2016 (1) TMI 346 - HC - Service Tax

Court rules in favor of petitioner against Service Tax Department for denial of personal hearing.

Transcoastal Cargo & Shipping Ltd. Versus Union of India, The Commissioner of Service Tax

The court ruled in favor of the petitioner, a Public Limited Company, in a case where the respondent, the Service Tax Department, failed to provide a ... Demand of service tax - principle of natural justice - their commercial operations were brought to a complete standstill, and hence, no liability was subsisting - Held that:- the petitioner should be given an opportunity of hearing, as the same is imperative, since the facts in the present case is to be decided and the question of law that arose for consideration also be properly dealt with. The matters in issue may adversely affect the petitioner with civil consequences and when such being the position, opportunity of personal hearing before passing such an order is a must. - Matter remanded back. Issues:1. Failure to afford personal hearing to the petitioner by the respondent.2. Violation of principles of natural justice and Article 14 of the Constitution of India.3. Allegations of the respondent passing the impugned order without proper communication.Analysis:The petitioner, a Public Limited Company engaged in leasing vessels and multi-modal transport services, faced financial and administrative issues due to a standstill in commercial operations. The Service Tax Department sought clarifications and documents regarding service tax liability for the years 2009-2011. The petitioner contended that they had discharged their liability till 2010 and requested a personal hearing to present their case effectively. Despite seeking a rescheduled date for personal hearing, the petitioner claimed they did not receive any intimation for the same.The learned Senior Counsel for the petitioner argued that the respondent's failure to provide a personal hearing violated principles of natural justice and Article 14 of the Constitution of India. They emphasized the importance of personal hearing for a fair resolution of the controversy. On the other hand, the Senior Central Government Standing Counsel for the respondent acknowledged dispatching the notice but admitted the lack of acknowledgment on file.The court emphasized the necessity of affording the petitioner a fair opportunity to present their case when civil consequences are at stake. It ruled in favor of the petitioner, setting aside the impugned order and remitting the matter to the respondent for a personal hearing on a specified date. The respondent was directed to hear the petitioner, examine the documents, and make a decision within six weeks. Failure of the petitioner to appear would allow the respondent to proceed as per the law. The judgment highlighted the importance of adherence to procedural fairness and the right to be heard in legal proceedings.