2024 (1) TMI 731 - HC - Service Tax

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 ... Seeking for invoking of the extra ordinary jurisdiction - though SCN were issued, they were not effectively served and that it could not be effectively defended - violation of principles of natural justice - HELD THAT:- A person, if for any of the reason, is not able to enter appearance for personal hearing on the first occasion, he could be granted two more opportunities before his right for personal hearing is closed. These instructions, which have been laid down by the Department itself has not been followed in the first instance or atleast there is no record to substantiate this fact. In the absence of any document to prove the service of notice on the petitioner, the Order-in-Original dated 01.11.2022, would not be sustainable and the same deserves to be and is accordingly set aside/quashed. Petition allowed. 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.