Full Judgment Text
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on 01.04.2025
Judgment pronounced on: 22.04.2025
+ W. P.(C) NO. 4084/2025 & CM APPL. 18965/2025 (INTERIM
STAY), CM APPL. 18966/2025 (EXEMPTION), CM APPL.
18967/2025 (EXEMPTION), CM APPL. 18968/2025
(PERMISSION TO FILE LENGTHY SYNOPSIS)
ROOTS EDUCATION PVT LTD ...Petitioner
Through: Mr. Rajat Mittal, Mr.
Priyanshu, Mr. Suprateek
Neogi, Advocates.
versus
COMMISSIONER OF CENTRAL TAXGST
DELHI EAST ORS. ...Respondents
Through: Ms. Sushila Narang, Advocate
for R-1 to R-3.
Mr. Atul Tripathi, SSC, CBIC,
Mr. Gaurav Mani Tripathi and
Mr. Shubham Mishra,
Advocates for R-4.
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
J U D G M E N T
HARISH VAIDYANATHAN SHANKAR, J.
1
1. The Petitioner herein assails the Order-In-Appeal dated
31.01.2025 passed by the Commissioner of Central Tax Appeals-II,
2
New Delhi, and the Order-In-Original dated 27.06.2024 passed by
the Additional Commissioner, CGST, Delhi (East), confirming the
1
OIA
2
OIO
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By:HARVINDER KAUR
BHATIA
Signing Date:01.05.2025
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demands of Service Tax, interest and penalty emanating from five
3
Show Cause Notices dated 17.04.2013, 07.05.2014, 20.04.2015,
10.05.2016 and 19.03.2018 issued to the Petitioner for the periods
2007-08 to 2011-12, 2012-13, 2013-14, 2014-15, and 2015-16 to June
2017.
2. The Petitioner seeks quashing of the OIA, OIO and the SCNs,
primarily on the ground of inordinate and unexplained delay in their
adjudication, contending, inter alia , that:
(a). The impugned OIA, OIO and SCNs are liable to be quashed
forbeing constitutionally untenable and against the Principles of
Natural Justice.
(b). The inordinate delay in adjudication deprived the Petitioner of a
fair opportunity to defend its case.
(c). Although the SCNs were issued between the years 2013 to 2018
and replies were filed at the relevant time, the final adjudication
was kept pending for several years, ranging from seven to twelve
years.
(d). The Respondents have violated the mandate of Section 73(4B) of
4
the Finance Act , 1994 which provides a specific timeframe for
adjudication i.e., six months or one year from the issuance of the
SCN.
(e). In respect of the first four SCNs dated 17.04.2013, 07.05.2014,
20.04.2015 and 10.05.2016, a personal hearing was held on
27.12.2016. Despite that, no final order was passed and the
adjudication was kept pending for further eight (8) years. The
3
SCN
4
Finance Act
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BHATIA
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fifth SCN dated 19.03.2018 was also premised upon identical
issues to the previous SCNs.
(f). The delayed adjudication is wholly attributable to the
department.
(g). The impugned Orders and SCNs are in the teeth of the judgment
passed by this Court in Vos Technologies India (P) Ltd. v.
5
Director General , National Building Construction Co. Ltd. v.
6
Union of India and Commissioner of GST and Central Excise
7
and Another vs. M/s Shree Baba Exports .
3. We propose to examine the present petition on the touchstone of
the recent judgment of this Court in Vos Technologies (P) Ltd .
( supra ) having formed the vanguard of the attack on the SCNs.
4. At this juncture, it will be apposite to advert to the salient facts
leading up to the institution of the present petition .
BRIEF FACTS:
5. The Petitioner, being engaged in the business of imparting
coaching, was registered with the Service Tax Department for
providing taxable services such as “Commercial Coaching or Training
Service” and “Franchisee Service” falling under Section 65 and
Section 65(105) respectively of the Finance Act.
