2018 (3) TMI 1551 - HC - Central Excise

Principles of Natural Justice - ex-parte order - The Tribunal specifically queried but the appellant did not reply as to why the show cause notice was not responded to or why there was absence for personal hearing; both of which were admitted - Held that - in the instant case the assessee cannot be termed to have acted with diligence. The assessee did not respond to the show-cause, failed to appear for personal hearing and challenged the order on grounds of ignorance of law. Then when the Tribunal allowed fresh consideration on terms, the condition imposed was not complied. There are no unreasonableness, in the condition imposed. There is no sufficient cause to condone the delay or interfere with the order passed - appeal dismissed.

Summary

Issues:
1. Challenge against an ex parte order imposing service tax with penalties.
2. Tribunal's direction for fresh consideration on terms.
3. Delay in challenging the conditions imposed by the Tribunal.
4. Communication of the order to the assessee.
5. Compliance with the condition of deposit directed by the Tribunal.
6. Applicability of the decision of the Hon'ble Supreme Court in a similar case.

Issue 1: Challenge against an ex parte order imposing service tax with penalties

The appellant challenged an ex parte order demanding service tax of ?63,73,330 for the period between 2005 and 2010, along with penalties. The Tribunal directed the matter to be considered afresh, with a condition for the appellant to deposit an amount of ?15,00,000 within eight weeks. An appeal was filed challenging this condition after a delay of 1061 days.

Issue 2: Tribunal's direction for fresh consideration on terms

The Tribunal found the appellant negligent for not responding to the show cause notice but considered the appellant's plea of illiteracy and lack of proper advice. The Tribunal directed a remand on condition, requiring the appellant to deposit a certain amount. The appellant did not challenge the conditions in a timely manner, leading to the dismissal of the appeal.

Issue 3: Delay in challenging the conditions imposed by the Tribunal

The appellant failed to challenge the conditions imposed by the Tribunal in a timely manner. The Court found the explanation for non-compliance unsatisfactory and declined to interfere with the Tribunal's order, especially considering the reduced amount demanded for deposit.

Issue 4: Communication of the order to the assessee

The appellant argued that the order was not communicated to them. The Court rejected this contention, noting that the order had been pronounced in open court. The appellant was required to obtain a certified copy of the order and comply with the conditions imposed by the Tribunal.

Issue 5: Compliance with the condition of deposit directed by the Tribunal

The Tribunal directed the appellant to deposit an amount which may be due, leading to the appellant's contention of pre-judging the issue. The Court found the condition imposed reasonable, especially in comparison to similar cases cited by the appellant's counsel.

Issue 6: Applicability of the decision of the Hon'ble Supreme Court in a similar case

The appellant relied on a Supreme Court decision cautioning against onerous conditions before trial commencement. The Court distinguished the cited case, emphasizing the diligence required from the appellant in responding to legal proceedings and complying with Tribunal directives.

In conclusion, the Court dismissed the delay condonation application and the appeal. However, if the appellant complies with the deposit condition within the specified time, the Department will reconsider the matter and assess the liability accordingly. Failure to comply will result in the Department proceeding with the recovery process.