Order Set Aside Due to Lack of Fair Hearing; Case Remitted for Compliance with Natural Justice Principles. The HC set aside the impugned Order-in-Original due to a violation of natural justice principles, as the petitioner was not afforded a proper personal ...
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Order Set Aside Due to Lack of Fair Hearing; Case Remitted for Compliance with Natural Justice Principles.
The HC set aside the impugned Order-in-Original due to a violation of natural justice principles, as the petitioner was not afforded a proper personal hearing, contrary to the master Circular dated 10.03.2017. The Department failed to prove service of notice for a personal hearing. The matter was remitted back to respondent No. 1 for a fair hearing, treating the impugned order as a Show Cause Notice. The petitioner was directed to respond by a specified date, and the respondents were instructed to schedule a personal hearing and make a prompt decision. The writ petition was allowed on technical grounds, with no costs awarded.
Issues involved: Challenge to Order-in-Original u/s 73(2) of the Finance Act, 1994, violation of principles of natural justice, sustainability of impugned order, compliance with master Circular dated 10.03.2017.
Challenge to Order-in-Original: The writ petition challenged Order-in-Original No. HYD-EXCUS-004-COM-015-2022-23, confirming a demand of Rs. 3,94,53,998/- u/s 73(2) of the Act, along with interest u/s 75 and penalties u/s 78, 77, and late fee u/s 70(1) of the Act. The petitioner contended that the order was in violation of natural justice as show cause notices were not effectively served, and no personal hearing was provided, especially during the peak Covid period.
Compliance with Circular dated 10.03.2017: The petitioner argued that the impugned order contravened the master Circular issued by the Government of India, Ministry of Finance, which mandates fair and reasonable opportunity for replying to show cause notices and personal hearings. The Circular specifies at least three opportunities of personal hearing with sufficient intervals, which were not provided in this case.
Sustainability of Order: The Court directed the Department to provide proof of service of notice of personal hearing, which they failed to produce. The proceedings were found to have been conducted without affording a proper opportunity of personal hearing to the petitioner, contrary to the Circular's requirements.
Judgment: Considering the submissions and the Circular's provisions, the Court found the impugned order unsustainable due to lack of proper personal hearing. The order was set aside, remitting the matter back to respondent No. 1 for a fair hearing. The impugned order was to be treated as a Show Cause Notice, with the petitioner directed to respond by a specified date. The respondents were instructed to provide a date for personal hearing and pass a decision promptly. The writ petition was allowed on technical grounds of violating natural justice, with no costs awarded.
Conclusion: The Court's decision was based on the failure to adhere to the principles of natural justice and the requirements of the master Circular, emphasizing the importance of providing fair opportunities for personal hearings in such matters.
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