6. It appears that based on information gathered regarding the
Petitioner allegedly not discharging its service tax liability, the
Respondent issued an SCN dated 17.04.2013 for the period of 2007-
08 to 2011-12, proposing to impose a demand of INR 85,16,334/-
along with penalties on the ground that the Petitioner was not paying
5
SCC OnLine Del 12137
6
2018 SCC OnLine Del 12397
7
2022 SCC OnLine P&H 4270
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BHATIA
Signing Date:01.05.2025
10:11:43
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service tax on the value of study material supplied by it, by
considering it as standard textbooks in terms of Circular No.
59/8/2003 dated 20.06.2003.
7. On 20.03.2013, the Petitioner filed a Reply to the said SCN.
8. Analogous to the aforementioned SCN, four (4) more SCNs
came to be issued to the Petitioner for the subsequent periods.
9. For the sake of brevity, the details germane to the proceedings
pertaining to the Impugned SCNs are summarized herein below:
Financial
Year
Date of the
SCN
Responses to the SCN Personal
Hearing
Final
adjudication
17.04.2013
Reply dated 20.05.2013.
2007-08 to
2011-12
Common Written
Submission dated
30.12.2016 pursuant to
hearing dated 27.12.2016.
Common Additional
Submissions dated
26.03.2024.
27.12.2016
2012-13 07.05.2014 Reply 12.06.2014.
Common
15.03.2024
Common Written
order dated
Submission dated
27.06.2024
30.12.2016 pursuant to
hearing dated 27.12.2016.
Common Additional
Submissions dated
26.03.2024.
Reply 15.05.2015.
2013-14 20.04.2015
Common Written
Submission dated
30.12.2016 pursuant to
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BHATIA
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hearing dated 27.12.2016.
Common Additional
Submissions dated
26.03.2024.
2014-15 10.05.2016 Common Written
Submission dated
30.12.2016 pursuant to
hearing dated 27.12.2016.
Common Additional
Submissions dated
26.03.2024.
19.03.2018
Reply dated 04.04.2018.
2015-16
15.03.2024
to
Common Additional
2017-18
Submissions dated
(upto June
26.03.2024.
2017)
10. Vide a common OIO dated 27.06.2024, the Additional
Commissioner, CGST, Delhi (East), summarily dismissed the
contentions of the Petitioner on the issue of delayed adjudication and
confirmed the demands proposed in the SCNs.
11. Being aggrieved by OIO dated 27.06.2024, the Petitioner
preferred five (5) appeals. On 31.01.2025, vide a common Order, the
Additional Commissioner, CGST, Delhi (East) confirmed all demands
imposed against the Petitioner. Hence the present Petition.
ANALYSIS:
12. Irrefutably, the impugned SCNs were issued on 17.04.2013,
07.05.2014, 20.08.2015, 10.05.2018 and 19.03.2018, and which came
to be finally decided vide the impugned OIO dated 27.06.2024. As is
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BHATIA
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apparent, the Respondent kept the adjudication of the impugned SCNs
pending for a period of 6 to 11 years.
