2015 (12) TMI 1055 - HC - Service Tax

Demand of service tax - waiver of pre-deposit - No detailed reasons have been given on the issues regarding the jurisdiction of the adjudicating authority and whether the service provided by the petitioner was labile to service tax - Violation of principle of natural justice - Held that - Impugned order has been passed by respondent No.3 without considering the overall material on record including the reply to the show cause notice submitted by the petitioner. No detailed reasons have been given on the issues regarding the jurisdiction of the adjudicating authority and whether the service provided by the petitioner was labile to service tax. Thus, there was violation of principles of natural justice - impugned order dated 8.4.2015 is hereby set aside with the direction to respondent No.3 to decide the matter afresh, after affording full opportunity to the petitioner and considering the reply filed by it against the original notice Annexure P- 3 before the Commissioner of Service Tax, New Delhi, by calling the complete record from there, within three months from the date of receipt of certified copy of this order - Appeal disposed of.

Summary

Issues:
1. Direction to set aside the order dated 9.4.2015 and remand the matter to the original adjudicating authority.
2. Waiving off the payment of pre-deposit under Section 35F of the Central Excise Act, 1944 for filing appeal before the Tribunal.
3. Violation of principles of natural justice in passing the impugned order dated 8.4.2015.
4. Requirement of recording reasons in administrative decisions affecting parties prejudicially.

Analysis:
1. The petitioner sought a direction to set aside the order dated 9.4.2015 and remand the matter to the original adjudicating authority. Additionally, the petitioner requested the Chief Commissioner to assign the adjudication of all show cause notices to the Commissioner of Service Tax, Delhi. The petitioner also prayed for waiving off the pre-deposit under Section 35F of the Central Excise Act, 1944. The High Court set aside the impugned order and directed respondent No.3 to decide the matter afresh after affording a full opportunity to the petitioner and considering the reply filed by it against the original notice within three months.

2. The petitioner alleged that respondent No.3 passed the impugned order without considering the material on record and without giving a full opportunity of hearing. The respondents supported the impugned order. The High Court observed that the impugned order was passed without considering the overall material on record, including the petitioner's reply to the show cause notice. It was noted that there was a violation of principles of natural justice. Citing the Kranti Associates case, the court emphasized the importance of recording reasons in administrative decisions affecting parties prejudicially. The court set aside the impugned order due to the lack of detailed reasons and violation of natural justice principles.

3. The court highlighted the need for quasi-judicial authorities to record reasons in support of their conclusions. It emphasized that reasons reassure that discretion has been exercised on relevant grounds and without disregarding extraneous considerations. The court referred to the requirement of giving cogent, clear, and succinct reasons to maintain transparency and accountability in decision-making processes. Additionally, the court noted that transparency is essential to prevent abuse of judicial powers and to ensure broader scrutiny of decisions.

4. The judgment underscored that the recording of reasons is crucial for judicial accountability, transparency, and the development of law. It mentioned that judgments play a vital role in setting precedents for the future, and giving reasons for decisions is part of "Due Process." The court directed respondent No.3 to decide the matter afresh, considering the petitioner's reply and calling the complete record from the Commissioner of Service Tax, New Delhi, within three months from the date of receipt of the order.