2018 (8) TMI 20 - AT - Service Tax

Principles of Natural Justice - the order has been passed by the lower adjudicating authority without affording personal hearing as requested by the appellant and also not providing the ledgers which have been obtained from the CD print out of the computer - appellant has contested that had the print out of the ledgers were made available to them, they could have satisfied the adjudicating authority about their bonafide and payment of service tax and also the non-payment of service tax which were pending for lack of resources at their end. Held that - The appellant had been prevented from making defence by not allowing the personal hearing despite of request made by them and thus there is a violation of principle of natural justice in their case. Thus, at least one opportunity is required to be afforded to the appellant for defending their case before the lower adjudicating authority. The lower adjudicating authority shall afford the opportunity of personal hearing to the appellant and the appellant is also directed not to seek any further adjournment before the lower adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
1. Upholding of service tax demand on the appellant for failure to discharge appropriate service tax.
2. Allegation of deliberate suppression of facts regarding rendering of service tax.
3. Violation of principles of natural justice by the lower adjudicating authority.

Analysis:
1. The appeal was filed against the order passed by the Ld. Commissioner (Appeal) upholding the service tax demand on the appellant for providing 'rent a cab services' under Section 65 of the Finance Act, 1994. The demand amounted to &8377; 10,99,295/- along with education cess and interest on delayed payment. The appellant contested the order stating they were not engaged in a car business but only renting out vehicles to clients. They claimed to be unaware of the Service Tax Act and Rules, leading to irregularities in tax payment. The appellant argued that they had not received payments from clients, primarily Jharkhand Electricity Board, resulting in delayed tax payments. The appeal highlighted a lack of awareness and financial constraints as reasons for non-compliance.

2. The appellant raised concerns about the violation of principles of natural justice during the adjudication process. They claimed that the adjudicating authority did not provide them with crucial documents, including ledgers obtained from CDs, which formed the basis of the demand. The appellant requested an extension of time to prepare a defense but was not granted the opportunity for a personal hearing. The Tribunal acknowledged the appellant's plea, noting that the lower adjudicating authority failed to afford them a chance to present their case adequately. The Tribunal emphasized the importance of providing a fair opportunity to be heard and access to relevant documents for a proper defense. As a result, the Tribunal ordered a remand, directing the lower adjudicating authority to allow the appellant a personal hearing, provide copies of essential documents, and complete the proceedings within three months.

3. The Tribunal's decision focused on rectifying the procedural lapses and ensuring that the appellant's right to a fair hearing was upheld. By setting aside the previous order and allowing the appeal by way of remand, the Tribunal aimed to address the concerns raised by the appellant regarding the lack of opportunity to present their case effectively. The judgment underscored the significance of procedural fairness and adherence to principles of natural justice in adjudicating matters related to tax demands and compliance.