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 showcause 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 'wilful', 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.'

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 wilful suppression. Uniworth Textiles Limited (supra) has held that, nonpayment 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.'

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 of discretion 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 requi

red 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.