Appeal Succeeds: Draft Audit Allegations Now a Show Cause Notice; Submit Objections in 30 Days for Personal Hearing. The Court allowed the appeal, overturning the prior order, and instructed the petitioners to treat the Draft Audit Report allegations as a show cause ...
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Appeal Succeeds: Draft Audit Allegations Now a Show Cause Notice; Submit Objections in 30 Days for Personal Hearing.
The Court allowed the appeal, overturning the prior order, and instructed the petitioners to treat the Draft Audit Report allegations as a show cause notice. The appellants must submit objections within 30 days, after which the jurisdictional officer is required to conduct a personal hearing and issue a speaking order on the merits, in accordance with the law. The appellants are also permitted to include previous replies with their new objections.
Issues involved: The issue involves a belated challenge to a demand raised in 2019, following a spot memo issued in 2018 regarding service tax liability and Input Service Credit. The case concerns the failure of the authority to consider the appellant's submissions and follow proper adjudication procedures as per Section 72A(4) of the Finance Act, 1994.
Summary of the Judgment:
Issue 1: Belated Challenge to Demand The intra court appeal was filed against the dismissal of a writ petition challenging a demand raised in 2019, which the Single Bench rejected as belated since the petitioners approached the court after a significant delay following the issuance of the spot memo in 2018.
Issue 2: Failure to Consider Appellant's Submissions The appellant-assessee contended that they were eligible for Input Service Credit based on the spot memo issued in 2018, but the authority failed to consider their submissions and continued to issue demand notices without proper adjudication of the correctness of the stand taken by the appellant.
Issue 3: Adjudication Procedure The Court emphasized the importance of following proper adjudication procedures as per Section 72A(4) of the Finance Act, 1994, which mandates affording the assessee an opportunity to present their case before the jurisdictional officer for a speaking order to be passed. The Court found that such procedure was not followed in this case.
Judgment: The Court allowed the appeal, setting aside the previous order and directing the petitioners to treat the allegations in the Draft Audit Report as a show cause notice. The appellants were instructed to submit their objections within 30 days, after which the jurisdictional officer must provide a personal hearing and pass a speaking order on merits and in accordance with the law. The appellants were also permitted to submit earlier replies along with the new objections.
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