Case Details: Mahesh Kumar Chanani vs. Union of India (2026) 42 Centax 123 (Gau.)
Judiciary and Counsel Details
- Kaushik Goswami, J.
- Ms M.L. Gope, Ms N. Hawelia & Ms N. Gogoi, Advs., for the Petitioner.
- Dr. B. N. Gogoi, Ld. Standing Counsel for the Respondent.
Facts of the Case
The petitioner, a proprietorship concern engaged in the execution of works contract, asserted that the services rendered by it stood exempted under the Mega Exemption Notification issued under the Finance Act, 1994. A demand-cum-show cause notice was issued under Section 73(1) of the Finance Act, 1994, alleging non-payment of service tax and the adjudicating authority, by order-in-original, proceeded to confirm the demand. It was submitted that the very issuance of the demand-cum-show cause notice was ex facie barred by limitation as prescribed under Section 73(1) of the Finance Act, 1994 and that once the notice itself was time-barred, the adjudicating order was a nullity in the eyes of law. It was further urged that the existence of an alternative statutory remedy under Section 107 of the CGST Act and Assam GST Act would not operate as a bar to the exercise of writ jurisdiction. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that the existence of an alternative remedy was a rule of self-imposed restraint and not an inflexible bar. It held that Section 73(1) of the Finance Act, 1994, conditioned the exercise of power upon issuance of notice within the prescribed period of limitation and that the extended period could be invoked only upon satisfaction of jurisdictional facts, namely fraud, suppression or wilful misstatement with intent to evade tax. The High Court further held that the limitation under Section 73(1) was a substantive fetter on jurisdiction, and once the statutory period expired, the authority stood divested of the power to initiate proceedings. The High Court held that even assuming the applicability of the extended period, the demand-cum-show cause notice was beyond the statutorily permissible period and, therefore, the adjudicating authority lacked jurisdiction to proceed. Accordingly, the adjudicating order was quashed and set aside, and the writ petition was allowed.
List of Cases Cited
- Calcutta Discount Company Ltd. v. ITO — 1961 AIR 372 (SC) — Followed [Para 14]
- CIT v. Foramer France — [2003] 264 ITR 566 (SC) = [2003] 129 Taxman 72 (SC) — Referred [Para 4]
- Foramer v. CIT — [2001] 119 Taxman 61 (Allahabad) = [2001] 247 ITR 436 (Allahabad) — Referred [Para 4]
- Power Line Air Express v. Principal Commissioner of Central GST — (2026) 41 Centax 361 (S.C.) — Referred [Para 5]
- Power Line Air Express v. Principal Commissioner of Central Goods & Service Tax — (2026) 41 Centax 263 (Del.) — Referred [Para 5]
- State of Punjab v. Bhatinda District Cooperative Milk Producers Union Ltd. — 2007 (217) E.L.T. 325 (S.C.) — Referred [Para 16]
- UOI v. Shree Shubham Syndicate — Writ Appeal No. 359/2009, dated 8-11-2012 — Referred [Para 4]
- Whirlpool Corporation v. Registrar of Trade Marks — (1998) 8 SCC 1 — Followed [Paras 8, 20]
