2011 (8) TMI 941 - HC - Service Tax

Provisional assessment - The grievance of the Petitioners is that - (i) No hearing was afforded to them by the Deputy Commissioner of Customs; (ii) No speaking order has been passed and (iii) Even the elementary principles of natural justice have therefore not been complied with - Merely because there was a special drive to clear a backlog of matters, that would afford no justification for the department not to comply with fundamental principles of natural justice - Held that the impugned communication at Exhibit E and the consequent assessment orders, have to be set aside and a direction would have to be issued to the Deputy Commissioner of Customs to pass fresh orders finalizing the assessments after furnishing to the Petitioners an opportunity of being heard

Summary

Issues: Compliance with principles of natural justice in finalization of provisional assessments by Deputy Commissioner of Customs without affording a hearing to the Petitioners.

In this case, the Petitioners were aggrieved by a communication from the Assistant Commissioner Customs informing them that the Deputy Commissioner of Customs had finalized the provisional assessments of certain bills of entry without affording them a hearing. The Petitioners raised concerns that no hearing was provided to them, no speaking order was passed, and the principles of natural justice were not complied with. The Respondents suggested that the Petitioners should file an appeal against the orders passed by the Deputy Commissioner. However, it was acknowledged that the Petitioners were not given an opportunity to be heard, leading to a failure of compliance with natural justice principles. The court cited the case of Automotive Tyre Manufactures Asson v. Designated Authority, emphasizing that a personal hearing is crucial, and failure to comply with natural justice principles renders an order invalid.

The court held that the impugned communication and assessment orders needed to be set aside. A direction was issued to the Deputy Commissioner of Customs to pass fresh orders after providing the Petitioners with an opportunity to be heard. The court emphasized the importance of complying with natural justice principles even in cases where there is a special drive to clear backlogs, stating that efficiency should not override fundamental legal principles. The Petitioners were instructed to appear before the concerned Deputy/Assistant Commissioner of Customs with a copy of the court's order for the finalization of assessments in accordance with the law and principles of natural justice on an expedited basis. Ultimately, the rule was made absolute, and no costs were awarded in the case.