Ramnath Prasad Vs Principal Commissioner of CGST And Central Excise (Patna High Court)
The petitioner, Ramnath Prasad, engaged in the business of transportation of goods, entered into an agreement on 05.02.2014 with the Bihar State Food and Civil Supplies Corporation Ltd. for transporting foodgrains and other essential commodities within and outside districts, including handling and temporary storage. He challenged an order dated 02.01.2024 passed by the CGST authorities imposing Service Tax of ₹1,26,03,035, with equivalent penalty, interest, and other penalties for FY 2015–16 and 2016–17. The challenge was primarily on the grounds of lack of pre-show cause consultation, limitation, and non-consideration of the Mega Exemption Notification No. 25/2012–ST dated 20.06.2012.
Petitioner’s Submissions
Senior Counsel for the petitioner argued that the order was invalid for multiple reasons:
- Limitation:
The demand-cum-show cause notice dated 28.04.2021 was issued beyond the prescribed period under Section 73(1) of the Finance Act, 1994. The limitation then was 18 months from the relevant date, but the notice was issued after five and four years, respectively, for FY 2015–16 and 2016–17. Hence, the notice itself was time-barred. - Separate Notices:
Each financial year being self-contained, separate show cause notices were required for each year. - Pre-show Cause Consultation:
The petitioner claimed violation of Master Circular No. 1053/02/2017–CX dated 10.03.2017, which makes pre-consultation mandatory for demands exceeding ₹50 lakh. No such consultation was held, rendering the proceedings invalid. - Absence of Fraud or Suppression:
The petitioner argued that invocation of the extended limitation of five years was unjustified since there was no fraud, collusion, or wilful misstatement. Reliance was placed on Cosmic Dye Chemical (1995) 6 SCC 117 and Northern Operating Systems Pvt. Ltd. (2022) 17 SCC 90, where the Supreme Court held that “suppression or misstatement” must be wilful and made with intent to evade duty. - Statutory Time Limit for Determination:
Under Section 73(4B), the authority must determine tax dues within one year from the date of notice, where possible. Citing Kanak Automobiles Pvt. Ltd. v. Union of India (Patna HC, 2024), counsel argued that failure to conclude proceedings within the stipulated time renders the order unsustainable. - Exemption under Mega Notification 25/2012:
Item 21(a) exempts transportation of foodgrains and pulses by a goods transport agency. Since the petitioner’s services involved transport of foodgrains and essentials, they were non-taxable. The assessing authority wrongly denied exemption and confirmed tax of ₹1.26 crore with penalty and interest. - Simultaneous Assessment and Penalty:
Both assessment and penalty were determined by the same authority simultaneously, which was improper.
Respondent’s Submissions
