Hon’ble Supreme Court.
In other words, the show cause notice would be barred by the laws of Limitation, because the department had knowledge of the ingredients of the impugned show cause notice.
The petitioner could not be charged with suppression to invoke the longer period of limitation.
In those circumstances, the show cause notice dated 6th January, 2014 is set aside with an option to the Commissioner to scrutinise all relevant facts in the light of this judgment and to issue another show cause notice, if the same is warranted in law.
In case another show cause notice is issued, detailed recitals have to be contained therein to show how the bar of limitation and the above Supreme Court decision were overcome.
This writ application is, accordingly, allowed to the above extent.
Certified photocopy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(I.
Pkd.
A.R.[C.R.].P.MUKERJI, J.)