2017 (7) TMI 602 - HC - Service Tax

Service of notice - Section 37(C) of the Central Excise Act - natural justice - Held that - In the present case it is a matter of record that thrice the notice of hearing were issued to the petitioner i.e. on 30th October 2014 12th November 2014 and 14th September 2015. However the said notices have been issued on the old address of the petitioner whereas prior to the said notices of hearing being issued to the petitioner the petitioner on 6th January 2014 had intimated the respondent Authority of its address being changed and had also intimated the new address. It appears that the notices were not issued on the new address and all the notices issued to the petitioner on the old address were returned with an endorsement left . Naturally there was no service to the petitioner of the said notices. The petitioner did show his bona fide by undertaking to deposit 25 lakhs within three months without prejudice to his rights - The deposit of 25 lakhs as undertaken is condition precedent. Petition allowed - matter restored before lower authorities - decided partly in favor of petitioner.

Issues involved:
1. Service of notices and opportunity to be heard.
2. Jurisdiction under Article 226 of the Constitution of India.
3. Rule of alternate remedy and exceptional cases.

Issue 1: Service of notices and opportunity to be heard
The petitioner argued that the order in original was ex parte as they were not served with notices of hearing despite informing about a change in address. The petitioner contended that the notices were not properly served, relying on Section 37(C) of the Central Excise Act. The petitioner, through their Senior Counsel, requested the court to exercise jurisdiction under Article 226 of the Constitution of India, offering to deposit a sum of ?25 lakhs to show good faith. The respondent, however, claimed that the petitioner had the remedy of appeal and disputed the receipt of the address change letter. The respondent argued that the notices were served on the correct address, and criticized the petitioner's conduct for not replying to the show-cause notice.

Issue 2: Jurisdiction under Article 226 of the Constitution of India
The court acknowledged the rule of alternate remedy but stated that in exceptional cases like violation of natural justice principles or lack of jurisdiction, the writ jurisdiction under Article 226 could be exercised. The court noted that the notices were issued to the petitioner on the old address despite the petitioner informing about the address change. It was observed that the notices were not served on the new address, and the show-cause notice was issued by a different authority than the one passing the order. The court found that the petitioner had shown good faith by offering to deposit ?25 lakhs and decided to grant another opportunity for the petitioner to represent themselves before the Authority.

Issue 3: Rule of alternate remedy and exceptional cases
The court emphasized the importance of the rule of alternate remedy as a form of self-restraint. However, the court highlighted that in exceptional cases involving violations of natural justice or lack of jurisdiction, the writ jurisdiction under Article 226 could be invoked. The court considered the circumstances where the notices were not properly served on the petitioner despite the address change notification and the lack of service of the show-cause notice. Ultimately, the court quashed the impugned order, directing the petitioner to deposit ?25 lakhs within three months, subject to the decision in the proceedings before the Authority, and ordered the Authority to decide the show-cause notice afresh promptly upon the deposit. Failure to comply with the deposit condition would result in the original order standing. The court partially allowed the Writ Petition in light of the above analysis.

← Previous Next →