2023 (7) TMI 1239 - HC - Service Tax

Principles of natural justice - SCN was not served upon the petitioner and without giving an opportunity of hearing, the Adjudicating Officer had passed the order and the copy of the order was not served to the petitioner - Levy of penalty u/s 78 of the Finance Act, 1994 - HELD THAT - In the case of SARAL WIRE CRAFT PVT. LTD. VERSUS COMMISSIONER CUSTOMS, CENTRAL EXCISE AND SERVICE TAX OTHERS 2015 (7) TMI 894 - SUPREME COURT , the Hon ble Supreme Court held that an order must be tendered on the person concerned or his authorised agent, in other words, on no other person, to ensure efficaciousness. In the case of M/s RU s Marketing and Creative Unit 2018 (1) TMI 220 - MADRAS HIGH COURT , the Hon ble Division Bench of Madras High Court held that it is clear that after the word sending it by registered post with acknowledgement due the words i.e. or by speed post with proof of delivery has been inserted. The aforesaid amendment itself would clearly shows that the amendment sought to be made is not only clarificatory in nature but also purely procedural for the purpose of communication of decisions/orders/summons to the parties. It is the basic Principle of Law long settled that if the manner of doing a particular is prescribed under any statute, the must be done in that manner or not at all. Section 27 of the General Clause Act will not come in aid to the respondent. The respondents failed to show any material that the impugned order dated March 6, 2018 was served upon the petitioner - respondents have already realised the amount from the petitioner and the same is lying with the respondents, therefore, to safeguard the interest of revenue at this stage, it is not proper to direct the amount to be returned to the petitioner as this Court has not gone into the merit of the matter. Matter remanded back to the Adjudicating Authority to decide the matter of fresh by allowing the petitioner to file reply to show cause and after giving an opportunity of hearing to the petitioner, the Adjudicating Authority shall dispose of the said matter within a period of eight weeks from the date of receipt of this order - petition allowed by way of remand.

Summary

Issues Involved:
1. Challenge to the letters and order imposing penalty under Section 78 of the Finance Act, 1994.
2. Service tax liability and registration compliance.
3. Alleged procedural lapses in issuing show cause notice and opportunity of hearing.
4. Validity of the adjudicating authority's order and its service.

Summary:

1. Challenge to the Letters and Order Imposing Penalty:
The petitioner challenged the letter dated August 7, 2020, letter dated September 16, 2020, and the Order dated March 6, 2018, issued by the Superintendent, CGST, and Central Excise, imposing a penalty of Rs. 7,58,764/- under Section 78 of the Finance Act, 1994.

2. Service Tax Liability and Registration Compliance:
The petitioner, engaged in providing vehicles on hire since 2009 (with respondent no. 5) and 2012 (with respondent no. 4), received a letter on August 11, 2015, for verification of Service Tax liability. The petitioner obtained Service Tax registration on September 10, 2015, after realizing that "Rent-a-Cab" services were taxable.

3. Alleged Procedural Lapses:
The petitioner argued that no show cause notice was issued, and no opportunity for a hearing was provided before the demand notices and penalties were imposed. The petitioner claimed non-receipt of the original order dated March 6, 2018, and alleged procedural violations.

4. Validity of the Adjudicating Authority's Order and Its Service:
The respondents contended that a show cause notice was issued on February 5, 2016, and the petitioner was given multiple opportunities for a personal hearing, which the petitioner did not attend. The order dated March 6, 2018, was sent by speed post on March 14, 2018. However, the postal authorities could not confirm delivery due to non-availability of records.

Court's Findings:
- The court found that the petitioner had received the show cause notice and requested rescheduling of hearing dates, contradicting the petitioner's claim of non-receipt.
- The court noted the failure of the respondents to provide proof of delivery of the order dated March 6, 2018, as required under Section 37C of the Central Excise Act, 1944.
- The court emphasized that procedural compliance is mandatory and that the respondents failed to demonstrate proper service of the order.

Conclusion:
The impugned order dated March 6, 2018, was set aside, and the matter was remanded to the Adjudicating Authority for a fresh decision, allowing the petitioner to file a reply to the show cause notice and ensuring an opportunity for a hearing. The court directed the petitioner to appear before the authority and stated that any excess amount realized should be returned if found in favor of the petitioner. The writ application was allowed, and the interim application was disposed of.