13. For the sake of convenience, we set hereinbelow a tabular
statement of the timelines followed by the Respondent in the
adjudication of the impugned SCNs:
Financial Year Date of
SCN
Date of
adjudication
The time period
between the date of
SCN & the
adjudication
2007-08 to
2011-12
17.04.2013 27.06.2024 11 years, 2 months
and 10 days
2012-13 07.05.2014 27.06.2024 10 years, 1 month &
20 days
2013-14 20.04.2015 27.06.2024 9 years, 2 months & 7
days
2014-15 10.05.2016 27.06.2024 8 years, 1 month & 17
days
2015-16 upto
June 2017
19.03.2018 27.06.2024 6 years, 3 months & 8
days
14. The Petitioner herein raised the issue of delayed adjudication
before the Ld. Appellate Authority. The same came to be rejected in
the impugned OIA in the following manner:
“ 7.1 The appellant has also raised the issue of non-sustainability of
original order on the grounds of delayed adjudication. In their
additional written submission filed on 20.11.2024, the appellant
argued that the first show cause notice was issued in 2013 and
adjudication was completed in 2024 with no actual reasons known
to the appellant and argued that the whole adjudication process
fails to stand before the legal provisions and also relied upon a few
case laws in their support. I understand the concern of the appellant
but it must be appreciated that delay is caused due to more
extensive examination by keeping in mind the nuanced nature of
tax compliance and adjudication process. I firmly opine that
adherence to protect the larger public interest, the department is
bound to ensure for the expeditious and timely culmination of
proceedings especially when in this case the circumstances and
facts of the case clearly demonstrate that there was no litigation
pending on any procedural aspect concerning the subject matter. I,
however, refrain from quashing the matter on the ground of delay
as during the intervening period, the Corona related guidelines
leading to complete lockdown were at place and further the
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By:HARVINDER KAUR
BHATIA
Signing Date:01.05.2025
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suomoto cognizance of the problems arising on account of the
epidemic by the Hon'ble Supreme Court for not considering a
certain period for reckoning the limitation period. Besides, at the
given point of time, there was no rigidity or inflexibility under any
given provision of the Finance Act, 1994 stipulating any time limit
for completion of adjudication proceedings. I have also carefully
gone through the Section 73(4B) of the Finance Act, 1994 which is
reproduced as under:
Section 73-Recovery of service tax not levied or paid or short-
levied or short-paid or erroneously refunded
(4B) The Central Excise Officer shall determine the amount of
service tax due under sub-section (2)-
within six months from the date of notice where it is possible to do
so, in respect of cases falling under sub-section (1);
within one year from the date of notice, where it is possible to do
so, in respect of cases falling under the proviso to sub-section (1)
or the proviso to sub-section (4A)]
I find that the above provisions include the phrase “where it is
possible to do so”, indicating that the tax department is not
mandated to complete proceedings within a specified timeframe.
On the contrary, this language allows flexibility in managing the
adjudication process to the department thereby exhorting that
'wherever it is possible to do so', efforts should be made to
complete the adjudication proceeding within the given time frame.
I find that the appellant has relied upon a few case laws in their
support, but a careful perusal of the said citations makes it
abundantly clear that the said judgment has been given in respect
of party specific/circumstances specific cases whereas in this case,
as is evident from the fact narrated in the impugned order-in-
original, a common adjudicating authority has to adjudicate the
case. Besides, at the relevant point of time, the mandatory clauses
are unequivocally imposed where the intention of the legislation is
not to give any discretionary powers to the adjudicating authority
as is the case with Customs Act, 1962 wherein under Section
28(9), the rigid stipulation is underlined:
Section 28(9) The proper officer shall determine the amount of
duty or interest undersub-section (8),-
(a) Within six months from the date of notice, in respect of cases
falling under clause (a) of sub-section (1);
(b) Within one year from the date of notice, in respect of cases
falling under sub-section (4).
[Provided that where the proper officer fails to so determine within
the specified period, any officer senior in rank to the proper officer
may, having regard to the circumstances under which the proper
officer was prevented from determining the amount of duty or
interest under sub-section (8), extend the period specified in clause
(a) to a further period of six months and the period specified in
clause (b) to a further period of one year:
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BHATIA
Signing Date:01.05.2025
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Provided further that where the proper officer fails to determine
within such extended period, such proceeding shall be deemed to
have concluded as if no notice had been issued.
