Court sets aside Finance Act order due to lack of natural justice, directs fresh proceedings within 8 weeks.

The Court set aside the order confirming demand, interest, and penalty under the Finance Act, 1994 due to non-payment of service tax, citing violation of principles of natural justice for failure to provide an opportunity of personal hearing. The impugned order was treated as a show cause notice, directing the respondent to proceed afresh within eight weeks. If the petitioner defaults in replying, the respondent can pass an appropriate order. The writ petition was disposed of without costs.

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Issues involved:
Assailing the legality and validity of the order-in-original confirming demand, interest, and penalty under the Finance Act, 1994 due to alleged non-payment of service tax by the petitioner.

Details of the Judgment:

Issue 1: Violation of Principles of Natural Justice
The petitioner, a special class contractor providing taxable services, received a show cause notice for non-payment of service tax for the period 2016-17 and 2017-18. The petitioner claimed that after seeking time to reply, no further communication was received, including a notice for personal hearing. The impugned order was challenged on the grounds of violating the principles of natural justice.

Issue 2: Failure to Provide Opportunity of Personal Hearing
The respondent contended that a notice of personal hearing was sent to the petitioner's address as per GST records, but it was returned unserved. The impugned order mentioned that the service provider did not attend the personal hearing and no relevant documents were submitted. The Court noted that even if the notice was sent by registered post, the initial show cause notice was sent via email, raising questions about the inconsistency in communication methods.

Decision and Orders
The Court found that the failure to provide an opportunity for personal hearing vitiated the impugned order. Considering that the petitioner is now aware of the allegations, the impugned order was treated as a show cause notice. The following orders were passed:
1. Setting aside the order-in-original dated 02.11.2022.
2. Treating the set-aside order as the show cause notice for the petitioner to reply within four weeks.
3. Directing respondent No.1 to proceed afresh and pass a fresh order within eight weeks after receiving the reply.
4. Noting that if the petitioner defaults in submitting a reply, the respondent can pass an appropriate order.
The writ petition was disposed of without costs, and any pending miscellaneous applications were closed.

This judgment highlights the importance of adhering to principles of natural justice and providing a fair opportunity for parties to present their case in tax matters under the Finance Act, 1994.

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