Travel Agency Claims Record Loss in Fire: Patna HC Confirms ₹25 Lakh Service Tax Demand for Non-Cooperation [Read Order]

In a recent judgment, the Patna High Court upheld a Rs. 25 lakh service tax demand against Siddartha Travels, rejecting the travel agency’s claim that its business records were destroyed in a fire. The court found that the demand was justified due to the agency’s non-filing of statutory returns and non-cooperation during the investigation process.

Siddartha Travels, a proprietorship firm run by Anil Kumar, had filed a writ petition challenging a demand-cum-show cause notice dated 17.10.2020 and the final adjudication order dated 04.07.2024. The notices related to unpaid service tax for the financial years 2015–16 and 2016–17.

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The petitioner argued that service tax liability could only be computed on the commission earned from booking travel tickets, not on gross revenue, and contended that the show cause notice was time-barred under Section 73(1) of the Finance Act, 1994. They further claimed that all business records were lost in a fire, making compliance impossible.

The department counsel submitted that multiple attempts were made to contact the petitioner through letters and email, but all went unanswered. They argued that the petitioner had earlier surrendered their service tax registration and had not disclosed their taxable turnover or filed the mandatory ST-3 returns. The tax liability was determined based on data from the Income Tax Department, and the petitioner changed positions during proceedings and failed to submit any documentary evidence to substantiate their claims.

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A division bench comprising Justice Rajeev Ranjan Prasad and Justice Ashok Kumar Pandey observed that the petitioner had not challenged the department’s factual averments regarding failed communications and lack of cooperation.

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The court observed that suppression of material facts and failure to respond during investigation provided sufficient grounds to invoke the extended limitation of five years under the proviso to Section 73(1) of the Act. The court rejected the argument that mere loss of records could justify non-compliance, especially when the petitioner had not filed a rejoinder or presented evidence of their claims.

The court declined to interfere with the tax demand and adjudication order, holding that no jurisdictional error had occurred and clarified that it had not ruled on the merits of the tax computation itself, as those issues involve factual determinations more appropriately handled in an appeal. The court allowed the petitioner to pursue statutory remedies under Section 85 of the Finance Act, 1994, within four weeks from receipt of the judgment. The writ petition was dismissed.

To Read the full text of the Order CLICK HERE

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