2022 (12) TMI 1149 - HC - Service Tax

Violation of the principles of natural justice - service of SCN - challenge has been made on the ground that the show cause notice issued preceding the Order-in-Original as well as the notice for personal hearing, were not served upon the petitioner - HELD THAT - There is no finding recorded by the first respondent that show cause notice was served on the petitioner or that the four letters intimating virtual personal hearing were served upon the petitioner. Mere issuance of show cause notice or letters of personal hearing to an assessee is not adequate. Assessing Officer is required to record a finding that notices were issued and served upon the assessee but despite service of notice the assessee did not come forward to contest the proceeding. It is thereafter that the Assessing Officer may proceed exparte. Such a finding is conspicuous by its absence in the impugned order. Matter remanded back to the first respondent for a fresh decision. Since a copy of the show cause notice dated 24.12.2020 is now available, petitioner may submit its reply within 15 days from today - petition allowed by way of remand.

Summary

Issues:
Quashing of Order-in-Original for service tax demand, violation of principles of natural justice, dispute over service of show cause notice, exparte proceedings without proper findings.

Analysis:

1. Quashing of Order-in-Original: The petitioner sought to quash the Order-in-Original dated 30.03.2022, which confirmed a service tax demand of Rs.37,83,522.00 for the period 2014-2018, along with penalties and interest. The challenge was based on the alleged non-service of the show cause notice and the notice for personal hearing, leading to a violation of natural justice principles.

2. Violation of Principles of Natural Justice: The petitioner contended that the show cause notice and personal hearing notice were not served upon them, raising concerns about procedural fairness and adherence to natural justice principles. The lack of proper service of such crucial documents was a key ground for challenging the Order-in-Original.

3. Dispute over Service of Show Cause Notice: A dispute arose regarding the service of the show cause notice, with the petitioner denying receipt of the notice dated 24.12.2020. The respondent's counsel claimed that the notice was served on the petitioner's wife, leading to conflicting assertions about the actual service of the notice.

4. Exparte Proceedings without Proper Findings: The Order-in-Original indicated that the petitioner did not respond to the show cause notice or the letters for virtual personal hearing. However, the Court noted the absence of specific findings by the first respondent regarding the service of notices and the petitioner's non-participation. The Court emphasized that a clear finding on the service of notices is essential before proceeding exparte.

In the judgment, the Court found that there was no explicit finding by the first respondent regarding the service of notices to the petitioner, highlighting the necessity for such findings before conducting exparte proceedings. Consequently, the impugned Order-in-Original was set aside, and the matter was remanded back to the first respondent for a fresh decision. The petitioner was directed to submit a reply within 15 days, and the first respondent was instructed to make a fresh decision after providing a proper opportunity for a hearing. The writ petition was allowed, with miscellaneous applications pending to stand closed, and no costs were awarded in the matter.