2019 (12) TMI 239 - HC - Service Tax

Principles of Natural Justice - long time gap between the date of order passed and date of personal hearing - demand of service tax - Section 73 of Finance Act - HELD THAT - As it would be evident from the proceedings dated 07.08.2019, personal hearing was held on 15.06.2016 and the impugned order has been passed on 07.08.2018 (more than 20 months i.e., more than 1 years later). In this regard, circular No.1053/2/2017-CX., dated 10.03.2017 issued by the 'Central Board of Excise and Customs, New Delhi' CBEC forming part of Ministry of Finance (Government of India) is of relevance. There is no disputation or disagreement before this Court that this circular is operating. This Court is of the considered view that this is a fit case to remit the matter back to the respondent for redoing after affording an opportunity of personal hearing afresh to the writ petitioner the order assessing service tax after - petition disposed off by way of remand.

Summary

Issues:
1. Validity of the impugned order under Section 73 of Finance Act, 1994.
2. Delay in passing the impugned order after the personal hearing.
3. Application of circular No.1053/2/2017-CX regarding communication of orders and transfer of adjudicating authority.
4. Need for remitting the matter back to the respondent for redoing after affording an opportunity of personal hearing afresh.

Analysis:
1. The main issue in this case revolves around the validity of the impugned order made under Section 73 of the Finance Act, 1994, pertaining to service tax. The petitioner challenged the order dated 26.07.2018, arguing that it was served after a delay of more than 20 months from the personal hearing held on 15.11.2016. The court acknowledged that the impugned order was made under the powers conferred by Section 37A of the Central Excise Act, 1994, as applied to Service Tax by Section 83 of the Finance Act, 1994.

2. The court highlighted the significant delay between the personal hearing and the date of the impugned order, exceeding 20 months. Referring to circular No.1053/2/2017-CX issued by the Central Board of Excise and Customs, the court emphasized the importance of timely communication of orders after personal hearings, with a maximum permissible delay of one month, barring exceptional circumstances. The circular also outlined the protocol for transfer of adjudicating authority, emphasizing the need for the successor to offer a fresh hearing before deciding the case.

3. Considering the substantial delay and the procedural lapses in communication and transfer of adjudicating authority, the court deemed it appropriate to remit the matter back to the respondent for a redo. The court ordered the respondent to offer a fresh personal hearing to the petitioner, consider the objections and materials presented during the hearing, and pass orders afresh. The court directed the respondent to complete this process expeditiously within eight weeks from the date of receipt of the court's order.

4. Ultimately, the court set aside the impugned order dated 26.07.2018 solely on the ground of delay in issuing the order after the personal hearing, without expressing any opinion on the merits of the case. The court emphasized the importance of procedural fairness and timely resolution in matters concerning service tax, ensuring that parties are afforded a reasonable opportunity to present their case and respond to the allegations against them.