Anil Lingappa Palle Vs Commissioner of Central Excise & Service Tax (CESTAT Mumbai)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, allowed the appeal filed by the appellant against the Order-in-Appeal dated 31.01.2025, which had partly modified the Order-in-Original by reducing the service tax demand to ₹1,52,243 along with equal penalty and interest on the re-quantified demand.
The appellant raised a preliminary objection that the show cause notice dated 28.12.2020, forming the basis of the entire proceedings, had never been served upon him. According to the appellant, he became aware of the show cause notice only after receiving the ex parte Order-in-Original on 05.07.2024. It was contended that non-service of the show cause notice violated the principles of natural justice and Section 73 of the Finance Act, 1994, rendering the proceedings unsustainable. The appellant further submitted that participation in appellate proceedings could not cure the foundational defect arising from non-service of the notice.
The Tribunal examined the record and observed that service of a show cause notice is the foundation of adjudication proceedings under Section 73 of the Finance Act, 1994. It held that a notice requiring a person to explain why tax, interest and penalty should not be recovered must be served in the manner prescribed by law. Without such service, the noticee is deprived of the statutory opportunity to file a reply, produce evidence, contest the allegations and avail a personal hearing, resulting in a violation of the principles of natural justice.
