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2018 (11) TMI 1393 - HC - Service TaxAppeal was dismissed for non-compliance of the conditional order - demise of the proprietor of the firm - whether demand be confirmed on the legal representatives of the proprietor? - ex-parte order - principles of natural justice. Held that - It appears that the legal heir, who is presently the assessee in this appeal, viz., his spouse, did not have knowledge of the proceedings and consequently, the demise of the Proprietor of the appellant was not placed before the Tribunal. Further, the record shows that none appeared for the appellant when the Tribunal passed the interim order on 21.09.2016. Equally, when the appeal was dismissed for non-compliance of the conditional order, vide the impugned order, there was no appearance on behalf of the appellant - the peculiar facts and circumstances of the case warrant an order, which would grant some relief to the appellant. The matter is remanded to the Tribunal to decide the matter on merits and in accordance with law, without insisting upon pre-deposit - appeal allowed by way of remand.
Issues:
1. Appeal against order of Customs, Excise and Service Tax Appellate Tribunal under Section 35G of the Central Excise Act, 1944. 2. Questions of Law raised: a. Arbitrariness and legality of Tribunal's order. b. Dismissal of appeal on demise of firm's proprietor. c. Passing of ex-parte order without hearing on merits. Issue 1: Appeal Against Tribunal's Order The appellant filed an appeal under Section 35G of the Central Excise Act, 1944 against the order of the Customs, Excise and Service Tax Appellate Tribunal, Chennai, dated 15.2.2017. The Tribunal had dismissed the appeal as the appellant failed to comply with the condition of pre-depositing ?10 lakhs imposed by the Tribunal in an earlier order dated 21.09.2016. Issue 2: Questions of Law Raised a. The first question raised was regarding the arbitrariness and illegality of the Tribunal's order, contending that it was based on a misconception of law and facts. The appellant sought to set aside the order. b. The second question raised whether an appeal can be dismissed upon the demise of the proprietor of the firm, and if the demand can be confirmed against the legal representatives of the proprietor. c. The third question raised whether an ex-parte order can be passed without hearing the matter on merits. The Tribunal's order was based on the appellant's failure to comply with the pre-deposit condition. The appellant had filed the appeal against the original order in 2014, seeking a stay on the demand of service tax, interest, and penalty. However, the appellant's proprietor passed away after filing the appeal but before the hearing on the pre-deposit condition. The legal heir, who was the present appellant, was unaware of the proceedings, leading to non-appearance during the Tribunal's interim and final orders. The High Court, considering the peculiar circumstances and legal precedents, decided to grant relief to the appellant. Citing the Supreme Court's decisions in various cases, the Court directed the Tribunal to hear the appeal on merits without insisting on the pre-deposit. The Court emphasized that this decision was specific to the case and should not be considered a precedent. The appeal was allowed, the Tribunal's order was set aside, and the matter was remanded to the Tribunal for a decision on merits. In response to the arguments raised by the Senior Standing Counsel for the Respondent, the Court distinguished previous cases where the assessee did not participate in the adjudication process. In this case, the appellant's proprietor had participated before his demise. However, the Court maintained that the appeal should be heard on merits, allowing both parties to present their arguments before the Tribunal without any pre-deposit requirement. The liberty was extended to both the assessee and the Revenue to raise all contentions during the proceedings.
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