Case Law Details
Sai Construction Vs Assistant Commissioner of Central Tax (Telangana High Court)
HC held that Mere issuance of show cause notice or letters of personal hearing to an assessee is not adequate. Assessing Officer is required to record a finding that notices were issued and served upon the assessee but despite service of notice the assessee did not come forward to contest the proceeding. It is thereafter that the Assessing Officer may proceed exparte. Such a finding is conspicuous by its absence in the impugned order.
That being the position, we set aside the impugned Order-in-Original dated 30.03.2022 and remand the matter back to the first respondent for a fresh decision.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr. K.Durga Prasad, learned counsel for the petitioner; Mr. B.Narasimha Sarma, learned counsel for respondent Nos.1, 2 & 3; and Mr. G.Praveen Kumar, learned Deputy Solicitor General of India for Union of India representing respondent No.4.
2. By filing this petition under Article 226 of the Constitution of India, petitioner seeks quashing of Order-in-Original, dated 30.03.2022, passed by the first respondent.
3. By the aforesaid order, first respondent has confirmed the demand of service tax to the tune of Rs.37,83,522.00 for the period 2014 – 2018 in terms of proviso to Section 73(2) of the Finance Act, 1994 r/w Section 174 of the Central Goods and Services Tax Act, 2017 (briefly ‘the CGST Act’ hereinafter) besides imposing penalty of equivalent amount under Section 78 of the Finance Act, 1994. That apart first respondent has also levied interest etc., on the petitioner.
4. Challenge has been made on the ground that the show cause notice issued preceding the Order-in-Original as well as the notice for personal hearing, were not served upon the petitioner. Therefore, there is violation of the principles of natural justice.
5. On 29.10.2022, Mr. B.Narsimha Sarma, learned counsel for respondent Nos.1, 2 & 3 sought for time to obtain instructions. Yesterday i.e., on 07.11.2022, when the matter was called upon for hearing, Mr. B.Narsimha Sarma, learned counsel produced before us a copy of show cause notice dated 24.12.2020, wherefrom he submitted that the said show cause notice was received by one Srivani D/o. C.Raja Kishan Rao i.e., the petitioner.
6. Taking the prima facie view that show cause notice was served upon the petitioner, we directed listing of this case today under the caption ‘for dismissal’.
7. In the hearing today, learned counsel for the petitioner submits that name of petitioner’s daughter is Sowmya and not Srivani. He submits on instructions that petitioner did not receive show cause notice dated 24.12.2020. However, Mr. B.Narsimha Sarma, learned counsel for the respondent Nos.1, 2 & 3 submits that Srivani is the name of petitioner’s wife. Thus, there appears to be a dispute as to service of show cause notice upon the petitioner.
8. The Order-in-Original records in paragraph 9 that in response to the show cause notice, assessee (petitioner herein) neither submitted any written reply nor documents. In paragraph 12 of the impugned order, it is stated that despite despatch of four letters to the petitioner for virtual personal hearing, petitioner neither responded nor produced any documents. Taking the view that there was no defence on behalf of the petitioner, first respondent proceeded with the matter exparte and passed the impugned order.
9. From the above, we find that there is no finding recorded by the first respondent that show cause notice was served on the petitioner or that the four letters intimating virtual personal hearing were served upon the petitioner. Mere issuance of show cause notice or letters of personal hearing to an assessee is not adequate. Assessing Officer is required to record a finding that notices were issued and served upon the assessee but despite service of notice the assessee did not come forward to contest the proceeding. It is thereafter that the Assessing Officer may proceed exparte. Such a finding is conspicuous by its absence in the impugned order.
10. That being the position, we set aside the impugned Order-in-Original dated 30.03.2022 and remand the matter back to the first respondent for a fresh decision. Since a copy of the show cause notice dated 24.12.2020 is now available, petitioner may submit its reply within 15 days from today. On submission of such reply, first respondent shall take a fresh decision in accordance with law after giving due opportunity of hearing to the petitioner.
11. Writ petition is accordingly allowed.
Miscellaneous applications pending, if any, shall stand closed. However, there shall be no order as to costs.
