2018 (6) TMI 1145 - HC - Central Excise

Principles of Natural Justice - Ext.P11 order is though appealable in terms of the Finance Act, 1994, the petitioner challenges Ext.P11 order in this writ petition under Article 226 of the Constitution of India on the ground that the same is vitiated for non compliance of the principles of natural justice - Held that - In Ext.P10 explanation, the petitioner specifically sought for an opportunity of hearing. In so far as the petitioner sought specifically an opportunity of hearing in the matter in Ext.P10 explanation filed before passing the impugned order, in the light of the provisions contained in Section 33A of Central Excise Act, the second respondent should not have passed orders on the show cause notice, without affording the petitioner an opportunity of hearing. The order passed on 16.10.2017 is vitiated for noncompliance of the principles of natural justice. Petition allowed.

Summary

Issues:
Challenge to order under Article 226 on grounds of natural justice.

Analysis:
The petitioner, a Board under the Kerala Co-operative Societies Act, received a show cause notice for service tax amounting to ?17,13,34,094. The petitioner challenged the order under Article 226, alleging non-compliance with natural justice principles. The petitioner requested time to file objections, but the respondent scheduled a hearing without responding to the request. The petitioner's representative sought time during the hearing, and the petitioner submitted an explanation seeking an opportunity for a hearing. Despite this, the order was passed without granting a further hearing, violating the principles of natural justice.

The court examined Section 33A of the Central Excise Act, adopted for adjudication under the Finance Act, 1994. This section mandates that the adjudicating authority must provide an opportunity for a hearing to the concerned parties. The court noted that the petitioner had consistently requested time for a hearing and had specifically sought an opportunity for a hearing in their explanation. As a statutory body facing substantial liabilities, the petitioner should have been given a chance to present their case. Therefore, the order passed without affording the petitioner a proper hearing was deemed to be in violation of the principles of natural justice.

In conclusion, the court allowed the writ petition, quashed the impugned order, and directed the second respondent to pass fresh orders on the show cause notice after providing the petitioner with an opportunity for a hearing. This directive was to be carried out within one month from the date of receipt of the judgment.