2023 (5) TMI 1261 - HC - Central Excise

Service Tax Demand and Penalty Set Aside Due to Violation of Natural Justice; Case Remanded for Rehearing

Anuj Gupta, Indu Gupta And Rohit Negi Versus Commissioner Of Central Tax Gst Delhi East

The HC set aside the impugned orders confirming service tax demand and penalty due to a violation of natural justice, as the petitioners were not granted ... Violation of the principle of natural justice - opportunity of personal hearing was not granted to the petitioners - proper service of the notice in compliance with Section 37C(1) of CE Act, or not - HELD THAT:- Section 37C(1) of the Act provides for the service of the decision, order, summons or notice by sending it through registered post with acknowledgment due to the person for whom it is intended. It provides that in case the same cannot be served through registered post, it should be served by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice is intended. It is an admitted case that the notices in the present case could not be served on the petitioners since no one was found in the premises. Mr. Anuj Gupta, admittedly, had informed the authorities that the company has been taken over by a new management and the data can be procured from www.mca.gov.in. This Court is conscious of the fact that the impugned orders are appealable orders. The impugned orders can be challenged by filing an appeal in terms of Section 35B of the Act. However, since the impugned orders have been passed without complying with the principles of natural justice and that the petitioners have approached this Court immediately on becoming aware of the impugned order, this Court considers it apposite that one opportunity is granted to the petitioners to present their case by filing an appropriate reply before the Adjudicating Authority. The matter is restored before the Adjudicating Authority - petition allowed. Issues involved: The petitioners sought quashing of Order-in-Originals confirming service tax demand and penalty. They alleged violation of natural justice as no personal hearing was granted.Details of the judgment:Issue 1: Violation of natural justice- The petitioners alleged that the impugned orders were passed without granting them a personal hearing, violating the principle of natural justice.- The Show Cause Notices were issued based on a search conducted at the premises of the company, alleging non-payment of Central Excise Duty.- Despite attempts to serve notices, the company had shifted, and the new management had taken over, which was communicated to the authorities.- The respondent authorities proceeded with adjudication despite being informed of the change in management and the inability to serve notices at the old address.- The Court found that the impugned orders were passed without complying with the principles of natural justice.- The Court set aside the impugned orders and directed the petitioners to file their replies with supporting documents within four weeks before the Adjudicating Authority.- The matter was restored before the Adjudicating Authority for further proceedings, with a direction for a final order to be passed within four weeks from the filing of the reply.Significant legal points:- The Court highlighted the importance of complying with principles of natural justice in adjudicatory proceedings.- The Court emphasized that the petitioners should be given an opportunity to present their case and file a reply before the Adjudicating Authority.- The impugned orders were deemed appealable under Section 35B of the Act, but the Court intervened due to the lack of compliance with natural justice principles.Separate Judgment:No separate judgment was delivered by the judges in this case.