2018 (4) TMI 779 - HC - Service Tax

Maintainability of petition - only contention raised before us is that this petition should be entertained because the order-in-original dated 20th November, 2012 is passed without affording reasonable opportunity of being heard to the petitioner - Held that - After the show cause notice was issued and the petitioner requested that the matter be taken up post second week of July, 2012, then, we do not see how the order was passed, particularly when the petitioner was notified the dates of hearing on 16th, 19th and 20th November, 2012. It is thus uncalled for and avoidable urgency and expediency in disposal of the proceedings, which prompts us to interfere with the order-in-original. The rights and equities can be balanced by the petitioner being called upon to meet 50% of the demand in the show cause notice. The petitioner should, therefore, deposit a further sum of ₹ 5 lakhs within a period of four week from today with the Service Tax Commissionerate.

Issues:
1. Maintainability of the petition due to alternative remedy available.
2. Violation of principles of natural justice in passing the order-in-original.
3. Lack of opportunity for the petitioner to address the competent authority during the passing of the order-in-original.
4. Urgency and expediency in the disposal of proceedings leading to interference with the order-in-original.
5. Balancing rights and equities in the matter of collection of service tax.

Issue 1: Maintainability of the petition due to alternative remedy available:
The respondents argued that the orders under challenge could be appealed to the Customs, Excise, and Service Tax Appellate Tribunal and its Zonal Bench, where issues of violation of natural justice and erroneous dismissal on the grounds of limitation could be raised. However, the petitioner contended that the order-in-original was passed without affording a reasonable opportunity of being heard, making it illegal and contrary to principles of fairness and justice.

Issue 2: Violation of principles of natural justice in passing the order-in-original:
The petitioner claimed that the order-in-original dated 20th November, 2012, was passed without providing a reasonable opportunity for the petitioner to be heard. The petitioner highlighted that despite fixing dates for personal hearings, the petitioner could not attend due to personal difficulties and professional commitments. The petitioner's argument was that the order was passed immediately after the alleged failure to attend the scheduled hearings, raising concerns about the compliance with principles of natural justice.

Issue 3: Lack of opportunity for the petitioner to address the competent authority during the passing of the order-in-original:
The petitioner raised concerns about not being given a chance to address the competent authority when the order-in-original was passed. The petitioner emphasized that there was no notice provided, and when the petitioner appeared through a Chartered Accountant, the order-in-original was communicated through Speed Post, limiting the petitioner's ability to respond effectively.

Issue 4: Urgency and expediency in the disposal of proceedings leading to interference with the order-in-original:
The court found that there was unnecessary urgency and expediency in the disposal of the proceedings, leading to interference with the order-in-original. The court noted discrepancies in the scheduling of hearings and the passing of the order immediately after the alleged failure of the petitioner to attend the hearings, indicating a lack of procedural fairness.

Issue 5: Balancing rights and equities in the matter of collection of service tax:
Considering the matter of collection of service tax and the partial payment made by the petitioner, the court balanced the rights and equities by directing the petitioner to deposit a further sum within a specified period. The court emphasized the need for the petitioner to engage a representative for future proceedings, allowing inspection of records and submissions, instead of insisting on personal presence, given the petitioner's professional commitments.

In conclusion, the court entertained the petition based on the violation of principles of natural justice, lack of opportunity for the petitioner to address the competent authority, and the urgency in the disposal of proceedings. The court directed the petitioner to deposit a further sum and engage a representative for future proceedings, ensuring a fair and balanced approach in resolving the issues related to the collection of service tax.

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