Unexplained Delay of Over Three Years in Finalizing Service Tax

The Patna High Court has set aside a service tax demand, citing an unexplained and inordinate delay of over three years by the tax authorities in finalizing the order after the personal hearing was concluded. The court observed that such a prolonged delay without any justification is a violation of the principles of natural justice and administrative fairness. It held that justice delayed is justice denied, and the adjudicating authority cannot keep a matter pending indefinitely after hearing the parties. The significant time lag between the hearing and the issuance of the order could lead to a loss of perspective and a failure to properly consider the arguments presented. By quashing the demand, the High Court has sent a strong message to tax authorities about the importance of timely adjudication and the need to pass orders within a reasonable period after concluding the hearing process.