2024 (6) TMI 115 - HC - GST

Time limitation - Challenge to adjudication order u/s 78 of Finance Act, 1994 read with Section 174 of CGST Act, 2017 - HELD THAT - Undoubtedly, Section 33A of the Central Excise Act, 1994 seeks to limit the adjournment that may be granted to a noticeee facing adjudication proceedings, to three dates. Thus, the mandate of the Act exists to conclude the adjudication proceedings expeditiously. Once the legislature contemplates the limits the total adjournments to three dates, it does not contemplate denial of opportunity of hearing. Rather, it seeks to regulate and thereby restrict the number of total adjournments with the apparent intent to allow the adjudication proceedings to conclude in a time bound manner. In the course of adjudication proceedings, number of dates may be fixed. There is no prescription of law to restrict the total number of dates fixed in an adjudication proceeding, to any number. Also, there is no other prescription of time other than the general limitation of five years. Therefore, it is possible that in the course of adjudication proceedings, adjournment may or may not be sought at any particular date fixed. That event would remain case/circumstance specific. Fixing three successive dates within a period of one week was not a desirable course to be adopted as it does indicate a preconceived notion with the adjudicating authority qua the opportunity of adjournment that may be allowed. In any case the adjudicating authority had to pass specific orders to grant adjournment on each date fixed in the proceeding, if such adjournment was sought. It is at that stage that another date may have been fixed - In any case the adjudicating authority did not communicate to the petitioner the order allowing the adjournment sought/deemed to have been sought and allowed on any particular date. No useful purpose may be served in relegating the petitioner to the forum of the alternative remedy as his right of hearing has been seriously impaired. At the same time, in face of original show cause notice dated 19.10.2021 having been served on the petitioner and there being no denial as to that, the petitioner must be put to terms for the relief being claimed by him - Petition disposed off.

Summary

Issues involved: Challenge to adjudication order u/s 78 of Finance Act, 1994 read with Section 174 of CGST Act, 2017; Violation of rules of natural justice in adjudication proceedings.

Adjudication Order Challenge:
The petitioner challenged the adjudication order dated 23.3.2023, which imposed tax demand, penalties u/s 78 of Finance Act, 1994, and CGST Act, 2017. The petitioner claimed the order was served in March 2024, while the revenue authorities stated that notices were dispatched through e-mail and speed post to the petitioner's known address. The petitioner failed to attend personal hearings, leading to penalties. The petitioner argued that fixing three successive hearing dates within a week violated natural justice, citing a Gujarat High Court decision. The court agreed that limiting adjournments to three dates does not deny the right to a hearing but regulates the process to conclude proceedings promptly.

Violation of Natural Justice:
The court concurred with the Gujarat High Court's view that fixing three hearing dates at once, without granting adjournments as per law, breached natural justice principles. The adjudicating authority failed to pass orders on adjournment requests, leading to confusion and denial of proper hearing opportunities. The authority's actions indicated a preconceived notion about adjournments, and the petitioner was not informed about the proceedings adequately. As the petitioner's right to a fair hearing was compromised, the court set aside the adjudication order, requiring a deposit for further proceedings within a specified timeline. The petitioner was directed to respond to the order and appear for a hearing within three months for a prompt resolution.