Case Law Details
Salcomp Manufacturing India Private Ltd. Vs Commissioner (Madras High Court)
In a recent judgment, the Madras High Court addressed the case of Salcomp Manufacturing India Private Ltd. versus the Commissioner regarding an Order-in-Original dated 30.01.2021 for assessment years 2011-2012 to 2015-2016.
The petitioner, engaged in manufacturing electronic goods from a Special Economic Zone, received a show cause notice in April 2017, which was duly replied to. However, the impugned order issued in January 2021 was allegedly not served to the petitioner. The petitioner only became aware of it upon receiving communication in July 2023. Upon requesting a copy, it was provided in February 2024.
Arguing on behalf of the petitioner, counsel highlighted the violation of Section 73(4B) of the Finance Act, 1994, which mandates determination of service tax liability within a specified timeframe. Since the order wasn’t communicated timely, the petitioner demanded reconsideration in the interest of justice.
Responding to the petition, Mr. Ramesh Kutty, learned Senior Standing Counsel, noted that the impugned order was communicated via speed post in February 2021. He also referenced a favorable judgment by the Telangana and Andhra Pradesh High Court in a similar case.
Examining the Order-in-Original, the court observed that the Special Leave Petition filed against the Telangana and Andhra Pradesh High Court’s decision was dismissed by the Supreme Court. Consequently, the judgment of the High Court was upheld.
Given the circumstances and lack of proof of service of the impugned order, the court quashed the order and remanded the matter for reconsideration, directing the respondent to provide a reasonable opportunity, including a personal hearing, to the petitioner.
In conclusion, the writ petition was disposed of with no costs imposed, thereby granting the petitioner an opportunity to contest the tax demand within a stipulated timeframe.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An Order-in-Original dated 30.01.2021 in respect of assessment years 2011-2012 to 2015-2016 is challenged in this writ petition.
2. The petitioner is engaged in the manufacture of power supplies, electronic goods, chargers for mobile phones and the like. The petitioner operates from a Special Economic Zone. A show cause notice was issued to the petitioner on 18.04.2017 and such show cause notice was replied to on 16.05.2017. On receipt of personal hearing notice in December 2020, the petitioner replied thereto. It appears that the impugned order was issued thereafter in January, 2021. The petitioner asserts that such impugned order was not served on the petitioner and the petitioner was unaware of the same until the petitioner received a communication dated 10.07.2023. Immediately upon receipt thereof, the petitioner requested for a copy of the order by pointing out that such order was not communicated earlier. The order was enclosed thereafter by the respondents along with the communication dated 26.02.2024. The present writ petition was filed in the said facts and circumstances.
4. Learned counsel for the petitioner submits that the same issue arose for consideration in relation to other assessment years. The proceedings relating thereto were decided in favour of the petitioner. Therefore, learned counsel submits that the petitioner has a strong case on merits. Learned counsel further submits that Section 73(4B) of the Finance Act, 1994 requires the Central Excise Officer to determine the service tax liability within a period of 6 months or one year from the date of notice, depending on whether the case falls within the scope of sub-section (1) or the proviso to sub-section (1) or the proviso to sub-section (4), respectively. By pointing out that the show cause notice was issued on 18.04.2017, whereas the impugned order was issued on 30.01.2021, learned counsel submits that the mandatory prescription in the aforesaid provision was flouted. Since the order was not communicated to the petitioner, learned counsel submits that the interest of justice warrants reconsideration.
5. Mr. Ramesh Kutty, learned Senior Standing Counsel, accepts notice for the respondents. By referring to the communication dated 26.02.2024 from the respondents to the petitioner, he points out that the impugned order was communicated by speed post to the petitioner on 03.02.2021. He also points out that the issue arising in the impugned assessment was decided in favour of the petitioner by the Telangana and Andhra Pradesh High Court in GMR Aerospace Engineering Limited V. Union of India, (2019) 1 ALT 633(DB), and that the Hon’ble Supreme Court declined to interfere with such order.
6. On examining the Order-in-Original, it follows from paragraph 4.3.4 thereof that the Special Leave Petition filed by the tax authorities against the order of the Telangana and Andhra Pradesh High Court was dismissed by the Hon’ble Supreme Court in SLP(Civil) Diary No. 22140 of 2019. Consequently, the judgment of the Telangana and Andhra Pradesh High Court holds the field as on date. In these circumstances, it is just and appropriate that the petitioner be provided with an opportunity to contest the tax demand. It should also be noticed, in this regard, that there is no proof of service of the impugned order on the petitioner.
7. Therefore, the impugned order is quashed and the matter is remanded for reconsideration by the 1st The 1st respondent is directed to provide a reasonable opportunity to the petitioner, including a personal hearing, and thereafter issue a fresh order within three months from the date of receipt of a copy of this order.
8. The writ petition is disposed of accordingly. No costs. Connected W.M.P. is closed.
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