Gauhati High Court
M/S Mahesh Kumar Chanani And Anr vs The Union Of India And 2 Ors on 4 May, 2026
Page No.# 1/9
GAHC010151332024
2026:GAU-AS:6025
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/5050/2024
M/S MAHESH KUMAR CHANANI AND ANR
A PROPRIETORSHIP FIRM HAVING ITS OFFICE AT SBI COLONY,
BISHNUPALLY, HOJAI, ASSAM REPRESENTED BY SRI MAHESH KUMAR
CHANANI.
2: MAHESH KUMAR CHANANI
SON OF LATE MATU RAM CHANANI
RESIDENT OF SBI COLONY
HOJAI
PIN-782435
VERSUS
THE UNION OF INDIA AND 2 ORS.
REPRESENTED BY THE SECRETARY TO THE GOVERNMENT OF INDIA,
MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK,
NEW DELHI-110001.
2:THE COMMISSIONER
CENTRAL GOODS AND SERVICE TAX
GST BHAWAN
KEDAR ROAD
GUWAHATI-01
ASSAM
3:THE ASSISTANT COMMISSIONER
CENTRAL GOODS AND SERVICE TAX AND CENTRAL EXCISE
GUWAHATI DIVISION-II
GST BHAWAN
KEDAR ROAD
FANCY BAZAR
GUWAHATI-1
ASSAM
Page No.# 2/9
Advocate for the Petitioner : MS. M L GOPE, MS. N GOGOI,MS. N HAWELIA
Advocate for the Respondent : DY.S.G.I., SC, GST
BEFORE
HONOURABLE MR. JUSTICE KAUSHIK GOSWAMI
ORDER
04.05.2026
Heard Ms. M. L. Gope, learned counsel appearing for the petitioner. Also
heard Dr. B. N. Gogoi, learned Standing Counsel, CGST.
2. By way of the present petition under Article 226 of the Constitution of India,
the petitioner calls in question, inter alia, the legality and validity of the
adjudicating order dated 24.04.2024 passed by the Assistant Commissioner of
Central GST and Central Excise, Guwahati Division-II.
3. The foundational facts, shorn of unnecessary details, are that the petitioner,
a proprietorship concern engaged in execution of works contract, asserts that
the services rendered by it stood exempted under the Mega Exemption
Notification issued under the Finance Act, 1994. Notwithstanding such
exemption, a Demand-cum-Show Cause Notice dated 11.04.2022 came to be
issued for the financial year 2016-2017 under Section 73(1) of the Finance Act,
1994, alleging non-payment of service tax to the tune of Rs. 26,57,349.90/-.
The petitioner duly responded to the said notice on 17.11.2023. However,
the Adjudicating Authority, by Order-in-Original dated 24.04.2024, proceeded to
confirm the demand. Aggrieved thereby, the petitioner has invoked the writ
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jurisdiction of this Court.
4. Assailing the impugned action, learned counsel for the petitioner submits
that the very issuance of the Demand-cum-Show Cause Notice is ex facie barred
by limitation as prescribed under Section 73(1) of the Finance Act, 1994. It is
contended that once the notice itself is time-barred, the entire proceedings
stand vitiated, rendering the adjudicating order a nullity in the eyes of law.
It is further urged that in such circumstances, the existence of an
alternative statutory remedy would not operate as a bar to the exercise of writ
jurisdiction. Reliance is placed upon the following decisions –
(i) Commissioner of Income Tax and Ors. -Vs- Foramer France
(through constituted attorneys), reported in (2003) 185 CTR (SC)
512 [Apex Court].
(ii) Foramer -Vs- Commissioner of Income Tax and Anr, reported
in (2001) 247 ITR 436 [Allahabad High Court].
(iii) Union of India & Ors. -Vs- Shree Shubham Syndicate and
Ors., Writ Appeal No. 359/2009, decided on 08.11.2012 [Gauhati
High Court].
5. Per contra, learned Standing Counsel for the respondent CGST has raised a
preliminary objection as to the maintainability, contending that the petitioner
has an efficacious alternative remedy of appeal under Section 107 of the CGST
Act, 2017, and therefore ought to be relegated to the appellate forum. Reliance
is placed upon the decision of the Apex Court in M/s Power Line Air
Express Vs. Principal Commissioner of Central Goods and Service
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Tax & Ors., Special Leave to Appeal (C) No.11496/2026 and the
decision of the Delhi High Court in M/s Power Line Air Express Vs.
