2023 (11) TMI 256 - AT - Service Tax

Principles of natural justice - denial of opportunity of hearing - whether the Principal Commissioner was justified in passing the ex-parte order on 11.08.2015? - HELD THAT - A perusal of the order passed by the Principal Commissioner would indicate that opportunity of personal hearing was granted to the appellant on 11.12.2014, 24.04.2015 and 11.02.2015 (should be 11.05.2015) and the last opportunity was provided on 15.06.2016. The facts stated leave no manner of doubt that an opportunity of hearing was denied to the appellant. The department has not contested the endorsement made by the Principal Commissioner on the application dated 06.07.2015 that the matter was being adjourned to 10.08.2015. The appellant did appear before the Principal Commissioner on 10.08.2015, but was informed that the next date would be communicated. What also needs to be noted is that the appellant, after it came to know of the order dated 11.08.2015 passed by the Principal Commissioner, immediately moved an application for rectification of mistake bringing to the notice of the Principal Commissioner the correct facts. Rectification of mistake - HELD THAT - The application filed by the appellant for rectification of mistake should have been decided on merits and should not have been disposed of merely by stating that the Officer who had passed the order had, in the meantime, been transferred even before the filing of the application. The power given under section 74(1) of the Finance Act cannot be rendered infructuous if the Officer who passed the order is transferred. What has to be decided is whether there is a mistake apparent from the record. In a case where the Officer has not been transferred, of course it should be the same Officer who should decide the application, but in a case where the Officer has been transferred, the Officer who has been posted would have the jurisdiction to pass the order - It is, therefore, evident from the facts of the present case that an opportunity of personal hearing was denied to the appellant as even after adjourning the matter from 06.07.2015 to 10.08.2015 the Principal Commissioner did not hear the appellant nor did he examine the documents filed by the appellant. Tt is considered appropriate to remit the matter to the adjudicating authority to pass a fresh order on the basis of the evidence submitted by the appellant and after granting an opportunity of personal hearing to the appellant. For this purpose the appellant shall appear before the adjudicating authority on November 20, 2023, on which date the adjudicating officer may either hear the matter or fix another date for personal hearing - Appeal allowed.

Summary

Issues Involved:

1. Justification of the ex-parte order dated 11.08.2015 passed by the Principal Commissioner.
2. Rejection of the application for rectification of error under section 74 of the Finance Act.

Issue 1: Justification of the Ex-Parte Order

The appellant contended that the ex-parte order dated 11.08.2015 was passed without providing an opportunity for a hearing, thereby violating the principles of natural justice. The appellant had submitted an application on 06.07.2015 seeking an adjournment to file documents, which was endorsed by the Principal Commissioner, adjourning the matter to 10.08.2015. On 10.08.2015, the appellant submitted the relevant documents and requested another hearing date. Despite this, the Principal Commissioner passed the ex-parte order on 11.08.2015. The Tribunal found that the appellant was denied an opportunity of hearing as the matter was adjourned to 10.08.2015, and the appellant appeared but was informed that the next date would be communicated. The Tribunal concluded that the appellant was denied a fair opportunity to present their case, and thus, the ex-parte order was unjustified.

Issue 2: Rejection of the Application for Rectification of Error

The appellant filed an application for rectification of mistake under section 74 of the Finance Act, which was rejected on the grounds that the Principal Commissioner who passed the original order had been transferred. The Tribunal held that the application for rectification should have been decided on merits and not merely rejected due to the transfer of the officer. Section 74(1) of the Finance Act allows for rectification of any mistake apparent from the record by the Central Excise Officer who passed the order or by the officer currently posted in case of a transfer. The Tribunal emphasized that the power under section 74(1) should not be rendered infructuous due to the officer's transfer.

Conclusion:

The Tribunal set aside the orders dated 11.08.2015 and 20.01.2016, remitting the matter back to the adjudicating authority to pass a fresh order after granting an opportunity for a personal hearing to the appellant. The appellant is directed to appear before the adjudicating authority on November 20, 2023, for a hearing or to fix another date for the same.