Moninoor Islam vs The Union Of India And Ors

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GAHC010101892025

2026:GAU-AS:12824
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/2607/2025
MONINOOR ISLAM
S/O LT YAQUIB ALI R/O GOLAI NO 1 PO DIGBOI DIST TINSUKIA ASSAM
PIN 786171
VERSUS
THE UNION OF INDIA AND ORS
REP BY THE SECRETARY OF GOVT OF INDIA MINISTRY OF FIANANCE
NEW DELHI 11001
2:THE COMMISSIONER
CENTRAL GOODS AND SERVICES TAX DIBRUGARH MILAN NAGAR F
LANE PO CR BUILDING DIBRUGARH 786003
3:THE ASSISTANT COMMISSIONER
CENTRAL GOODS AND SERVICES TAX TINSUKIA DURGABARI ROAD
TINSUKIA 786123
4:THE ASSISTANT COMMISSIONER
CENTRAL GST AND CENTRAL EXCISE DIVISION DIBURGARH CR
BUILDING DIBRUGARH ASSAM 78600
Advocate for the Petitioner : MR. R S MISHRA, MS M NIROLA
Advocate for the Respondent : DY.S.G.I., SC, GST

BEFORE
HON’BLE MR JUSTICE ARUN DEV CHOUDHURY

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For the Petitioner : Mr. R. S. Mishra, Advocate.

For the Respondents : Mr. S. C. Keyal, Standing Counsel,
CGST assisted by Mr. K. Jain,
Advocate.

Date on which Judgment is
Reserved : NA

Date of pronouncement of
Judgment : 03.09.2026

Whether the pronouncement
is of the operative part of the
Judgment : NA.

Whether the full Judgment has
been pronounced : Yes.


JUDGMENT & ORDER (ORAL)

(A.D.Choudhury, J)


1. Head Mr. R. S. Mishra, learned counsel for the petitioner. Also heard
Mr. S. C. Keyal, learned Standing Counsel, CGST, assisted by Mr. K. Jain,
learned counsel for the respondent.

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2. The petitioner has approached this court, assailing the Order-in-
Original No. 70/ST/ADJ/ACD/2024-25 dated 28.06.2024, whereby the
adjudicating authority has confirmed a demand of service tax amounting to
Rs.17,64,358/- for the period from October 2014 to June 2017, together with
interest and penalties under the Finance Act, 1994.
3. The case of the petitioner, in substance, is that the impugned demand
has been arrived at substantially on the basis of figures reflected in Form-
26AS, by treating the gross receipt appearing therein as consideration for
taxable services. According to the petitioner, such an approach is legally
unsustainable, since the amounts received included amounts relating to the
supply of materials and services rendered to Indian Oil Corporation Limited,
which are covered by the reverse charge mechanism. The petitioner further
asserts that he was registered under the Finance Act 1994, had filed ST3
returns, and had discharged the service tax liability, while IOCL had
discharged the tax attributable to the recipient under the reverse charge
mechanism.
4. At a belated stage, beyond the time prescribed in the notice, a detailed
reply to the show cause notice was filed on 01.06.2023, contending that the
show cause notice was not served upon him initially but only on his demand.
The aforesaid reply to the show-cause notice was also accompanied by
documents, wherein the petitioner furnished a reconciliation of the receipts
reflected in Form 26AS.
5. It was contended that, as per the said reconciliation, the total receipts
of Rs. 1,22,09,987/- included material supplies of approximately Rs.
51,18,505, leaving a service component of approximately Rs. Rs.

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70,91,482/-.
The petitioner further asserted that service tax amounting to approximately
10,000,07/- had been deposited by IOCL under the reverse charge
mechanism and that he had deposited a further amount of approximately
21,170/-.
The petitioner accordingly disputed both the computation of taxable value
and the allegations of non-payment of service tax.
6. The respondent revenue has opposed the writ petition primarily on the
ground that an alternative statutory remedy of appeal under Section 85 of the
Finance Act 1994 is available. It is also contended that the petitioner did not
submit the relevant document in response to the investigation letters, that the
proceedings were duly taken forward after notices of hearing, and that the
adjudicating authority was justified in proceeding based on the materials
available on record.
7. Countering the arguments on delay in initiating the process, the
respondents sought to justify the delayed proceedings by contending that the
show cause notice dated 31.12.2022 was issued under the proviso to Section
73(1) of the Finance Act, 1994, and that delay in adjudication does not, by
itself, invalidate the order.
8. The petitioner, on the other hand, has specifically relied on Section
73(4)(B) and has also questioned the invocation of the extended period of
limitation.
9. Having heard the learned counsel for the parties and having perused

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the materials placed on record, this court is of the view that the controversy
need not at this stage be examined primarily from the standpoint of delay in
adjudication.
10. The more fundamental question is whether the impugned order could
have lawfully confirmed the demand in the manner in which it was done,
particularly when the petitioner had raised specific defenses regarding the
very basis of the computation and the alleged discharge of tax liability but
was not dealt with at all by the adjudicating authority in its order.
11. It is true that ordinarily a person aggrieved by an order of the
adjudicating authority under Finance Act, 1994, is expected to pursue the
statutory appellate remedy. The rule as to alternative remedy is, however, a
rule of judicial restraint and not an absolute bar to the exercise of writ
jurisdiction. Where the challenge discloses a failure to exercise jurisdiction
in accordance with governing statute, violation of fundamental principles of
natural justice, the existence of an appellate remedy, does not necessarily
foreclose the jurisdiction under Article 226 of the Constitution of India.
12. The present case, therefore, cannot be disposed of merely by directing
the petitioner to avail of the appellate remedy without examining the
foundational objections raised by the petitioner.
13. This court is not determining the correctness of the quantum determined
by the adjudicating authority. However, the question in the background of
the petitioner's specific reply remains whether the material relied upon by
the petitioner was duly considered by the adjudicating authority or was
legally sufficient to establish taxable service receipt, and whether the

