DEBANGSU BASAK, J.
The petitioners have assailed a show-cause cum demand notice dated October 18, 2016 issued by the Principal Commissioner of Service Tax-I
Commissionerate, Kolkata. Additional Advocate General appearing for the petitioners has submitted that, the impugned show-cause notice alleges
that, the petitioner had availed of CENVAT credit inappropriately. He has referred to Rule 6 (3B) of the CENVAT Credit Rules, 2004 and has
submitted that, the petitioners never availed CENVAT credit which was not due to the petitioners. The petitioners had treated the accounts in a
particular way. The manner in which the petitioner treated the accounts was known to the authorities.
He has referred to pleadings in paragraph 19 to 36 of the writ petition and has submitted that, the manner in which the CENVAT credit was being
claimed by the petitioners, was made known to the authorities in diverse proceedings. At no stage, did the authorities question the treatment of the
accounts in such manner. He has submitted that, the period for which, the show-cause notice has been issued was covered by the proceedings
initiated in respect thereof by the department, independent of the show-cause notice. Therefore, there is no question of suppression of any fact by the
petitioners. The department cannot invoke the extended period of limitation. In support of such contention, he has relied upon 2007 Volume 10
Supreme Court Cases page 337 (Continental Foundation Joint Venture Holding, Nathpa, H.P. v. Commissioner of Central Excise, Chandigarh-I), 2005
Volume 7 Supreme Court Cases page 749 (Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut) and 2013 Volume 9 Supreme
Court Cases page 753 (Uniworth Textiles Limited v. Commissioner of Central Excise, Raipur).
Relying upon 1993 Volume 204 Income Tax Reports page 276 (Raja Mookherjee & Ors. v. Wealth-Tax Officer & Ors.), 1991 Volume 56 Excise
Law Times page 31 (Nayek Paper Industries Pvt. Ltd. v. Union of India) and 2007 Volume 8 S.T.R. page 312 (Bom.) (Jayantilal Thankkar &
Company v. Union of India), he has submitted that, existence of statutory alternative remedy is not a complete bar to the maintainability of a writ
petition. In circumstances where, the authorities have invoked jurisdiction without the jurisdictional fact required for the assumption of jurisdiction being
present, such an action of the authority can be challenged under Article 226 of the Constitution of India. He has submitted that, the impugned order
suffers from lack of jurisdiction and is therefore required to be quashed.
Learned Advocate appearing for the respondents has submitted that, the impugned show-cause notice states that, the petitioners are guilty of
contravention of Sections 66 (A), 67 and 68 of the Finance Act, 1994. He has also referred to Rules 6 and 9 of the CENVAT Credit Rules, 2004 and
submitted that, the impugned show-cause notice, spells out the grounds on which the same has been issued. The facts constituting the assumption of
jurisdiction are stated in the impugned show-cause notice. The extended period of five years is available on account of the petitioner being guilty of
making misstatements in order to escape and/or evade tax. These facts can be conveniently adjudicated upon by the statutory authority. He has
submitted that, the impugned show-cause notice gives adequate reasons for the invocation of the extended period.
The department did not have knowledge of the accounts of the petitioner prior to the discovery thereof upon an investigation being undertaken, as
stated in the impugned show-cause notice. Therefore, the department cannot be said to be with the knowledge of the facts constituting the subject
matter of the impugned show-cause notice prior to the date of the investigation. The impugned show-cause notice is within time. The pleadings in the
writ petition as relied upon by the petitioners do not denude the department with the jurisdiction to issue the impugned show-cause notice. According to
him, a Writ Court should not interfere, where there exists a statutory alternative remedy. He has relied upon All India Reporter 2008 Supreme Court
page 1631 (C.C.T. Orissa & Ors. v. Indian Explosives Ltd.), All India Reporter 2010 Supreme Court page 3413 (United Bank of India v. Satyawati
Tondon & Ors.), All India Reporter 2013 Supreme Court page 3518 (Commissioner of Income-tax, Gujarat v. Vijaybhai N. Chandrani) and 2014
Volume 1 Supreme Court Cases page 603 (Commissioner of Income Tax & Ors. v. Chhabil Dass Agarwal) in support of his contentions.
