Facts of the Case

  • The petitioner, a civil construction contractor, executed a housing project for Haryana Housing Board.
  • Investigation was initiated for alleged non-payment of service tax under “Construction of Complex Service”.
  • A show cause notice (SCN) dated 27.02.2009 demanded service tax, cess, interest, and penalties.
  • The petitioner replied and participated in hearings in 2010.
  • No communication was received thereafter for over a decade.
  • In 2022, proceedings were suddenly revived through a fresh hearing notice.
  • The petitioner challenged this revival before the Delhi High Court.

Issues Involved

  1. Whether adjudication of a show cause notice after a delay of 13 years is legally sustainable?
  2. Whether placing a matter in the “Call Book” justifies such prolonged delay?
  3. Whether proceedings must be concluded within a reasonable period even when no statutory limitation is prescribed?

Petitioner’s Arguments

  • The proceedings are barred due to inordinate delay and violate the principle of reasonable time.
  • The SCN itself was time-barred under Section 73.
  • The contract was a composite works contract, not liable to service tax at the relevant time.
  • The petitioner was never informed about placing the matter in the “Call Book”.
  • Revival after 13 years is arbitrary and prejudicial.

Respondent’s Arguments

  • The matter was kept pending in the “Call Book” as per CBEC Circulars.
  • The issue was sub judice before the Supreme Court (Sobha Developers case).
  • Proceedings were resumed once the legal position became clear.
  • Determination of “reasonable period” depends on facts and circumstances. 

Court’s Findings / Order

  • Even in absence of a statutory limitation, powers must be exercised within a reasonable time.
  • Delay of 13 years is grossly unreasonable and unjustified.
  • “Call Book” procedure cannot justify indefinite delay.
  • No action was taken even 4.5 years after Supreme Court decision, showing administrative lethargy.
  • Petitioner was not informed about keeping the matter in Call Book, violating fairness.

Final Order:

  • Proceedings pursuant to the show cause notice are quashed.
  • Respondents are restrained from continuing any action on the SCN.

Important Clarifications by Court

  • “Reasonable period” doctrine applies where statute is silent on limitation.
  • Administrative mechanisms like “Call Book” cannot override legal rights.
  • Authorities must inform assessees when proceedings are kept pending.
  • Long silence can lead an assessee to reasonably assume closure of proceedings.

Important Case Laws Referred

  • Government of India vs Citedal Fine Pharmaceuticals (1989)
  • State of Punjab vs Bhatinda District Cooperative Milk Producers Union (2007)
  • Commissioner vs Larsen & Toubro Ltd. (2016)
  • Siddhi Vinayak Syntex Pvt. Ltd. vs Union of India
  • ATA Freight Line (I) Pvt. Ltd. vs Union of India

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/VIB18042023CW139062022_150443.pdf

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