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specific defense raised by the petitioner was considered before the demand
was confirmed.
14. There is no dispute that a substantial part of the demand is founded
upon the figures appearing in Form 26AS. Form 26AS is a statement
generated for the purpose of the Income Tax Act and essentially reflects
information, inter alia, relating to tax deducted at source. The mere
appearance of a receipt in such a statement does not by itself establish that
the receipt represents consideration for a taxable service under the Finance
Act 1924. Therefore, the nature of the transaction must be examined
independently with reference to the provision of the taxing statute.
15. It is now well settled that, in substance, Form 26AS cannot be
mechanically treated as determinative of service tax liability and that the
authority must examine the nature of the underlying services, the
applicability of statutory provisions, and the claim of exemption or reverse
charge, wherever raised. The liability to tax must flow from the statute and
cannot be founded merely upon an inference from income tax data.
16. The aforesaid settled principle is significant in the present case because
the petitioner did not merely deny the figures in Form 26AS; he presented a
specific reconciliation to the adjudicating authority and asserted that gross
receipts included a substantial amount towards the supply of materials. He
also asserted in his reply that services rendered through IOCL were subject
to the reverse charge mechanism and that service tax had already been
discharged by IOCL to the extent applicable.
17. Such an objection, in the opinion of this court, cannot be treated as

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peripheral or collateral but goes to the root of the existence and quantum of
alleged service tax liability. It is also significant that the petitioner, in his
reply, specifically stated that he was a registered assessee under the Finance
Act 1994 and had filed ST3 returns. He also relied upon the relevant
contracts with IOCL, the correspondence of IOCL, the particulars of the
amount paid under reverse charge, and the reconciliation in the receipt.
18. Whether every part of the aforesaid defense is ultimately capable of
acceptance at the hands of the authorities is a different matter, but such a
defense required consideration at the hands of the adjudicating authority
before it confirmed the demand.
This Court must also record here that adjudicating authority is not required
to accept every assertion made by an assessee. However, it is required to
apply its mind to the material defense raised and to record the reasons for
accepting or rejecting the same.
An order of adjudication confirming the demand without dealing with the
material defense touching the root of the taxability cannot be sustained only
on the ground that an opportunity of hearing was given to the assessee.
19. At this stage, as a note of caution, this Court records that, in the present
proceeding, it is not making a final finding that every amount claimed by the
petitioner as having been paid under reverse charge stands conclusively
established. Such a factual determination is for the competent authority.
What is material is that the petitioner has raised a specific defense supported
by certain documents, taking the plea that the alleged liability had already
been discharged in whole or in part under a statutory mechanism. Such a

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defense must be adjudicated by the adjudicating authority.
20. It is true that the assessee can raise the issues before the appellate court
too. However, the appellate remedy, amongst others, is intended to examine
a legally made adjudication based on all the material available, thereby
facilitating the appellate authority in exercising its power properly, which is
not available in the present case.
21. For the reasons aforesaid and in the peculiar facts of the present case,
this court is satisfied that the impugned Order-in-Original is required to be
interfered for a fresh adjudication based on the reply already filed by the
petitioner, inasmuch as such reply was not considered by the adjudicating
authority and the order had proceeded upon a broad treatment of Form 26
AS figures and was not dealt in a legally satisfactory manner with the
petitioner’s substantive defence concerning the nature of receipt and the
discharge of service tax under reverse charge.
22. Accordingly, the impugned Order-in-Original No.
70/ST/ADJ/ACD/2024-25 dated 28.06.2024 passed by the respondent No. 4
i.e., the Assistant Commissioner, Central GST and Central Excise Division,
Dibrugarh, is set aside and quashed together with the consequential demand
of service tax, interest, and penalties arising therefrom.
23. Accordingly, for ends of justice, while reversing the clock back to the
date of furnishing of the reply, it is provided that the adjudicating authority
shall undertake the adjudication independently and in accordance with the
Finance Act, 1994, and the applicable provisions. In doing so, the authority
shall consider the petitioner’s reply and documents relied upon by him.

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24. While parting with the record, it is made clear that this Court has not
expressed any final opinion on the merits of the petitioner’s claim regarding
the precise amount of service tax already paid, the exact taxable value, the
applicability of any exemption or reverse charge provision to any particular
transaction. All such questions are left open to be considered by the
adjudicating authority in accordance with the law.
25. Such exercise shall be carried out by the competent authority, i.e., the
Assistant Commissioner, CGST, Dibrugarh, within a period of 2 (two)
months from the date of receipt of the certified copy of this order to be
furnished by the petitioner.
26. It is made clear that the petitioner shall furnish a certified copy of this
order within a period of 15 (fifteen) days from today.
27. Accordingly, this writ petition stands disposed of.
JUDGE
Comparing Assistant