Adjudication order set aside for seven-year delay violating natural justice principles in service tax dispute

CESTAT Chandigarh set aside the adjudication order due to excessive delay in passing the order. The dispute period was 2008-09 to 2010-11, show cause notice issued on 16.10.2014, but order passed on 22.03.2021 after seven years without department correspondence. The delay violated natural justice principles and increased appellant's interest liability. The tribunal held that appellant validly opted for 67% abatement under Notification No. 01/2006-ST for construction services, fulfilled all conditions, and could continue benefiting from the notification as it wasn't withdrawn. Appeal allowed with consequential relief.

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Issues:
Interpretation of abatement scheme under Notification No. 01/2006-ST dated 01.03.2006; Delay in passing Order-in-Original affecting natural justice principles.

Analysis:
The judgment pertains to an appeal against an Order-in-Original issued by the Commissioner (Appeals) concerning the eligibility of an appellant for abatement under Notification No. 01/2006-ST dated 01.03.2006. The appellant, engaged in providing taxable construction services, was alleged to have short paid service tax due to incorrect abatement rate application. The Original Authority confirmed the demand, leading to the appellant's appeal. The appellant contended that the long delay of seven years in passing the Order-in-Original violated natural justice principles, depriving them of a fair opportunity to present their case. The appellant referenced precedents to support their argument, emphasizing the importance of timely adjudication for effective defense.

The appellant argued that they met all conditions specified in Notification No. 01/2006-ST and had not violated any provisions. They highlighted that the department did not dispute their compliance with the notification's requirements, including not availing Cenvat Credit and meeting specified conditions for abatement. The appellant also cited a relevant case to support their position, emphasizing their adherence to the notification's conditions. Additionally, the appellant pointed out that they did not opt for the composition scheme under the Works Contract Rules, indicating their eligibility for abatement under Notification No. 01/2006.

On the other hand, the Revenue's Authorized Representative contended that the appellant was only entitled to a 60% abatement under the composition scheme, not the 67% claimed. However, upon review of the submissions and evidence, the Tribunal found that the appellant had indeed fulfilled all conditions under Notification No. 01/2006-ST and had not opted for the composition scheme. The Tribunal relied on a previous decision to support the appellant's eligibility for the abatement scheme under the notification. Consequently, the Tribunal held that the denial of the benefit of Notification No. 01/2006-ST to the appellant was legally flawed and set aside the impugned order, allowing the appeal with consequential relief as per law.

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