Natural justice: finalisation without notice is invalid and remitted; corrigendum withdrawal set aside; hotel and medical credits denied.

The article addresses four issues: (i) finalisation of provisional assessments without issuing show cause notices breached natural justice and orders are set aside and remitted for de novo adjudication; (ii) a post finalisation corrigendum that withdrew previously granted relief was an impermissible review by corrigendum without fresh notice and is set aside to that extent; (iii) reversal of common input service credit under Rule 6 was remitted for fresh consideration because of procedural defects and conflicting precedents, leaving substantive contentions open; (iv) CENVAT credit for hotel accommodation and staff medical insurance falls within statutory exclusions and denial of credit is affirmed.

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Issues: (i) Whether the Commissioner (Appeals) was correct in upholding finalization of provisional assessment without issuing show cause notices and without following principles of natural justice; (ii) Whether the corrigendum issued to the Orders-in-Original revisiting/withdrawing earlier grant of exemption was legally sustainable; (iii) Whether reversal of credit attributable to common input services for taxable and exempted services under Rule 6 of the CENVAT Credit Rules, 2004 was correct and the methodology adopted was lawful; (iv) Whether CENVAT credit on hotel accommodation and staff medical insurance is liable to be denied under the applicable law.

Issue (i): Whether finalization of provisional assessment without issuance of notice and without adhering to principles of natural justice was permissible.

Analysis: The Tribunal examined the Orders-in-Original and found that provisional assessments were finalized without putting the appellant on notice. The appellate authority merely affirmed the original authority by following an interim stay order of another Bench, without addressing the absence of show cause notices or the audi alteram partem requirement. The Tribunal noted that finalization without notice and opportunity to be heard undermines principles of natural justice and requires fresh consideration.

Conclusion: The matter is answered in favour of the assessee; the impugned orders insofar as finalization of provisional assessment are set aside and remitted for de novo adjudication.

Issue (ii): Whether the corrigendum issued after finalization of provisional assessment to withdraw previously granted relief was legally sustainable.

Analysis: The Tribunal found the corrigendum to have revisited and substantially modified conclusions of speaking Orders-in-Original without issuing notice to the assessee. The action was treated as a review of a concluded order by way of corrigendum, which bypasses the requirement of hearing and is impermissible except for bona fide clerical corrections. The appellate authority's refusal to interfere was held to be incorrect for failing to address this legal infirmity.

Conclusion: The grievance of the assessee is sustained; the impugned orders are set aside to the extent they rely on the corrigendum that withdrew previously granted relief.

Issue (iii): Whether the reversal of credit attributable to common input services under Rule 6(2)/6(3A) of the CENVAT Credit Rules, 2004 and the methodology adopted was correct.

Analysis: The Tribunal noted that the lower authorities applied a rule-based reversal but also relied on an interim order of a different Bench; the Tribunal acknowledged conflicting decisions of various Benches and observed absence of notice in assessment. Given procedural defects and the presence of differing tribunal decisions (including a later final order in the cited Mumbai matter), the Tribunal considered it necessary to remit the question for fresh adjudication so that the adjudicating authority may consider relevant legal precedents and the appellant's contentions anew.

Conclusion: The issue is remitted for de novo adjudication in favour of the assessee's right to a fresh, reasoned decision; all contentions on this issue are left open for adjudication.

Issue (iv): Whether CENVAT credit on hotel accommodation and staff medical insurance could be denied under Clause (C) to Rule 2(l) and related notifications.

Analysis: The Tribunal examined the statutory exclusion effected by Notification No. 3/2011-C.E.(N.T.) dated 01.03.2011 and Clause (C) to Rule 2(l) of the CENVAT Credit Rules, 2004, and found that health insurance and travel benefits to employees are specifically excluded from input services eligible for credit. The lower appellate authority applied the exclusion correctly and the Tribunal found no merit in the assessee's claim.

Conclusion: The issue is decided against the assessee; the denial of credit for hotel accommodation and staff medical insurance is confirmed in favour of the revenue.

Final Conclusion: The appeals are partly allowed: the impugned orders are set aside and remitted for de novo adjudication on issues (i) and (iii), the impugned orders are set aside insofar as they were modified by the post-finalization corrigendum (issue ii), and the denial of credit for hotel accommodation and staff medical insurance is affirmed (issue iv).

Ratio Decidendi: An adjudicating authority cannot, by issuing a corrigendum after passing speaking final orders, withdraw or substantially modify relief previously granted without issuing fresh notice and affording an opportunity of hearing; finalization of provisional assessment without issuance of notice and adherence to audi alteram partem is procedurally invalid, warranting de novo adjudication.

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