Facts of the Case

The petitioner, M/s. Maa Sarala Enterprises, a registered partnership firm engaged in civil works and manpower supply services, challenged an Order-in-Original dated 24.05.2022 passed by the Assistant Commissioner of GST & Central Excise, Cuttack-II Division. The impugned order raised service tax demand, interest, and penalties for Financial Year 2014-15 based on third-party data received from the Central Board of Direct Taxes (CBDT).

The petitioner contended that the services rendered during the relevant period were exempt under Mega Exemption Notification No. 25/2012-Service Tax dated 20.06.2012. Earlier, another Order-in-Original dated 20.01.2021 had already been passed for the same financial year, against which a statutory appeal was pending before the Commissioner (Appeals). Despite the pending appeal, the department issued another adjudication order for the identical assessment period, resulting in duplicate proceedings.

Issues Involved

  1. Whether the Department could pass a second Order-in-Original for the same Financial Year 2014-15 involving the same demand.
  2. Whether duplicate assessment proceedings for the same cause of action are legally sustainable.
  3. Whether the second adjudication order passed on the basis of third-party information was without jurisdiction.
  4. Whether the impugned order deserved to be quashed as non-est in law.

Petitioner's Arguments

  • The petitioner submitted that the entire service rendered during FY 2014-15 was exempt under Mega Exemption Notification No. 25/2012-Service Tax.
  • An earlier Order-in-Original dated 20.01.2021 had already adjudicated the same issue, and an appeal against that order was pending before the Commissioner (Appeals).
  • The Assistant Commissioner had no authority to pass another adjudication order for the same assessment year involving identical demand.
  • The second order dated 24.05.2022 was mechanically passed merely on the basis of CBDT third-party data without considering the earlier proceedings.
  • Therefore, the subsequent order was without jurisdiction and liable to be quashed.

Respondent's Arguments

  • During the hearing, the Senior Standing Counsel appearing for the Department, upon instructions, fairly admitted that the second Order-in-Original dated 24.05.2022 had been passed due to inadvertence.
  • The Department itself accepted that the impugned order was liable to be quashed.

Court Order / Findings

The Orissa High Court held that once an adjudication order had already been passed for Financial Year 2014-15 and the matter was pending before the appellate authority, another Order-in-Original for the same period and same demand could not legally survive.

Since the Department itself admitted that the second order had been issued inadvertently, the Court quashed Order-in-Original No. AC/CTC-II DIVN/ST/54/2022 dated 24.05.2022 relating to FY 2014-15.

Accordingly, the writ petition was allowed.

Important Clarification

  • Two adjudication orders for the same assessment period covering the same cause of action cannot legally coexist.
  • A second assessment order issued while the first order is already under challenge before the appellate authority is liable to be declared unsustainable.
  • The Court recognized that even the Department admitted the subsequent order was issued due to inadvertence and therefore quashed it.
  • The judgment reinforces the principle that duplicate adjudication proceedings for the same assessment year are impermissible.

Sections Involved

  • Article 226 & 227 of the Constitution of India
  • Section 70 of the Finance Act, 1994
  • Section 73(1) of the Finance Act, 1994
  • Section 75 of the Finance Act, 1994
  • Section 77(1)(a)
  • Section 77(1)(c)(ii)
  • Section 78 of the Finance Act, 1994
  • Mega Exemption Notification No. 25/2012-Service Tax dated 20.06.2012

Link to Download the Order https://www.mytaxexpert.co.in/uploads/1785391161_2294compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.