The petitioners are assessees under the Finance Act, 1994. The petitioners have suffered a show-cause notice dated October 18, 2016 for the period
from 2011 to 2015 allowing constructions of Sections 66A, 66C(1), 67 and 68 of the Act of 1994. On the basis of intelligence input, that, the petitioners
were not paying 50% of the CENVAT credit as required in terms of Rule 6(3B) of the CENVAT Credit Rules, the registered office of the petitioners
were visited by the officers of the Anti Evasion Unit of Service Tax-I, Commissionerate on January 27, 2016 for verification of records and
documents. The petitioners had issued few letters to the department on this subject subsequent thereto. The petitioners have contended that, they took
credit to the extent of net 50% of the Service Tax including cess, which was utilized thereafter. The balance 50% credit was reversed at the point of
taking credit by way of non-availment of credit to that extent. That 50% was charged to profit and loss account and was treated as expense for the
company. The department has taken a view that, the contentions of the petitioners are untenable.
It has relied upon Rule 6(3B) of the CENVAT Credit Rules and has taken the view that, a banking company and a financial institution including a non-
banking financial company, engaged in providing services by way of extending deposits, loans or advances is required to pay every month, an amount
equal to 50% of the CENVAT credit availed of, independent of input service of that month, and the manner of payment is either through debit in
CENVAT credit or otherwise. Other options of payment of amount under Rule 6 are not available for any tax payer. According to the respondents,
the petitioners do not have an option to take 50% credit. The contention that, the petitioners had availed 50% credit remained unsubstantiated without
any supporting proof. Consequently, the petitioners are liable to pay the amount as demanded in the impugned show-cause notice.
The period under the impugned show-cause notice is 2011-2015. The writ petition discloses that, the Service Tax Department initiated at least seven
several proceedings against the petitioners for varying time bands during the period 2007-2016. First, for the period from 2007-2013, the respondents
issued a notice dated December 3, 2012 for Service Tax audit, in which the petitioners produced all ledger accounts, CENVAT credit ledger, Service
Tax payment challans, audit financial statements and CENVAT credit invoices. Second, the audit team of the department visited the office of the
petitioners between June 24, 2013 and June 26, 2013. Such audit team verified the records of the petitioners. No adverse show-cause notice was
issued to the petitioners thereafter. Third, a search was carried out on March 13, 2013 by the officers of DGCEI. An investigation was carried out in
details and a show-cause notice dated April 23, 2014 was issued.
A Service Tax audit proceedings was initiated for the period 2007-2013. The authorities did not pursue the same. Fourth, a Service Tax audit
proceeding was initiated for the period 2010-2014 by the notice dated February 17, 2015. The respondents did not proceed with such audit upon being
informed by the petitioners that, the Service Tax audit for the period 2007-2013 stood concluded. Fifth, a Service Tax audit was sought to be
conducted by a notice dated February 17, 2015. Pursuant to such notice, the petitioners produced all their ledger accounts, CENVAT credit ledger,
Reconciliation of CENVAT credit taken as per ST-3 return vis-a-vis CENVAT Credit Register as well as, Trial Balance. After such audit, a show-
cause notice dated April 19, 2016 has been issued to the petitioners. Sixth, a Service Tax Audit proceedings initiated by a notice dated September 15,
2016 where the petitioners took a stand that, the period overlaps with the previous show-cause notice. Seventh, by a notice dated January 20, 2016
interest was demanded which the petitioners paid.
The respondents have invoked the extended period of limitation on the ground that, the petitioners intentionally, suppressed the fact of Service Tax not
paid by them and irregular CENVAT credit availed by them. According to the respondents, had the department not initiated investigation against them
on January 27, 2016, the petitioners would have continued to evade payment of Service Tax and would have availed and utilized CENVAT credit in
irregular manner. Consequently, extended period of five years in terms of Section 73(1) of the Act of 1994, read with Rule 14 of the CENVAT Credit
Rules, 2004 has been invoked.
The allegation of suppression contained in the impugned show-cause notice against the petitioners, for the purpose of invoking the extended period of
limitation, requires consideration. It is a fact which constitutes the assumption of jurisdiction by the respondents. Continental Foundation Joint Venture
Holding, Nathpa, H.P (supra) has explained the expression “suppression†used in the proviso to Section 11A of the Central Excise Act, 1944. It
has held as follows:-
“12. The expression “suppression†has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or
collusion"" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to
stop (sic evade) the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts
are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the
extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated
with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct.
