2023 (3) TMI 893 - HC - Service Tax

Violation of principles of natural justice - It is contended by learned counsel for the petitioner that after 18.11.2021, petitioner did not receive any intimation from the 1st respondent including notice for personal hearing - non-payment of service tax by the petitioner on the taxable services provided for the period 2016-17 and 2017-18 (upto June, 2017) - HELD THAT - Admittedly, insofar personal hearing is concerned, notice was not served upon the petitioner. Even if we accept the contention of learned counsel for respondent No.1, then also we fail to understand as to why the notice for personal hearing was sent by registered post when the show cause notice was sent through e-mail - Be that as it may, for failure of the 1st respondent to provide an opportunity of personal hearing to the petitioner, we are of the view that the impugned order stands vitiated. However, now that petitioner is aware of the allegations made by the 1st respondent, the impugned order may be treated as the show cause notice. Order-in-original dated 02.11.2022 passed by the 1st respondent is hereby set aside - Though the order-in-original dated 02.11.2022, is set aside, the same shall now be construed to be the show cause notice - petition disposed off.

Summary

Issues involved:
Assailing the legality and validity of the order-in-original confirming demand, interest, and penalty under the Finance Act, 1994 due to alleged non-payment of service tax by the petitioner.

Details of the Judgment:

Issue 1: Violation of Principles of Natural Justice
The petitioner, a special class contractor providing taxable services, received a show cause notice for non-payment of service tax for the period 2016-17 and 2017-18. The petitioner claimed that after seeking time to reply, no further communication was received, including a notice for personal hearing. The impugned order was challenged on the grounds of violating the principles of natural justice.

Issue 2: Failure to Provide Opportunity of Personal Hearing
The respondent contended that a notice of personal hearing was sent to the petitioner's address as per GST records, but it was returned unserved. The impugned order mentioned that the service provider did not attend the personal hearing and no relevant documents were submitted. The Court noted that even if the notice was sent by registered post, the initial show cause notice was sent via email, raising questions about the inconsistency in communication methods.

Decision and Orders
The Court found that the failure to provide an opportunity for personal hearing vitiated the impugned order. Considering that the petitioner is now aware of the allegations, the impugned order was treated as a show cause notice. The following orders were passed:
1. Setting aside the order-in-original dated 02.11.2022.
2. Treating the set-aside order as the show cause notice for the petitioner to reply within four weeks.
3. Directing respondent No.1 to proceed afresh and pass a fresh order within eight weeks after receiving the reply.
4. Noting that if the petitioner defaults in submitting a reply, the respondent can pass an appropriate order.
The writ petition was disposed of without costs, and any pending miscellaneous applications were closed.

This judgment highlights the importance of adhering to principles of natural justice and providing a fair opportunity for parties to present their case in tax matters under the Finance Act, 1994.