Order quashed for violating natural justice as show cause notice sent to incorrect address

Gauhati HC set aside and quashed order dated 25.11.2022 for violating principles of natural justice. Petitioner was not properly served show cause notice as it was sent to incorrect address, making subsequent service methods impermissible. Court held that without proper service at correct address, the order was passed without affording due opportunity to petitioner. Regarding territorial jurisdiction of Commissionerate of Dibrugarh over petitioner, HC ruled this factual issue should be decided by respondent if fresh show cause notice is issued at proper address. Petition disposed of with order quashed.

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Issues Involved:

1. Jurisdiction under Article 226 of the Constitution.
2. Non-service of show cause notice and opportunity of hearing.
3. Territorial jurisdiction of the respondent.

Issue-wise Detailed Analysis:

1. Jurisdiction under Article 226 of the Constitution:

The court considered whether it should exercise jurisdiction under Article 226 of the Constitution despite the availability of an alternative remedy in the form of an appeal before the Custom Excise and Service Tax Appellate Tribunal. The court referred to the Supreme Court judgment in M/s. Godrej Sara Lee Ltd. Vs. Excise and Taxation Officer cum Assessing Authority and Ors, which identified exceptions to the rule of exhausting alternative remedies before approaching the writ court. These exceptions include violations of fundamental rights, principles of natural justice, orders or proceedings being wholly without jurisdiction, challenges to the vires of an Act, and pure questions of law requiring legal determination by the High Court. The court deferred its decision on this issue pending analysis of the other issues.

2. Non-service of show cause notice and opportunity of hearing:

The petitioner argued that the impugned order dated 25.11.2022 violated principles of natural justice as the show cause notice was not served at the correct address. The petitioner's registered address was in Naharlagun, Arunachal Pradesh, but the notice was sent to an address in North Lakhimpur, Assam, where the petitioner had no office. The court noted that Section 37C of the Central Excise Act, 1944, as incorporated into the Finance Act, 1994, prescribes the manner of serving notices, which includes sending by registered post with acknowledgment due or by speed post with proof of delivery. The court found that the notice was not served at the correct address and that the recourse to alternative service methods under Section 37C(1)(b) and (c) was not permissible. The court concluded that the impugned order was passed without affording due opportunity to the petitioner, violating principles of natural justice.

3. Territorial jurisdiction of the respondent:

The petitioner contended that the respondent No. 2 did not have territorial jurisdiction as the petitioner's business was registered in Naharlagun, Arunachal Pradesh, and not within the jurisdiction of the Dibrugarh Commissionerate. The respondent's counsel argued, based on verbal instructions, that the petitioner conducted business within the jurisdiction of the Dibrugarh Commissionerate. However, no documentary evidence was provided to support this claim. The court noted that the petitioner did not have a service tax registration under the Finance Act, 1994, and that the question of whether the petitioner conducted taxable activities within the jurisdiction of respondent No. 2 was a factual matter to be adjudicated by the jurisdictional officer. The court held that the issue of territorial jurisdiction should be decided by respondent No. 2 if a fresh show cause notice is issued to the petitioner at the correct address.

Conclusion:

(I) The impugned order dated 25.11.2022 and the corrigendum dated 16.12.2022 were set aside and quashed due to violation of principles of natural justice.

(II) The respondent authorities, particularly respondent No. 2, may initiate fresh steps under the law, ensuring the show cause notice is sent to the petitioner's correct address in Naharlagun, Arunachal Pradesh.

(III) The period from the issuance of the show cause notice on 16.11.2022 until the certified copy of the judgment is served on respondent No. 2 is excluded from the limitation period for initiating a de novo process.

(IV) The issue of territorial jurisdiction is remitted back to respondent No. 2 for determination, with the petitioner allowed to raise all permissible defenses.

The writ petition was disposed of with these observations and directions.

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