2016 (12) TMI 1069 - HC - Service Tax

Principles of natural justice - counsel had offered to appear on 16/12/2015, but, on account of certain personal reasons, counsel could not appear in the matter and therefore petitioner submitted Ext.P4 application seeking adjournment. In Ext.P4, the counsel also sought for time to post the hearing by another week. It seems that the officer did not take note of Ext.P4 and had proceeded to pass the impugned order - whether there is any violation of principles of natural justice or rather one more opportunity should be granted to the petitioner to contest the matter? Held that - Though there is justification on the part of the officer to have proceeded further in the matter, still, when the petitioner has a contention that certain documents are required to be produced to substantiate the defence taken in the matter, I am of the view that one more opportunity has to be given to the petitioner to ventilate their grievance - petition allowed in favor of petitioner by way of remand.

Summary

Issues: Challenge to service tax demand and penalty imposition based on violation of principles of natural justice.

Analysis:
The petitioner, a Co-operative Bank, challenged the demand for service tax and penalty imposed by the respondent authorities through Ext.P5. The petitioner had received a show cause notice dated 6/1/2014 and had submitted a reply and appeared for a hearing. However, due to the absence of the counsel on 16/12/2015, the assessment order was passed. The main contention raised was the violation of principles of natural justice as the petitioner claimed to have enough documents to support their contentions but was not given an opportunity to produce them. It was argued that the bank provided services to both members and non-members, with a belief that no service tax liability existed for services provided to members based on statutory provisions.

The court refrained from delving into the merits of the contentions at that stage and focused on whether there was a breach of natural justice or if the petitioner should be granted another chance to contest the matter. The respondents contended that ample opportunities were given to the petitioner for a personal hearing, with the authorized person appearing on some dates but not on the final hearing date. They argued that the officer had considered all contentions and taken a valid view, suggesting that any disagreement should be addressed through the statutory appeal process.

On the other hand, the petitioner's counsel highlighted that although they appeared on 8/12/2015, the officer requested documents during the hearing, which were available but no further notice was received regarding the next hearing date. An application for adjournment was submitted due to unavoidable circumstances, but the officer proceeded to pass the order without considering the request. The court acknowledged the officer's justification for proceeding but emphasized that since the petitioner claimed the need to produce certain documents to support their defense, another opportunity should be granted to address their concerns.

Consequently, the writ petition was disposed of by setting aside Ext.P5, directing the petitioner to appear before the 2nd respondent with all necessary documents for a hearing on a specified date. The officer was instructed to review the matter and make appropriate decisions in accordance with the law.