2008 (10) TMI 110 - HC - Central Excise

Violation of principle of natural justice - Commissioner (Appeals) not granted opportunity of hearing to petitioner, while deciding the stay application - In the Scheme of a taxing statute, unless expressly or by necessary implication excluded, personal hearing is desirable at the appellate stage, though effect of denial of opportunity differs from case to case impugned order is quashed Commissioner is directed to pass a fresh order after granting opportunity of hearing to the petitioner

Summary

Issues:
Quashing of order dated 30-5-2008 passed by the Commissioner of Customs and Central Excise (Appeals) under Section 35F of the Central Excise Act, 1944.

Analysis:
The petitioner sought the quashing of an order passed by the Commissioner of Customs and Central Excise (Appeals) under Section 35F of the Central Excise Act, 1944. The petitioner contested a show cause notice for levying service tax, and after the adjudicating Authority raised a demand and imposed a penalty, the petitioner filed an appeal along with an application for stay. However, the application for stay was rejected by respondent no. 3 without granting an opportunity of hearing to the petitioner. The respondent directed the deposit of a certain amount as a condition for hearing the appeal. The petitioner argued that the respondent, in deciding the stay application, acted as a quasi-judicial authority and was required to provide an opportunity of hearing. The petitioner relied on a judgment emphasizing the importance of considering relevant factors such as prima facie case, balance of convenience, and irreparable loss before making any direction regarding pre-deposit. Additionally, reference was made to a Supreme Court judgment highlighting the necessity of providing an opportunity of hearing when an order affects a person with civil consequences.

The respondent contended that providing an opportunity of hearing is not always necessary for deciding an appeal. However, the court acknowledged that while the principles of natural justice may not always require personal hearing at the appellate stage, in the scheme of a taxing statute, personal hearing is desirable unless expressly or by necessary implication excluded. The court emphasized the importance of personal hearing at the appellate stage, though the effect of denial of opportunity may vary in different cases. The respondent also argued that the petitioner did not sufficiently plead hardship beyond stating that the deposit would result in undue hardship. The petitioner raised arguments regarding the validity of the tax levy in the application.

The court, without expressing any opinion on the merits, held that respondent no. 3 must grant personal hearing to the petitioner before deciding the issue. Consequently, the petition was allowed, and the impugned order was quashed with liberty given to respondent no. 3 to pass a fresh order after providing an opportunity of hearing to the petitioner. The petitioner was directed to appear for a personal hearing on a specified date, and the petition was disposed of.