2023 (5) TMI 9 - HC - Central Excise

Court quashes tax order over fairness breach, directs fresh hearing

The Court quashed the Order-in-Original passed by the Commissioner of CGST and Central Excise due to a breach of natural justice principles. The ... Breach of principles of natural justice - Non-service of SCN - notices have been returned “left” - Lock down period - HELD THAT:- Petitioners were not served. Once the authority was aware that the Petitioner was not served as notices have been returned “left”, then the such notices cannot be made foundation of passing an adverse order as such order would amount to passing an order without notice. Also, during lock-down period, where even issuance of physical service or notices were difficult. Keeping this aspect in mind and since the Petitioner was seeking opportunity of hearing, on the earlier date we had put the Petitioner to notice that indulgence, if any, of this nature would be subject to Petitioner demonstrating bonafide by depositing certain amount. The Petitioner had sated that 7.5% of the dues had the Petitioner filed an appeal would be 6 lacks and the Petitioner had deposited the amount of Rs. 4 lacks in the Registry of this Court. Considering the totality of the circumstances, it is opined that Petitioner has demonstrated his benefits and an opportunity needs to be given to the Petitioner to put forth his case. The proceedings stand restored to file of the concerned Commissioner. The amount of Rs. 4 lacks deposited in this Court stands transferred to the adjudicating authority, subject to further orders to be passed in the proceeding - petition allowed. Issues Involved:Challenge to Order-in-Original dated 24 December 2020 passed by the Commissioner of CGST and Central Excise, Mumbai on grounds of breach of principles of natural justice.Summary:The Petitioner challenged the Order-in-Original passed by the Commissioner, citing a breach of natural justice principles. The Commissioner noted that despite virtual hearing dates being set, the Petitioner did not attend, leading to the imposition of Central Excise duty and penalty. The Petitioner claimed non-receipt of hearing notices due to lockdown restrictions. The Respondent stated that notices were sent via registered post but returned as 'left'. The Petitioner argued that the acknowledgment for virtual hearing notices was not provided in the reply. Reference was made to Section 37C of the Central Excise Act, 1944 regarding service of decisions and orders.The Court considered the challenges faced during the lockdown period and the issues with physical service of notices. The Petitioner, to demonstrate good faith, deposited a portion of the dues with the Court. After assessing the circumstances, the Court quashed the impugned order, restoring the proceedings to the Commissioner's file. The deposited amount was transferred to the adjudicating authority, and the Petitioner was directed to appear before the Commissioner for a suitable hearing date. The Court clarified that the decision was based on the breach of natural justice principles and not on the merits, leaving the proceedings to be decided on their own merits.