When the above provisions are compared, the basic difference that
emerges is about the mandatory and discretionary powers of the
adjudicating authority and it becomes explicitly obvious that the
intention of the legislation in providing the flexibility in
adjudication under Section 73(4B) of the Finance Act, 1994 was
nothing but a recognition of the complex process involving
scrutiny of records etc. which can take a longer time. In the
impugned context, I note that Demand cum Show Cause Notice
was issued on the basis of investigation conducted by the Anti-
Evasion branch, which were well within the knowledge of the
appellant and the same are to be decided, after taking into account
their written submission and submissions tendered during personal
hearing, by issuing an appealable Order. Needless to mention that
the Demand cum show cause notices and subsequent order is a part
of principle of natural justice. Thus, notice issued for personal
hearing before passing on adjudication order is a part of principle
of natural justice given to the appellants. The Hon'ble Supreme
Court in the case of CCE, New Delhi Vs M/s Bhagsons Paint
Industry (India), reported in 2003 (158) ELT 129 (SC) 2003-TIOL-
21-SC-CX, has held that there is no statutory bar to adjudicate the
matter even after lapse of nine years after the issue of show cause
notice and the adjudication pertains only to the actual levy of the
duty which is due to the department and not to any levy of interest
and penalty. Further, the Hon'ble Supreme Court in Commissioner,
GST and Central Excise Commissionerate II & Ors. vs. M/s. Swati
Menthol and Allied Chemicals Lid. & Ant. in SLP(C) No. 20072
of 2021 dated 10 July, 2023, on a similar plea being raised by the
assessee, the Hon'ble Supreme Court had permitted adjudication of
the show cause notice. Thus, in view of the foregoing, I do not find
any merits in the contentions raised by the appellant on the said
issue.”
15. This Court in Vos Technologies (P) Ltd . ( supra ) and further
8
Judgments in Paras Products v. Commr. (CGST) and M/s Shyam
9
Indus Power Solutions (P) Ltd. v. Commr. (CGST) had occasion to
deal with the issue of delay on behalf of the authorities in concluding
the proceedings within a reasonable time (arising out of the Customs
8
2025 SCC OnLine Del 1784
9
2025 SCC OnLine Del 1845
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BHATIA
Signing Date:01.05.2025
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Act, 1962, the Finance Act, 1994, the Central Goods and Services Act,
2017 and the Central Excise Act, 1944).
16. After a detailed analysis of the relevant provisions and previous
judgments of the Hon‟ble Supreme Court and High Courts, this Court,
in Vos Technologies (P) Ltd. ( supra ) , while highlighting the fact that
the authorities are legally obligated to conclude the adjudication with
due expedition, held that, an inordinate and unexplained delay on
behalf of the authorities to act within a reasonable period would
constitute sufficient grounds to quash the proceedings. The relevant
portions of the judgment are reproduced hereinbelow:
“…….
2. The principal ground of attack is the inordinate delay in the
finalisation of the adjudication proceedings with the writ
petitioners contending that the failure on the part of the
respondents to conclude adjudication within a reasonable period of
time and inordinately delaying the same for decades together
would constitute a sufficient ground to annul those proceedings.
They would contend that the principles of a „reasonable period‟
which courts have propounded in connection with an adjudicatory
function conferred upon an authority would apply and the
impugned SCNs‟ and orders are liable to be quashed on this short
score alone.
*
18. This provision flows along lines similar to those appearing in
the Customs Act and creates two separate streams dependent on
whether the allegation be plainly of short-levy, non-levy or
erroneous refund as contrasted with cases where that may have
occurred by reason of fraud, collusion, wilful misstatement or
suppression of facts. However, and of significance is sub-section
(4-B), and which continues to employ the phrase “where it is
possible to do so” as opposed to the amendments which came to be
made in Section 28 of the Customs Act.
