Introduction: The case of Bright Communications versus the Joint Commissioner of Central Tax and Central Excise, heard by the Kerala High Court, revolves around the assessment of service tax liabilities for the period from 2012-13 to 2016-17. The petitioner, Bright Communications, challenged the order passed by the 1st respondent, disputing the imposition of service tax and penalty.
1. Assessment of Service Tax Liability: The petitioner, engaged in providing advertising agency services, faced an assessment of service tax liability amounting to Rs. 64,52,336/- and Rs. 1,335/- for remitting advertising agency services and legal consultancy services under the reverse charge mechanism. This assessment was conducted for the period spanning from 2012-13 to 2016-17.
2. Show Cause Notice and Lack of Response: The Department issued a detailed Show Cause Notice to the petitioner in December 2018, seeking explanations regarding the non-payment or short payment of service tax. However, the petitioner failed to respond or produce the required documents during the audit process.
3. Opportunities of Hearing: Contrary to the petitioner’s claim of not being afforded an opportunity of hearing, records indicate that the petitioner was granted multiple opportunities for personal hearings. Despite these opportunities, the petitioner either did not respond or sought adjournment, delaying the finalization of the order.
4. Principles of Natural Justice: The Court noted that the petitioner had been granted ample opportunities for hearing, with no valid reasons provided for non-attendance. Therefore, the Court concluded that there was no violation of the principles of natural justice. The authority cannot indefinitely wait for the petitioner’s appearance for personal hearing before the authority concerned. Additionally, the Court highlighted the availability of the appellate remedy for the petitioner to contest the order.
Conclusion: The Kerala High Court, after careful consideration, dismissed the writ petition filed by Bright Communications. Upholding the order passed by the 1st respondent, the Court found no substance in the petitioner’s claim of violation of natural justice. This case underscores the importance of compliance with procedural requirements and the availability of appellate remedies in tax matters.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
1. The present writ petition has been filed impugning Exhibit P-5 order dated 06.11.2020 passed by the 1st respondent under the provisions of Finance Act, 1994 (‘the Act’ for short) assessing the service tax liability of 64,52,336/- and Rs. 1,335/- (CESS payable by the petitioner on remitting the advertising agency service for the period from 2012-13 to 2016-17 and Legal Consultancy Services as recipient of service, under the reverse charge mechanism for period from 2014-15 to 2016-17 in terms of the proviso to Section 73(1) of the Act as amended from time to time.
2. The petitioner is an assessee for service tax under the category of ‘Advertising Agency Service’. The petitioner are providing services of ‘Advertising Agency’, ‘services related to making/releasing of advertisements in Print Media, Visual Media etc.’ and other advertisement and related services like ‘wall painting’, ‘editing’, ‘dubbing’, ‘theatre advertisement’, ‘graphic advertisement’, etc.
3. During the course of audit of the records of the petitioner by the Department for the financial year 2012-13 to 2016-17, non- payment/short payment of service tax was noticed due to non- inclusion of certain amounts falling under the heads ‘BIZ-show charges’. The petitioner was issued detailed Show Cause Notice in Exhibit P-1 on 12.2018 asking the petitioner to show cause as to why the amounts mentioned in the Show Cause Notice should not be confirmed. The petitioner did not file any reply to the said Show Cause Notice nor produced the documents required from him for examination. As the petitioner did not file any reply neither he produced any documents as directed by Exhibit P-1 Show Cause Notice, the order in original has been passed as in Exhibit P-5 imposing the demand of service tax amounting to Rs. 64,52,336/- and Rs. 1,335/- along with penalty and interest.
4. The learned Counsel for the petitioner submits that the petitioner was not given any opportunity of hearing. However, the record would suggest that the petitioner was issued a notice dated 09.10.2020 for personal hearing. Earlier also the petitioner was issued notices on 18.12.2020, 03.09.2020, 11.09.2020 and last notice was issued on 09.10.2020 requiring the petitioner for personal hearing on 15.10.2020 at 3.00 pm. On the last date when the hearing was fixed, it appears that the petitioner sent some communication to the Assistant Commissioner seeking adjournment of three weeks. There is no definite record of the said request having been received in the Office. However, the learned Counsel for the petitioner submits that there is seal of the Office of the Assistant Commissioner with date on the said request.
5. The petitioner has been granted four opportunities of personal In respect of the three opportunities earlier granted there is not even request for adjournment. It is only on the fourth opportunity i.e. 09.10.2020 fixing the date for hearing on 16.10.2020, a letter was addressed. Admittedly, the petitioner did not file any reply to the said Show Cause Notice. The whole effort of the petitioner was to postpone the finalisation of the order. The authority cannot indefinitely wait for the petitioner’s appearance for personal hearing before the authority concerned.
6. The petitioner himself has not availed the three earlier opportunities of hearing and with respect to the fourth opportunity, the petitioner has filed adjournment, this Court is of the considered view that there has been no violation of the principles of natural justice as alleged by. Moreover, there is a remedy of appeal and this ground also can be taken before the appellate authority. There is no bar under the statue that the ground of violation of principles of natural justice cannot be taken before the appellate authority and, it can be taken only before this Court. The impugned order is well reasoned order. Therefore, this Court would not like to interfere with the well reasoned order. I do not find any substance in this writ petition and, it is hereby dismissed.