2016 (5) TMI 197 - HC - Service Tax

Violation of principles of natural justice - Adjournment sought by the Petitioner on reasonable and valid grounds not granted - Deprived of an effective opportunity of participating in the adjudication proceedings and presenting its version - Evasion of Service tax - Demand of service tax, interest and penalty as proposed in the SCN confirmed.Adjudication pending for more than six years. Held that - with only one effective hearing having taken place, it would have not caused any serious prejudice to the Department if the request for adjournment made by the Petitioner, on account of the indisposition of its CA, supported by medical certificate, had been accommodated. After all, the SCN was pending adjudication for more than six years. It appears to the Court that the only reason why the Principal Commissioner, Central Excise as AA was in a hurry to conclude the proceedings was that he was retiring on the very date he passed the impugned order. He was perhaps anxious that the SCN should not be shown as pending for over six years. It is these extraordinary circumstances, that persuades the Court to exercise its powers under Article 226 of the Constitution.Therefore, the adjudication order is sets aside. Also it is directed that the adjudication proceedings arising out of the SCN issued against the petitioner will now resume before an AA, as may be designated by the Central Board of Excise and Customs (CBEC), from the stage it was prior to the passing of the impugned adjudication order. - Petition disposed of

Summary

Issues Involved:
Delay in adjudication proceedings, denial of adjournment request, violation of principles of natural justice

Analysis:

1. Delay in Adjudication Proceedings:
The petitioner received a Show Cause Notice (SCN) in 2009 regarding alleged evasion of service tax. Despite some correspondence with the Adjudicating Authority (AA), there were significant delays in the proceedings. The only effective hearing after May 2015 took place in November 2015, more than six years after the issuance of the SCN. The final adjudication order confirming the demand of service tax was passed ex parte in November 2015, raising concerns about the prolonged delay in the adjudication process.

2. Denial of Adjournment Request:
The petitioner sought an adjournment on medical grounds, supported by a medical certificate, due to the indisposition of its Chartered Accountant who was to represent them at the hearing. However, the request was not granted, and the AA proceeded to pass the final adjudication order ex parte. The petitioner contended that the denial of the adjournment request deprived them of an effective opportunity to participate in the proceedings and present their case, thereby violating the principles of natural justice.

3. Violation of Principles of Natural Justice:
The Court observed that the refusal to grant the adjournment request on reasonable and valid grounds unjustifiably deprived the petitioner of the opportunity to effectively participate in the adjudication proceedings. The retiring AA's haste to conclude the proceedings, possibly to avoid the SCN being pending for over six years, raised concerns about the fairness of the process. The Court intervened under Article 226 of the Constitution, setting aside the adjudication order and directing the proceedings to resume before a new AA designated by the Central Board of Excise and Customs (CBEC).

4. Court's Intervention and Directions:
In light of the extraordinary circumstances and the prolonged pendency of the SCN, the Court exercised its powers under Article 226, directing the CBEC to designate a new AA for the proceedings. The Court set a timeline for the conclusion of the adjudication proceedings within six months. The AA was instructed to communicate all hearing details to the petitioner in advance, ensuring their participation in the process. The Court emphasized that it did not delve into the merits of the case, leaving all contentions to be raised before the AA during the adjudication proceedings.

5. Conclusion:
The petition and application were disposed of with the Court's intervention to ensure a fair and timely adjudication process. By setting aside the ex parte adjudication order and directing the resumption of proceedings before a new AA, the Court aimed to uphold the principles of natural justice and procedural fairness in the adjudication of the service tax evasion case.

This detailed analysis covers the issues of delay in adjudication proceedings, denial of adjournment request, and the violation of principles of natural justice as highlighted in the judgment delivered by the Delhi High Court.