*
20. We have chosen to extract those provisions for the sake of
completeness and notwithstanding the petitioners asserting that by
virtue of Section 174(2) of the CGST Act, and which constitutes
the „Repeal and Saving‟ clause, it would be the provisions of the
1994 Act which would govern.
21. In terms of Section 73(1) of the CGST Act, which is principally
concerned with cases other than where allegations of fraud, wilful
misstatement or suppression of facts are made, and pertains to tax
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BHATIA
Signing Date:01.05.2025
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incorrectly computed, erroneously refunded or benefits wrongly
availed, sets out terminal points within which action referable to
that provision would have to be commenced and concluded. A
final order on the culmination of adjudication is liable to be framed
by the proper officer in terms contemplated under Section 73(9) of
the CGST Act. By virtue of sub-section (10) thereof, the proper
officer is bound to frame such an order within three years from the
due date for furnishing of an annual return. A notice commencing
proceedings referable to Section 73 must be issued at least three
months prior to the time limit as specified in sub-section (10)
coming to an end. It is relevant to observe that Section 73(10) of
the CGST Act uses the words “shall issue” and does not adopt the
“where it is possible to do so” phraseology as employed by the
Customs Act and 1994 Act. Similar is the position that obtains in
cases where fraud, wilful misstatement or suppression of facts may
be alleged, and in which eventuality it is the provisions of Section
74 of the CGST Act which would govern.
*
74. The meaning to be ascribed to the phrase “where it is possible
to do so” was lucidly explained in Swatch Group . As the Court
observed on that occasion, while the aforesaid expression did allow
a degree of flexibility, it would have to be understood as being
concerned with situations where the proper officer may have found
it impracticable or impossible to conclude proceedings. Swatch
Group had explained that expression to be applicable only where
the proper officer were faced with “ insurmountable exigencies ”
and further recourse being rendered “ impracticable or not
possible ”. It thus held that the leeway provided by the statute when
it employed the phrase “ where it is possible to do so ”, could not be
equated with lethargy or an abject failure to act despite there being
no insurmountable factor operating as a fetter upon the power of
the proper officer to proceed further with adjudication. It was these
aspects which came to be further amplified by the Court in Gala
International .
*
85. The position which thus emerges from the aforesaid discussion
and a review of the legal precedents is that the respondents are
bound and obliged in law to endeavour to conclude adjudication
with due expedition. Matters which have the potential of casting
financial liabilities or penal consequences cannot be kept pending
for years and decades together. A statute enabling an authority to
conclude proceedings within a stipulated period of time “where it
is possible to do so” cannot be countenanced as a license to keep
matters unresolved for years. The flexibility which the statute
confers is not liable to be construed as sanctioning lethargy or
indolence. Ultimately it is incumbent upon the authority to
establish that it was genuinely hindered and impeded in resolving
the dispute with reasonable speed and dispatch. A statutory
authority when faced with such a challenge would be obligated to
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BHATIA
Signing Date:01.05.2025
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prove that it was either impracticable to proceed or it was
constricted by factors beyond its control which prevented it from
moving with reasonable expedition. This principle would apply
equally to cases falling either under the Customs Act, the 1994 Act
or the CGST Act.
86. When we revert to the facts that obtain in this batch, we find
that the respondents have clearly failed to establish the existence of
an insurmountable constraint which operated and which could be
acknowledged in law as impeding their power to conclude pending
adjudications. In fact, and to the contrary, the frequent placement
of matters in the call book, the retrieval of matters therefrom and
transfer all over again not only defies logic it is also demonstrative
of due application of mind quite apart from the said procedure
having been found by us to be contrary to the procedure
contemplated by Section 28. The respondents have, in this regard,
failed to abide by the directives of the Board itself which had
contemplated affected parties being placed on notice, a periodic
review being undertaken and the proceedings having been lingered
unnecessarily with no plausible explanation. The inaction and the
state of inertia which prevailed thus leads us to the inevitable
conclusion that the respondents clearly failed to discharge their
obligation within a reasonable time. The issuance of innumerable
notices would also not absolve the respondents of their statutory
obligation to proceed with promptitude bearing in mind the
overarching obligation of ensuring that disputes are resolved in a
timely manner and not permitted to fester. Insofar as the assertion
of the assessees‟ seeking repeated adjournments or failing to
cooperate in the proceedings, it may only be noted that nothing
prevented the respondents from proceeding ex parte or refusing to
reject such requests if considered lacking in bona fides.
