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

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 a personal hearing. The Court found that the authorities proceeded with adjudication despite being informed of a change in management and the inability to serve notices at the old address. The case was remanded to the Adjudicating Authority, directing the petitioners to file their replies within four weeks, with a final order to be issued within four weeks thereafter. The Court underscored the necessity of adhering to natural justice principles in such proceedings.

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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.

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