2022 (5) TMI 1395 - HC - Central Excise

Adjudication errors lead to order reversal, refund of excess tax, and compliance with court directives.

M/s. Delhi and District Cricket Association Versus Assistant Commissioner of Central Tax, Delhi North

M/s. Delhi and District Cricket Association Versus Assistant Commissioner of Central Tax, Delhi North - [2022] 107 G S.T.R. 302 (Del) Issues Involved:1. Jurisdiction of the officer passing the impugned order.2. Requirement of pre-show cause notice consultation.3. Provision of personal hearing to the petitioner.4. Scope of adjudication as per the remand order.5. Accuracy of the facts in the show cause notice.6. Refund of the cess amount and interest thereon.7. Short payment of tax and penalties imposed.Issue-wise Detailed Analysis:1. Jurisdiction of the Officer:The petitioner contended that the impugned order dated 30.06.2020 was passed by an officer who lacked jurisdiction. According to the petitioner, demands exceeding Rs.50,00,000/- should be adjudicated by an Additional/Joint Commissioner or a Commissioner if the demand exceeds Rs.2,00,00,000/-. This argument was supported by paragraph 11.1 of the CBEC circular dated 10.03.2017.2. Requirement of Pre-Show Cause Notice Consultation:The petitioner argued that no pre-show cause notice consultation was carried out, despite the demand exceeding Rs.50,00,000/-. This was a requirement under paragraph 5 of the CBEC circular dated 10.03.2017. The court noted that this procedural lapse was not disputed by the respondent.3. Provision of Personal Hearing:The petitioner asserted that no personal hearing was provided before the impugned order was passed. The court found that this procedural infraction was also not contested by the respondent.4. Scope of Adjudication as per the Remand Order:The petitioner claimed that the adjudicating authority exceeded the scope of the remand order issued by the Commissioner (Appeals-I) on 30.05.2019. The remand was limited to examining the refund of cess amounting to Rs.36,94,642/- and the issue of interest on the refund amount. However, the adjudicating authority issued a fresh show cause notice and broadened the scope, which included additional tax demands and penalties.5. Accuracy of the Facts in the Show Cause Notice:The petitioner argued that the impugned show cause notice was based on inaccurate facts, particularly regarding the payment of service tax amounting to Rs.2,40,03,002/-. The petitioner provided evidence that this amount had already been paid.6. Refund of the Cess Amount and Interest Thereon:The petitioner sought a refund of the excess service tax and cess paid. The court noted that the initial Order-in-Original dated 03.01.2019 had sanctioned a refund of Rs.2,32,09,285/- but denied the refund of Rs.36,94,642/- attributable to cess. The Commissioner (Appeals-I) had remanded the matter to address this issue. The court directed the respondent to refund the excess amount paid towards tax and cess amounting to Rs.36,27,615/- and to pay interest on the refunded amount at the rate of 6% per annum from 02.02.2018 to 03.01.2019.7. Short Payment of Tax and Penalties Imposed:The adjudicating authority, in the impugned order dated 30.06.2020, concluded that the petitioner had short-paid taxes amounting to Rs.2,15,39,257/- and Rs.1,03,05,282/-. Additionally, penalties were imposed for late filing of service tax returns. The court found that the adjudicating authority had reopened the entire assessment, which was beyond the scope of the remand order.Conclusion:The court found several procedural and substantive flaws in the adjudication process. It held that the adjudicating authority had exceeded its jurisdiction and failed to comply with procedural requirements, such as pre-show cause notice consultation and personal hearing. The court set aside the impugned order and directed the respondent to refund the excess amount paid towards tax and cess along with interest. The writ petition was allowed, and the respondent was ordered to comply with the court's directions within two weeks.