2016 (9) TMI 898 - HC - Service Tax

Validity of impugned order - violation of principles of natural justice - petitioner has not been given adequate opportunity to put forth their case by way of personal hearing - Held that - it is not in dispute that the respondent did not give any reply to the said request made by the petitioner. Nevertheless, the petitioner submitted a representation on 01.03.2016, furnishing certain details said to be the break-up details and a specific request was made to the respondent that an opportunity of personal hearing may be granted to explain the facts and the basis for their calculation. It is also not in dispute that the said representation dated 01.03.2016, was received by the respondent, nevertheless, neither they rejected the request nor considered the same and afforded an opportunity of personal hearing, but, proceed to pass the impugned order on 23.03.2016. In Taxation Statute, though certain Statutes do not specifically provide for an opportunity of personal hearing, Courts have rendered decisions and stated that when complicated questions of facts are involved, it would be in fitness of things for the Authority to afford an opportunity of personal hearing. The said decision has been rendered with a view to clarify the facts and also in a way to help the Adjudicating Officer to give a proper and just conclusion at the earliest. Therefore, had the respondent afforded an opportunity to the petitioner as sought for in their representation dated 01.03.2016, the petitioner would not have approached this Court. Therefore, this Court is inclined to interfere with the impugned order, on the ground that it is in violation of principles of natural justice. - Petition allowed by way of remand

Summary

Issues: Challenge to Order-in-Original on grounds of violation of principles of natural justice.

Analysis:
The Writ Petition challenges an Order-in-Original demanding Service tax and imposing penalties on the petitioner. The primary contention is the violation of principles of natural justice due to inadequate opportunity for a personal hearing. The Court directed the respondent to address the issue of effective hearing. The Court's examination focused solely on whether natural justice principles were followed, disregarding other factual averments. After reviewing the submissions and materials, the Court found that the petitioner was indeed not given a fair chance to present their case, thus concluding a breach of natural justice.

The show cause notice initiated the process, and the petitioner requested extensions to submit replies and supporting documents. Despite these requests, the respondent fixed a hearing date without considering the petitioner's subsequent requests for more time due to unforeseen circumstances. The respondent did not respond to the petitioner's requests adequately, leading to the passing of the impugned order without granting a personal hearing. The Court emphasized the importance of a personal hearing in tax matters involving complex facts to ensure fairness and proper adjudication. Had the respondent granted the requested opportunity for a personal hearing, the Court opined that the petitioner might not have resorted to legal action.

Based on the above findings, the Court decided to intervene, setting aside the impugned order and remanding the matter to the respondent for fresh consideration. The respondent was instructed to provide a proper opportunity for a personal hearing to the petitioner and their counsel, consider their submissions and documents, and make a decision on merits and in accordance with the law. The Court emphasized that the new decision should not be influenced by any observations in the previous order. The Writ Petition was allowed with no costs, and the connected Miscellaneous Petition was closed as a result of the judgment.