87. We are further constrained to observe that the respondents also
failed to act in accord with the legislative interventions which were
intended to empower them to pursue further proceedings and take
the adjudicatory process to its logical conclusion. We have in the
preceding paragraphs of this decision taken note of the various
statutory amendments which were introduced in Section 28 and
were clearly intended to ratify and reinforce the jurisdiction which
the Legislature recognised as inhering in them. The above
observations are, of course, confined to those cases to which the
Second Proviso placed in Section 28(9) would not apply. The
Second Proviso where applicable would in any case deprive the
respondents of the right to continue a pending adjudication or
frame a final order once the terminal point constructed by statute
came into effect.”
(emphasis supplied)
17. The aforenoted Judgement of this Court emphasizes the need
for matters pertaining to financial liabilities or penal consequences,
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BHATIA
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not to be kept pending for a prolonged period of time. This Court also
held that the phrase “ where it is possible to do so” cannot be used as
an excuse to not adjudicate matters in a time-bound manner. The
discretionary latitude conferred by the legislation is not intended to be
exploited or interpreted as an endorsement of inaction. The statutory
provisions affording such flexibility must not be invoked arbitrarily
over an extended period, absent sufficient cause or reasonable
justification.
18. Ultimately it is incumbent upon the authorities to establish that
it was genuinely hindered and impeded in resolving the dispute with
reasonable dispatch. A statutory authority, when faced with such a
challenge, would be obligated to prove that it was either impracticable
to proceed with or was constrained by factors beyond its control
which prevented it from moving with reasonable expedition. The
authority does not, in fact, assert as such in the present case.
19. The Petitioner has also rightly drawn our attention to the
judgments of M/s Shree Baba Exports ( supra ) and National Building
Construction Co. Ltd. ( supra ) which categorically held that the
statutory time frame for adjudication must be adhered to and that
delayed adjudication will be barred.
20. The contents of Para 7.1 of the impugned OIA, extracted
hereinabove, seeking to explain the delay in adjudication, do not
inspire the confidence of the Court. The reasoning offered therein
does not satisfy the requirement of the existence of conditions that are
insurmountable or such that render the adjudicatory process by the
department impossible.
21. The situation is also exacerbated by the fact that, for the first
four impugned SCNs, a personal hearing had been held as far back as
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BHATIA
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on 27.12.2016, and subsequent thereto, a clarificatory written response
was also submitted by the Petitioner on 30.12.2016. In spite of that, no
final order was passed by the Respondent, and the adjudicatory
process remained in limbo for a further 7.5 years. There appears no
justification for the same.
22. As far as the reliance by the Ld. Appellate Authority upon the
decisions of the Hon‟ble Supreme Court in Commissioner, GST and
10
Central Excise Commissionerate- II and Ors. v. M/s Swati Menthol
11
and CCE v. Bhagsons Paint Industry (India) are concerned, this
Court has already considered them in Vos Technologies (P)
Ltd. ( supra ).
23. In view of the discussion above, we have no hesitation in
holding that the rationale put forth in Vos Technologies (P) Ltd.
( supra ) , Paras Products ( supra ) and M/s Shyam Indus Power
Solutions (P) Ltd. ( supra ) , would apply squarely to the facts and
circumstances of the present case.
24. Resultantly, the present petition is allowed and the impugned
OIA dated 31.01.2025, OIO dated 27.06.2024 and SCNs dated
17.04.2013, 07.05.2014, 20.04.2015, 10.05.2016 and 19.03.2018, are
quashed and set aside.
25. The present petition and all pending applications are disposed
of in the above terms.
SUBRAMONIUM PRASAD, J.
HARISH VAIDYANATHAN SHANKAR, J.
APRIL 22, 2025/sm/va
10
2023 SCC Online SC 1566
11
(2003) 158 ELT 129 (SC)
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
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