Principal Commissioner of Central Goods and Service Tax & Ors.,
WP(C) 3328/2026.
6. The rival submissions fall for consideration in a narrow compass. The
existence of an alternative remedy is not in dispute. Equally well settled,
however, is the principle that such rule is one of self-imposed restraint and not
an inflexible bar.
7. The core issue that arises for determination is: whether an adjudicating
order founded upon a demand notice which is ex facie barred by limitation can
be sustained in law, and whether such defect strikes at the very jurisdiction of
the authority so as to warrant interference under Article 226 of the Constitution
of India.
8. The law on the point is no longer res integra. In Whirlpool Corporation
Vs Registrar of Trade Marks, Mumbai and Ors., reported 1998 8 SCC
1, the Apex Court authoritatively held that notwithstanding the availability of an
alternative remedy, a writ petition would be maintainable in, inter alia, cases
where the proceedings are wholly without jurisdiction.
9. The said principle is not merely procedural but is rooted in the constitutional
duty of the High Court to prevent abuse of statutory power. Where the
assumption of jurisdiction itself is in question, relegating a party to an appellate
forum would amount to compelling it to participate in proceedings which are
void ab initio.
10. At this stage, it becomes apposite to extract Section 73(1) of the Finance
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Act, 1994, which reads as under:
“Where any service tax has not been levied or paid or has been short-levied or
short-paid or erroneously refunded, the 4[Central Excise Officer] may, within
5’eighteen months’ from the relevant date, serve notice on the person
chargeable with the service tax which has not been levied or paid or which has
been short-levied or short-paid or the person to whom such tax refund has
erroneously been made, requiring him to show cause why he should not pay the
amount specified in the notice :
Provided that where any service tax has not been levied or paid or has been
short-levied or short-paid or erroneously refunded by reason of –(a) fraud; or
(b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e)
contravention of any of the provisions of this Chapter or of the rules made there
under with intent to evade payment of service tax, by the person chargeable
with the service tax or his agent, the provisions of this sub-section shall have
effect, as if, for the words 1″eighteen months”, the words “five years” had been
substituted”
11. A plain reading of the aforesaid provision makes it abundantly clear that
the power to issue a show cause notice is conditioned upon issuance within the
prescribed period of limitation. The statute does not merely prescribe a timeline;
it conditions the very exercise of power upon adherence to such timeline.
12. The distinction between the normal period and the extended period is also
not cosmetic. The extended period can be invoked only upon satisfaction of
stringent jurisdictional facts, namely fraud, suppression, or wilful misstatement
with intent to evade tax.
13. In that view of the matter, the prescription of limitation under Section
73(1) is not a matter of procedural convenience but a substantive fetter on
jurisdiction. Once the statutory period expires, the authority stands divested of
the power to initiate proceedings.
14. This position stands authoritatively settled by the Apex Court in Calcutta
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Discount Company Ltd. -Vs- Income Tax Officer, Companies
District-I, Calcutta reported in AIR 1961 Supreme Court 372. Relevant
paragraphs of the aforesaid judgment read as under –
“26. Mr. Sastri argued that the question whether the Income-tax Officer had
reason to believe that under assessment had occurred “by reason of non-
disclosure of material facts” should not be investigated by the courts in an
application under Art. 226. Learned Counsel seems to suggest that as soon as
the Income-tax Officer has reason to believe that there has been under
assessment in any year he has jurisdiction to start proceedings under S 34 by
issuing a notice provided 8 years have not elapsed from the end of the year in
question, but whether the notices should have been issued within a period of 4
years or not is only a question of limitation which could and should properly be
raised in the assessment proceedings It is wholly incorrect however to suppose
that this is a question of limitation only not touching the question of jurisdiction.
The scheme of the law clearly is that where the Income-tax Officer has reason to
believe that an under assessment has resulted from non-disclosure he shall
have jurisdiction to start proceedings for re-assessment within a period of 8
years, and where he has reason to believe that an under assessment has
resulted from other causes he shall have jurisdiction to start proceedings for re-
assessment within 4 years. Both the conditions, (1) the Income-tax Officer
having reason to believe that there has been under assessment and (1) his
having reason to believe that such under-assessment has resulted from non-
disclosure of material facts, must coexist before the Income-tax Officer has
jurisdiction to start proceedings after the expiry of 4 years. The argument that
the Court ought not to investigate the existence of one of these conditions, viz.,
that the Income-tax Officer has reason to believe that under assessment has
resulted from non-disclosure of material facts cannot therefore be accepted.
