Patna High Court Upholds ₹25 Lakh Service Tax Demand Against Travel Agency Which Failed To Disclose Transactions & Claimed Records Were Lost In Fire

The Patna High Court has recently upheld a service tax demand of ₹25.25 lakh against a travel agency, dismissing its defence that crucial business records had been lost in a fire.

The Division Bench comprising Justice Rajeev Ranjan Prasad and Justice Ashok Kumar Pandey observed, “this petitioner having surrendered his service tax registration had not disclosed the transactions in ST-3. The Taxing Authority were not aware of this, they were looking for cooperation on the part of the petitioner, they called for relevant information and records during investigation but the petitioner did not provide those information to the Taxing Authority. In such circumstance, if the Taxing Authority has taken a view that it is a case of suppression and the facts which have surfaced during investigation were not earlier known to them and they would not have come to know it if the investigation would not have taken place, cannot be found fault with.”

Further, the bench held, “no jurisdictional error has been committed by the respondent no. 2 or respondent no. 3 in invoking the extended period of limitation of five years under proviso to Sub-Section (1) of Section 73 of the Act of 1994.”

The Patna-based travel agency had filed the writ petition for setting aside the demand-cum-show cause notice dated 17.10.2020 issued by the Asst. Commissioner of CGST and Central Excise for the financial years 2015-16 and 2016-17 whereby and whereunder the Respondent called upon the petitioner to show cause as to why the demand for payment of service tax amounting to Rs.25,25,313/- and an equivalent penalty and further interest be not imposed upon him. The petitioner had further challenged the order issued by Dy. Commissioner of CGST and Central Excise whereby and whereunder he has confirmed demand of service tax of Rs.25,25,313/-, interest and an equivalent penalty.

It was argued by the petitioner that the show cause notice was barred by limitation and that the tax could not be levied on gross receipts but only on the commission earned from ticket sales. It also claimed that it was unable to furnish records due to a fire that allegedly destroyed all documents.

However, on going through the various judicial pronouncements as to the subject of what would constitute a fraud, suppression or collusion, the Court opined, “of the prima-facie view that no jurisdictional error has been committed by the respondent no. 2 or respondent no. 3 in invoking the extended period of limitation of five years under proviso to Sub-Section (1) of Section 73 of the Act of 1994.”

The Court noted, “in the present case, this Court finds that the show-cause notice was issued during Corona period and the petitioner filed it's defence reply in the month of February 2024 whereafter he was given three opportunities of personal hearing.”

The Court concluded by directing that the petitioner may avail his remedy of statutory appeal before the Appellate Authority within a period of four weeks from the date of receipt/communication of a copy of the order, and in case any such appeal is preferred before the Appellate Authority, the same will be considered keeping in view that the petitioner was pursuing his remedy before this Court after passing of the impugned order.

Accordingly, the Court disposed of the writ application.

Case Title: Siddartha Travels v. Principal Commissioner of CGST and Central Excise & Ors.

LL Citation: 2025 LiveLaw (Pat) 49

Case No.: Civil Writ Jurisdiction Case No. 13297 of 2024

Click Here To Read Judgement