Service tax adjudication requires a requested hearing; denial of effective opportunity breaches natural justice and vitiates the order.

Service tax adjudication must follow the hearing procedure in Section 33A of the Central Excise Act, 1944 as applied by Section 83 of the Finance Act, 1994, including a requested opportunity of being heard and adjournments only within the statutory limit. Where the assessee sought time and requested a hearing before the order was passed, failure to afford a proper hearing amounted to breach of natural justice. The adjudication order was therefore unsustainable and was quashed in favour of the assessee.

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Issues: Whether the service tax adjudication order was liable to be quashed for breach of natural justice on account of denial of an effective opportunity of hearing.

Analysis: By virtue of Section 83 of the Finance Act, 1994, the adjudication procedure under Section 33A of the Central Excise Act, 1944 applies to service tax proceedings. That provision requires the adjudicating authority to give a party an opportunity of being heard if so desired, while permitting adjournments only within the statutory limit. The petitioner had sought time and had also requested a hearing before the impugned order was passed. In the circumstances, the order was passed without affording the petitioner a proper opportunity of hearing.

Conclusion: The impugned adjudication order was vitiated for non-compliance with the principles of natural justice and was quashed in favour of the assessee.

Ratio Decidendi: In service tax adjudication, the adjudicating authority must afford a requested hearing in accordance with Section 33A of the Central Excise Act, 1944 as applied by Section 83 of the Finance Act, 1994, and failure to do so renders the order unsustainable for breach of natural justice.

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