27.Mr Sastri next pointed out that at the stage when the Income-tax Officer
issued the notices he was not acting judicially or quasi-judicially and so a writ
of certiorari or prohibition cannot issue It is well settled however that though the
writ of prohibition or certiorarn will not issue against an executive authority the
High Courts have power to issue in a fit case an order prohibiting an executive
authority from acting without jurisdiction. Where such action of an executive
authority acting without jurisdiction subjects or is likely to subject a person to
lengthy proceedings and unnecessary harassment, the High Courts, it is well
settled, will issue appropriate orders or directions to prevent such
consequences.
28. Mr. Sastri mentioned more than once the fact that the company would have
Page No.# 7/9sufficient opportunity to raise this question, viz whether the Income-tax Officer
had reason to believe that under assessment had resulted from non-disclosure
of material facts, before the Income-tax Officer himself in the assessment
proceedings and if unsuccessful there before the appellate officer or the
appellate tribunal or in the High Court under S 66(2) of the Indian Income-tax
Act The existence of such alternative remedy is not however always a sufficient
reason for refusing a party quick relief by a writ or order prohibiting an
authority acting without jurisdiction from continuing such action.
29. In the present case the company contends that the conditions precedent for
the assumption of jurisdiction under $ 34 were not satisfied and came to the
court at the earliest opportunity There is nothing in its conduct which would
justify the refusal of proper relief under Art 226. When the Constitution confers
on the High Courts the power to give relief it becomes the duty of the courts to
give such relief in fit cases and the courts would be failing to perform their duty
if relief is refused without adequate reasons. In the present case we can find no
reason for which relief should be refused.”
15. The above exposition unequivocally establishes that limitation, where it
conditions the assumption of power, partakes the character of a jurisdictional
fact.
16. The same principle has been reiterated in State of Punjab and Ors.
-Vs- Bhatinda District Cooperative Milk Producers Union Ltd,
reported in (2007) 11 SCC 363. Relevant paragraph of the aforesaid
judgment read as under –
“24. Question of limitation being a jurisdictional question, the writ petition was
maintainable.
25. We are, however, not oblivious of the fact that ordinarily the writ court
would not entertain the writ application questioning validity of a notice only,
particularly, when the writ petitioner would have an effective remedy under the
Act itself This case, however, poses a different question The revisional
authority, being a creature of the statute, while exercising its revisional
jurisdiction, would not be able to determine as to what would be the reasonable
period for exercising the revisional jurisdiction in terms of Section 21(1) of the
Act. The High Court, furthermore in its judgment, has referred to some binding
precedents which have been operating in the field. The High Court, therefore,
Page No.# 8/9cannot be said to have committed any jurisdictional error in passing the
impugned judgment.”
17. In the case at hand, the Demand-cum-Show Cause Notice dated
11.04.2022 pertains to the financial year 2016-2017. Even assuming the
applicability of the extended period, the notice has been issued beyond the
statutorily permissible period.
18. The inevitable consequence thereof is that the very initiation of
proceedings is vitiated in law. The Adjudicating Authority, lacking the
foundational jurisdiction to proceed, could not have passed the impugned order
dated 24.04.2024.
19. The defect is not a curable irregularity but goes to the root of the matter,
rendering the proceedings non est.
20. The contention that the petitioner ought to be relegated to the appellate
remedy cannot be accepted. The present case squarely falls within the
exception carved out in Whirlpool Corporation (Supra), namely, where the
proceedings are wholly without jurisdiction.
21. To relegate the petitioner to the appellate forum in such circumstances
would amount to requiring it to challenge an order which is a nullity, a course
consistently disapproved by constitutional Courts.
22. In view of the foregoing, this Court holds that:
(i) The Demand-cum-Show Cause Notice dated 11.04.2022 is ex facie
barred by limitation;
(ii) The proceedings initiated pursuant thereto are without jurisdiction;
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(iii) The impugned adjudicating order dated 24.04.2024 is liable to be set
aside.
23. Accordingly, the impugned adjudicating order dated 24.04.2024 is hereby
quashed and set aside.
24. The writ petition is allowed.
25. No order as to costs.
JUDGE
Comparing Assistant
Pranab Digitally signed
by Pranab
Kumar Kumar Deka
Date:
2026.05.04
Deka 17:00:19 +05'30'
