2021 (4) TMI 514 - AT - Central Excise

Refund of input tax credit - input service or not - consent fees paid to Tamil Nadu Pollution Control Board (TNPCB) under reverse charge mechanism - requirement of issuance of SCN u/s 11B of CEA - HELD THAT - The Order-in-Original has been passed undoubtedly without the issuance of Show Cause Notice. The Commissioner (Appeals) in the impugned Order has also observed that one Shri P. Veera Kumar appeared before the Adjudicating Authority, but however, both the authorities below are silent as to whether the said person, who is alleged to have been heard, was well-versed with the law and the change in law and whether the said person was authorized by the appellant-company to argue before the authorities. It is the basic tenet of our Constitution that justice should not only be done, but should manifestly and undoubtedly be seen to be done . The above fundamental principle has to be followed along with the principles of audi alteram partem and any Order which creates a doubt as to the manner in which it was passed, has to be held as having passed without adhering to the principles. The fundamental principles of law are at stake and the Orders have been passed without affording proper and reasonable opportunities to the appellant - Appeal allowed by way of remand.

Summary

Issues:
Refund claim rejection, Input Service Tax credit, Central Goods and Services Tax Act, Show Cause Notice requirement, Legal infirmity in Order-in-Original, Principles of natural justice.

Refund Claim Rejection:
The appellant filed a refund claim for input Service Tax credit paid on consent fees to the Tamil Nadu Pollution Control Board. The appellant argued that post the introduction of the Central Goods and Services Tax Act, they were unable to take credit for the input Service Tax, leading to the refund claim.

Show Cause Notice Requirement:
The appellant contended that the Adjudicating Authority did not issue a Show Cause Notice, which is a legal requirement. The appellant argued that the absence of a Show Cause Notice created legal infirmity in the Order-in-Original and violated the principles of natural justice.

Legal Infirmity in Order-in-Original:
The appellant's representative was heard without proper authorization, and it was unclear if the representative had the necessary knowledge of the law and the change in law. The absence of clarity on the representative's authority and expertise raised doubts about the fairness of the proceedings.

Principles of Natural Justice:
The Tribunal emphasized the importance of adhering to the principles of natural justice, specifically the audi alteram partem rule. The Tribunal held that justice must not only be done but must also be seen to be done. Any doubt regarding the fairness of the proceedings calls into question the validity of the orders passed.

In the judgment, the Tribunal set aside the impugned order and remanded the matter to the Adjudicating Authority. The Tribunal directed the Adjudicating Authority to pass a fresh order, ensuring that the principles of natural justice, especially the right to be heard, are followed diligently in light of the change in law. The appeal was allowed by way of remand, emphasizing the importance of upholding fundamental legal principles in decision-making processes.