Service of Assessment order by hand delivery to kitchen boy of assessee company is bad service – SC

Brief of the case:

• The Hon’ble Supreme Court in the case of Saral Wire Craft P. Ltd. held that where the law provided a manner of doing certain thing then the same to be done in that manner only. The execution deviating the prescribed manner is of no cure.
• Thus, service of order by hand where the prescribed manner is registered post under acknowledgment due that too to kitchen boy is no service at all on the assessee or its authorized agent.

Brief facts of the case:

• The adjudicating officer passed an order demanding a duty of Rs. 3,45,629/- on the ground of denial of exemption to assessee. The order was passed after a period of eight months from the date of issue of show cause notice.
• The order so passed was served on the Mr. Sanjay, kitchen boy of the assessee company who affixed the stamp of company as an acknowledgment of hand delivery by the department.
• The assessee came to the know about such service only when the department initiated recovery proceedings and by that the time of filling appeal with Commissioner (Appeals) already got elapsed.
• The assessee challenged such service on ground that the same was not on authorized person.

But upto High court it did not get any relief.

Contention of the Assessee:

• Sec 37C (a) require the order to be served upon sending by registered post acknowledgment due to the assessee or its authorized agent.
• Therefore, the service by hand delivery that too to the kitchen boy is no service.
  

Contention of the Revenue:

The revenue did not present any fresh argument and supported the order of High court that the order was served upon the company by hand delivery and mere fact that the same could not reach to the management won’t render the service bad.

Held by Hon’ble Supreme Court:

• Sec 37(a) of the Central Excise Act, 1944 states that any decision, order, summons or notice may either be sent by registered post with acknowledgement due to the person for whom it is intended or his authorized agent. This mode of service to be resorted to before any other mode prescribed in sub section (b) or (c).
• In the present case the department has served the order by hand delivery & getting acknowledged from Shri Sanjay (kitchen boy of assessee company) and failed to dispatch the Order to the assessee company by registered post with acknowledgment due.
• The court relied on its own decision in the case of Babu Verghese vs. Bar Council of Kerala (1999) wherein it held that it is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner only.
• The Inspector serving the copy of order should have known the requirements of the law and, therefore, should have insisted on an acknowledgement either by the assessee or by its authorized agent. The function of service should be performed to ensure not only that assessee has knowledge thereof but also to enable him to initiate any permissible action.
• Thus, the service of adjudication order on kitchen boy who is not even a middle level officer and certainly not an authorized agent of the assessee is a bad service.