2014 (6) TMI 835 - HC - Service Tax

Recovery of service tax - non receipt of notice / order - Conclusion of service of order - proper service of notice - change of address - Held that - In this context it has to be noticed that the address of the 1st petitioner s Registered Office was also known to the respondents, as is evident from Exhibit P5. Exhibit P5 is a communication of the respondent addressed to the Registered Office long before the show cause notice itself was issued. The grievance projected by the petitioner is to be looked into on an analysis of the totality of the circumstances coming to fore. Section 83 of the Finance Act, 1994 contemplates that certain provisions of the Central Excise Act, 1944 would apply to that Act. Section 37C of the Central Excise Act deals with service of decisions, orders, summons, etc. Looking at Section 37C, one of the modes of service is registered post with acknowledgement due. There is no dispute that the Department had attempted service by that mode and if the Section provided only that, then the decision of the Hon ble Supreme Court would squarely apply. However, the provision specifically took into account the instances where service could not be effected as provided in clause (a); by clause (b), which mandates affixing a copy of the order, summons or notice on some conspicuous part of the place of business. This procedure admittedly has not been followed by the Department. There shall be a stay of recovery proceedings for two months from the date of communication of the certified copy of the order, after which the issue shall be covered by the orders passed in appeal, if one is filed and on failure to do so, shall confer the authority with liberty to proceed for recovery - Stay granted.

Summary

Issues:
1. Proper service of notice for show cause proceedings.
2. Effect of closure of business premises on proceedings.
3. Compliance with statutory requirements for service of orders.
4. Interpretation of relevant legal provisions regarding service.
5. Remedies available to the petitioner in case of improper service.

Analysis:

Issue 1: The primary grievance of the 1st petitioner was the lack of proper service of notice for the show cause proceedings, leading to the inability to avail appellate remedy. The show cause notice (Exhibit P1) was sent only to the address of the place of business, despite the 1st petitioner having two addresses. The petitioner filed objections (Exhibit P2) upon receipt but heard nothing thereafter, as the business premises were closed down. The petitioner was only made aware of the proceedings' conclusion when a garnishee order (Exhibit P3) was served on a related company.

Issue 2: The closure of the business premises post the filing of objections (Exhibit P2) complicated the situation. The petitioner, upon being served with the garnishee order (Exhibit P3), promptly requested a certified copy of the order determining the service tax due to avail statutory remedies. This raised concerns about the impact of the closure on the proceedings and the subsequent steps taken by the authorities.

Issue 3: The Department contended that the order was sent by post to the place of business provided by the petitioner, which was returned unserved. Citing legal precedent, the Department argued that attempts to evade service do not grant the right to contest the denial of actual service. However, the Department failed to follow the procedure outlined in Section 37C of the Central Excise Act, which includes modes of service beyond registered post, such as affixing a copy at the place of business.

Issue 4: The judgment delved into the interpretation of statutory provisions regarding service, referencing the case of M/s. Madan & Co. v. Wazir Jaivir Chand. The judgment emphasized the importance of compliance with service requirements and the need for a practical interpretation of the term 'served.' It highlighted the distinction between sending by post and actual receipt, emphasizing the statutory procedures for effective service.

Issue 5: In light of the circumstances and legal provisions, the court allowed the writ petition, directing the respondent to serve a copy of the order within a specified period. The petitioner was granted time to file an appeal with an application for condonation of delay. The judgment outlined a stay on recovery proceedings pending the appeal outcome, emphasizing the importance of proper service and adherence to statutory procedures for a fair resolution.