Fresh opportunity be granted for personal hearing when SCN was inadvertently sent to old address of Assessee

C. Ekambaram Vs Assistant Commissioner of GST & Central Excise (Madras High Court)

The Hon’ble Madras High Court in C. Ekambaram v. Assistant Commissioner of GST And Central Excise [W.P. No. 12380 Of 2024 dated June 7, 2024], held that fresh opportunity be granted for personal hearing and filing of reply when Show Cause Notice (“the SCN”) was inadvertently sent to old address of the Assessee.

Facts:

C. Ekambaram (“the Petitioner”) filed a writ petition against the Order-in-Original dated October 26, 2022 (“the Impugned Order”) passed by the Revenue department (“the Respondent”) on the ground that the Petitioner be granted an opportunity to contest the demand on merits as the Impugned Order was passed stating that no person was found on the address where SCN was sent as the Petitioner had shifted to new address. Also, it is stated that as the Petitioner was not registered for Service Tax purposes, the SCN was sent to the address as per the data on the Income Tax Portal which was the old address of the Petitioner.

Issue:

Whether fresh opportunity be granted for filing of reply and personal hearing when SCN was inadvertently sent to old address of the Assessee?

Held:

The Hon’ble Madras High Court in the case of W.P. No. 12380 of 2024 allowed the writ petition and held that the Petitioner be granted an opportunity to the Petitioner to contest the tax demand on merit. Hence, the Impugned Order was set aside and the Petitioner was directed to file reply after the receipt of SCN.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

An order in original dated 26.10.2022 is challenged on the ground of breach of principles of natural justice. The petitioner asserts that he is a painting contractor. While he was an Income Tax assessee, he was not registered for service tax purposes. Upon purchasing a house on 07.11.2013, the petitioner shifted from the old premises at No.20/38, Privari Road, Anna Nagar, Chennai 40 to the new premises at No.226, Fort Street, Nehru Nagar, 13^th Main Road, Anna Nagar, Chennai 40. As a consequence, the petitioner asserts that he did not receive either the show cause notice or the impugned order until the recovery notice was received by him in July 2023 at the new address. The present writ petition was filed in these facts and circumstances.

2. By referring to the impugned order, learned counsel points out that it is recorded therein that the notice for personal hearing was returned by the postal authority with the remark “no such person in the address”. On merits, learned counsel submits that the proposal pertains to labour charges which were paid by the petitioner to persons engaged in painting work. Therefore, learned counsel seeks an opportunity to contest the tax demand on merits. On instructions, he agrees to remit a sum of Rs.50,000/- as a condition for remand.

3. Mr. K. Mohanamurali, learned senior standing counsel, accepts notice for the respondents. He points out that even the income tax return of the petitioner for assessment year 2017-18 contains the old address to which the notices were sent. He also points out that the impugned order were issued in October 2022 and that revenue interest should be protected.

4. As contended by learned counsel for the petitioner, the impugned order records expressly that the personal hearing notice was returned with the endorsement “no such person in the address”. The petitioner has placed on record the sale deed for purchase of a house on 07.11.2023. Upon such purchase, the petitioner asserts that he shifted to such address. In these facts and circumstances, it is just and necessary that an opportunity be provided to the petitioner to contest the tax demand on merits, albeit by putting the petitioner on terms.

5. For reasons set out above, the impugned order dated 26.10.2022 is set aside subject to the condition that the petitioner remits a sum of Rs.50,000/- towards the tax demand within a maximum period of three weeks from the date of receipt of a copy of this order. The respondent is directed to serve a copy of the show cause notice on the petitioner within one week from the date of receipt of a copy of this order. Upon receipt thereof, the petitioner is permitted to reply within two weeks from the date of receipt of the show cause notice. Upon receipt of the petitioner’s reply, the respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh assessment order within a period of three months from the date of receipt of the petitioner’s reply.

6. W.P.No.12380 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.Nos.13497 and 13498 of 2024 are closed.

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