2023 (6) TMI 373 - AT - Service Tax

Service of SCN - SCN not sent at proper address - Show Cause Notice also clearly mentioned that this was the address in which the appellant was previously residing - adjudication order has been passed exparte and that the Show Cause Notice has not been served upon the appellant - Principles of natural justice - HELD THAT - The department was fully aware that the appellant is not residing and not available in the address at No. 2/126-E, Dindigul Road, Ramjee Nagar, Trichy 620 009. Even then the Show Cause Notice has been issued to the said address by the department. After the Show Cause Notice was returned as unclaimed, the department has not opted to issue the Show Cause Notice to the proper address and instead was followed the procedure under sec. 37C(b) of the Central Excise Act r/w sec. 83 of the Finance Act, 1994 to paste and affix the Show Cause Notice at the Trichy address. The appellant has not been served the intimations for personal hearing and the order is seen to have passed exparte. The Show Cause Notice was not issued to the appellant and also that the order has been passed exparte. Clear violation of principles of natural justice is established - the demand cannot sustain and requires to be set aside - Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are non-payment of service tax under 'cleaning services', violation of principles of natural justice in issuance of Show Cause Notice, and exparte adjudication leading to demand confirmation, interest imposition, and penalty.

Non-Payment of Service Tax:
The Appellate Tribunal CESTAT Chennai dealt with a case where the appellant had provided services to M/s. Ordnance Factory, Tiruchirappalli for the years 2007-08, 2008-09, and 2009-10 without discharging the service tax under 'cleaning services'. Despite multiple letters from the Superintendent of Central Excise directing the appellant to obtain service tax registration, make payments, and file returns, the appellant did not respond. The Order in Original confirmed the demand, interest, and penalty. The appellant contended that the order violated principles of natural justice as the Show Cause Notice was not properly served.

Violation of Principles of Natural Justice:
The appellant argued that the Show Cause Notice was sent to an address in Trichy where the appellant no longer resided. The Notice was returned as 'not claimed', and subsequent attempts to serve it were also unsuccessful. The appellant claimed that the Notice was not received, and no opportunity for a personal hearing was granted. The department defended its actions, stating that the Notice was affixed at the rented premises occupied by the appellant as per legal procedures. The Tribunal found that the Notice was not properly served, leading to an exparte order. It held that there was a clear violation of natural justice, setting aside the demand and allowing the appeal.

Exparte Adjudication and Relief Granted:
The Tribunal noted discrepancies between the appellant's actual address and the one used for the Show Cause Notice. Despite the department's awareness of the appellant's correct address, the Notice was sent to the outdated address. As a result, the appellant was not properly served, and the order was passed exparte. The Tribunal concluded that the demand could not be sustained due to the violation of natural justice and set it aside, allowing the appeal with any consequential relief as per the law.