Assam Rifles Group Insurance Scheme v/s Additional Director General

What happened

The show-cause notice was dated 5 October 2016, the reply 25 October 2016, and the first personal hearing was fixed for 5 April 2024 by a letter of 14 March 2024, about 2704 days after the notice; the Order-in-Original dated 12 March 2025 confirmed service tax, invoked the extended period and imposed interest and penalties, 3081 days after the notice. The petitioner argued that section 73(4B) set a one-year limit for extended-period cases, that the department's delay was unjustified, that Notification No. 22/2014-ST giving all-India jurisdiction to DGCEI officers was ultra vires, that investigation and adjudication by the same directorate showed bias, and that compulsory deductions for the schemes were not consideration and the petitioner was Government under the negative list. The department said section 73(4B) is directory, the delay came from the petitioner's requests for retrospective exemption and from inter-departmental coordination, the petitioner had suppressed facts, and an appeal lay.

Questions before the court

• Is an order made 8.5 years after a show-cause notice invoking the extended period valid under section 73(4B), and does the alternative remedy of appeal bar the writ?

Why the court ruled this way

Section 73(4B)(b) applies because the extended period was invoked for suppression, so the officer had to try to decide within one year (paragraph 20). Relying on IDFC First Bank v. Union of India (Bombay), Sunder System (Delhi), L.R. Sharma and Co. (Delhi) and Power Spectrum Sarbidipur (Patna), the Court held that authorities must act within a reasonable time and that a time frame of six months or one year cannot be extended for an inordinate period without valid justification (paragraphs 22 to 25). The notice itself carried the facts and allegations, so the need for detailed examination was no answer; section 33A allows no more than three adjournments, so the petitioner's letters from 2017 and its representations were no justification (paragraphs 26 and 27). Since the question was the meaning of section 73(4B), a question of law, and the order was arbitrary and offended Article 14, the alternative remedy did not bar the writ (paragraph 29).

Controlling point

The department failed to give any justified cause for the delay, so the order was in violation of section 73(4B)(b), arbitrary and bad in law.

Order and next steps

The Order-in-Original dated 12 March 2025 was set aside and quashed on this ground alone; the writ petition was allowed to the extent indicated and disposed of without deciding the other issues.

Practical implications

An assessee with a service tax notice left undecided for years can rely on this decision to challenge a late order in writ jurisdiction when the department offers no real reason for the delay.

Limits of this ruling

• The Court did not decide whether the schemes were taxable, whether the petitioner was Government, whether the notification was valid or whether the extended period was rightly invoked, and the department may not be barred from other remedies on those points.