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14. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or
suppression of facts are concerned, they are clearly qualified by the word “wilfulâ€, preceding the words ""misstatement or suppression of facts
which means with intent to evade duty. The next set of words “contravention of any of the provisions of this Act or Rules†are again qualified by
the immediately following words “with intent to evade payment of duty.†Therefore, there cannot be suppression or mis-statement of fact, which
is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Misstatement of fact must be wilful.â€
Anand Nishikawa Co. Ltd. (supra) has held in the facts of that case that, the assessee was not guilty of suppressing any fact deliberately. It has found
in that case that, the assessee had made true and full disclosure. The department had access to relevant materials. Therefore, the assessee could not
be held guilty of willful suppression. Uniworth Textiles Limited (supra) has held that, non- payment of duties may amount to ordinary default. For the
purpose of construing non-payment of a duty or an ordinary default in payment of duties as suppression, would require something more. In the facts of
that case, it has held that, there was no suppression on the part of the assessee.
Writ Courts are slow to intervene when there exists alternative remedy. Writ Courts are even slower to intervene when a show-cause notice is
assailed before it. It is a rule of self-imposed limitation rather than a rule of law. Chhabil Dass Agarwal (supra) has noted such position and has held in
paragraph 15 that,
“15. Thus, while it can be said that this Court has recognized some exceptions to the rule of alternative remedy, i.e., where the statutory authority
has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has
resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the
proposition laid down in Thansingh Nathmal case, Titagarh Paper Mills case and other similar judgments that the High Court will not entertain a
petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the
action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statutory forum is
created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.â€
Vijaybhai N. Chandrani (supra) has held in the facts of that case that, the assessee ought to have been directed to avail of the statutory alternative
remedy. Satyawati Tondon & Ors. (supra) has held that, a writ petition directed against a measure taken by a secured creditor exercising powers
under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 should not be ordinarily entertained in
view of the statutory alternative remedy available under Section 17 of the Act of 2002. Indian Explosives Ltd. (supra) has found the exercise
ofdiscretion of the Writ Court not to be proper in view of the availability of statutory alternative remedy, in the facts of that case. Raja Mookherjee &
Ors. (supra) and Nayek Paper Industries Pvt. Ltd. (supra) have held that, existence of statutory alternative remedy is no bar to the maintainability of a
writ petition when the impugned order was passed without jurisdiction. Jayantilal Thankkar & Company (supra) has held that, when a show-cause
notice is non est in the eyes of law for absolute want of jurisdiction the same can be assailed by way of a writ petition.
Notwithstanding the existence of statutory alternative remedy, a writ petition directed against a show cause notice is maintainable, if it can be
established, after taking the statements made in the impugned show-cause notice to be true and correct, that the same do not constitute requisite facts
to assume jurisdiction by the authority issuing the impugned notice. In the facts of the present case, the issue of jurisdiction is a pure question of law.
The facts stated in the impugned show-cause notice have to be assumed as correct for the purpose of deciding the issue of jurisdiction. The issue of
limitation has to be adjudicated on the same principles, so far as this case is considered. Section 73 of the Act of 1994 allows the Assistant
Commissioner or the Deputy Commissioner, as the case may be, to invoke the extended period of limitation. He must have reasons to do so. There
must be omission or failure on the part of the assessee to disclose wholly or truly all materials for verification of the assessment under Section 71 of
the Act of 1994 for the period for which the show cause notice would be issued.
In the present case, the petitioners had, disclosed all materials required for verification under Section 71 for the period from 2007 to 2013 pursuant to a
notice dated December 3, 2012 and for a period upto 2015 pursuant to a Service Tax Audit notice dated February 17, 2015. The petitioners have
claimed in the writ petition that all materials required for verification of assessment under Section 71 of the Act of 1994 are available with the
authorities pursuant to seven several proceedings taken by the department in respect of periods of time which overlap the period for which the
impugned show-cause notice has been issued. Such averments have not been denied by the respondents in their affidavit-in-opposition. The period of
time for which the impugned show-cause notice has been issued overlaps with the period of time for which either a proceeding is pending or stands
concluded. The department cannot be allowed to revisit the same issue under the garb of exercise of powers under Section 73 of the Act of 1994. The
petitioners are not guilty of omitting or failing to disclose wholly or truly all materials required for verification of the assessment under Section 71.
Facts constituting the assumption of jurisdiction under Section 73 of the Act of 1994 are lacking. The impugned show-cause notice is, therefore,
without jurisdiction.
The impugned show-cause notice is quashed. W.P. No. 2095 (W) of 2017 is allowed. This order will not prevent the authorities from proceeding with
the pending proceedings or arriving at any finding thereat, in accordance with law. No observation made herein will prejudice any of the parties in the
pending proceedings. Urgent certified website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the
requisite formalities.
