2009 (11) TMI 602 - AT - Service Tax

Demand with penalty - principle of natural justice - It is well settled principle of law that merely because principle of natural justice was not complied with, that itself cannot be a ground to grant whole exemption from the liability to pay duty by the assessee - the impugned order cannot be sustained and is liable to be set aside and the matter is remanded to the adjudicating authority with the direction to furnish the required copies of the documents to the assessee and give him opportunity of being heard in the matter and thereafter pass an appropriate order afresh in accordance with the provisions of law - matter remanded back.

Summary

Issues: Failure to comply with natural justice principle in adjudication proceedings.

Upon hearing the appeal arising from the order passed by the Commissioner (Appeals), Ludhiana, the Appellate Tribunal noted that the Commissioner (Appeals) had set aside the order of the adjudicating authority due to the failure to provide copies of relied-upon documents to the respondent assessee, thereby violating the basic principle of natural justice. The Joint Commissioner, Central Excise, Ludhiana had earlier confirmed a demand of Rs. 5,16,587/- along with interest and imposed penalties against the respondent company's Director and two other entities. The impugned order set aside the said order on the grounds of non-compliance with natural justice principles. The Tribunal emphasized that the failure to provide necessary documents to the assessee does not automatically exempt them from duty liability. However, it recognized that the absence of document copies can be a valid ground for challenging the adjudication order, necessitating the appellate authority to rectify the deficiency by providing the documents to the appellant and allowing them to present their case before making a decision on the merits.

In light of the above, the Tribunal concluded that the impugned order could not be sustained and needed to be set aside. The matter was remanded to the adjudicating authority with clear directions to furnish the required document copies to the assessee, grant them an opportunity to be heard, and subsequently issue a fresh order in compliance with the legal provisions. The appeal succeeded on a limited ground, leading to the remand of the case to the adjudicating authority for further proceedings. The appeal was disposed of accordingly, emphasizing the importance of adhering to principles of natural justice in adjudication proceedings.