2010 (3) TMI 387 - AT - Service Tax

Natural Justice-order was reviewed and the show cause notice was issued proposing imposition of penalty under Section 76 and 78 of the Finance Act, 1994 for non-payment of service tax and suppression of the value of taxable services with intent to evade payment of tax. Assessee was not heard before passing the order .Held that- matter remanded to Commissioner for fresh decision.

Summary

Issues:
Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994 without following principles of natural justice.

Analysis:
The judgment pertains to an appeal against the imposition of penalties under Sections 76 and 78 of the Finance Act, 1994 by the Commissioner. The Assistant Commissioner had initially confirmed service tax demand, interest, and imposed a penalty under Section 77, but had dropped penalties under Sections 76 and 78. Subsequently, the Commissioner, acting as a revisional authority, imposed penalties under both Sections 76 and 78. The appeal was filed challenging this decision.

During the hearing, it was argued that the Revision Order of the Commissioner violated the principles of natural justice. The appellant contended that they had requested an adjournment due to personal reasons, which was received by the Commissioner's office on the day of the hearing. However, the Commissioner did not consider this adjournment request in the order and proceeded with the decision based solely on available records, without giving the appellant an opportunity to present their case.

The Vice-President of the Appellate Tribunal found merit in the appellant's argument regarding the violation of natural justice principles. It was noted that the appellant was not given a fair chance to be heard before the passing of the impugned order. Consequently, the Vice-President set aside the Commissioner's decision and remitted the case for a fresh decision. The Commissioner was directed to provide the appellant with a reasonable opportunity to present their defense before passing fresh orders.

In conclusion, the appeal was allowed by way of remand, emphasizing the importance of adhering to the principles of natural justice in administrative proceedings. The judgment highlights the significance of providing parties with a fair hearing and the opportunity to present their case before making decisions that may have significant consequences.