Allegation of Suppression of Service Tax: Orissa HC stays Revenue Recovery proceedings till March 27 [Read Order]

In a recent case, the Orissa High Court stayed the demand notice of service tax, alleging suppression of service tax. It was also found that the determination of amount of service tax due was not made anywhere near within one year from date of the notice.

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M/s. Panchanan Birabara Jagdevray, the petitioner, filed the appeal against the order demanding service tax.  Mrs. Wallace,  advocate virtually appears on behalf of the petitioner and submitted, assuming though not admitting that there could be allegation of suppression by her client, the determination of amount of service tax due was not made anywhere near within one year from date of the notice. She submitted the facts are glaring for her to demonstrate that impossibility to determine within the time cannot be case of revenue. She relies on use of word ‘shall’ in sub-section (4B) under section 73 in Finance Act, 1994 to make her point.

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She relies on the judgment dated 4th April, 2024 of a Division Bench in the High Court of Patna (Civil Writ Jurisdiction Case no.18398 of 2023) M/s. Kanak Automobiles Pvt. Ltd. v. Union of India and others (tiol print). We reproduce below paragraph-10 from the judgment.

“10. Here, we agree that it is not an absolute mandate that the proceedings should be completed within one year from the notice; but it requires the statutory authority to take all possible steps, so to do and conclude the proceedings within an year. No steps were taken in the entire one year period, which results in the frustration of the goal of expediency as required statutorily. We hence find that the proceedings cannot be continued.”

Mr. Kedia, advocate, Junior Standing Counsel appears on behalf of revenue. The bench  required the  revenue to issue instruction for being heard on adjourned date. Since the Mr. Kedia prayed for two weeks, the bench of Justice Arindam Sinha, Acting Chief Justice and Justice M.S. Sahoo  listed the matter on 27th March, 2025 and stayed the  impugned order dated 16th August, 2024 till next date of hearing.

To Read the full text of the Order CLICK HERE

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