M/S S3 Enterprise And Anr vs. Union Of INDIA And 3 Ors.
Original PDF →Facts
The petitioners, M/s S3 Enterprise and its managing partner, were served with a recovery notice dated 04.01.2024 by the Assistant Commissioner, Central Goods and Service Tax, Dibrugarh (Respondent No. 3). This notice demanded payment of service tax amounting to Rs. 4,96,375/-, along with interest and penalty, pursuant to an Order-in-Original dated 19.07.2021 passed by the Deputy Commissioner, Central Goods and Service Tax, Dibrugarh (Respondent No. 4). The petitioners contended that they never received the show cause notice or the Order-in-Original, nor were they given any intimation of a hearing. They made a representation on 11.01.2024 seeking a copy of the show cause notice and a stay on coercive recovery. On 18.01.2024, they received the Order-in-Original via email, which indicated it was passed based on a show cause notice dated 07.07.2020. The petitioners then approached the High Court, alleging a violation of natural justice.
Held
The Court held that the interest of justice would be served by directing the proceedings to be conducted afresh. The Court found merit in the petitioners' contention that they were deprived of an opportunity of hearing. The reasoning was based on the petitioners' assertion of not receiving the show cause notice and the Order-in-Original, and the subsequent discovery of the order only upon receiving a recovery notice. The Court acknowledged the respondent's claim of sending communications by registered post but prioritized ensuring the petitioners received a fair opportunity. The ratio decidendi is that a quasi-judicial order passed without affording a proper opportunity of hearing to the affected party, even if the party claims non-receipt of notices, warrants a fresh adjudication to uphold natural justice. The Court directed the respondent authorities to issue a fresh copy of the show cause notice dated 07.07.2020 to the petitioners, grant them sufficient time to file a reply, and provide a personal hearing. The recovery notice dated 04.01.2024 and the Order-in-Original dated 19.07.2021 were set aside. The petitioners were also permitted to collect the show cause notice personally from the respondents' office.
Key Issues
1. Whether the Order-in-Original dated 19.07.2021 was passed in violation of the principles of natural justice, specifically the right to a hearing, as the petitioners claim non-receipt of the show cause notice and the order. The petitioners argued that they were denied an opportunity of hearing because they did not receive the show cause notice dated 07.07.2020 or the Order-in-Original dated 19.07.2021. They contended that the entire proceeding leading to the demand was vitiated due to this lack of notice and opportunity, thus violating fundamental principles of fairness. They relied on the fact that they only became aware of the order upon receiving the recovery notice and subsequently obtained a copy of the order via email. The respondent authorities contended that multiple communications regarding the proceedings were sent to the petitioners via registered post and were not returned as undelivered, implying the petitioners must have received them. They argued that the petitioners were duly notified and had the opportunity to respond.
Sections Cited
Section 73, Section 129
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER Date : 07.04.2026
Heard Mr. R.S. Mishra, the learned counsel for the petitioners. Also heard Mr. K. Jain, the learned counsel appearing on behalf of Mr. S. C. Keyal, learned Standing Counsel, CGST for respondent Nos. 2 and 4. 2. The case of the petitioners is that on 09.01.2024, the petitioner No.2 was served with a recovery notice dated 04.01.2024 issued by the respondent No.3 stating inter alia that vide Order-in-Original dated 19.07.2021 passed by the respondent No.4, a demand of service tax of Rs. 4,96,375/- was confirmed along with interest and penalty and thereby, asked the petitioners to pay Rs. 4,96,375/- along with the interest and penalty.
It is contended that since the petitioners neither received any show cause notice nor any intimation of hearing with regard to the same and also that the petitioners did not receive the aforesaid Order- in-Original dated 19.07.2021, the petitioner No.2 made a representation on 11.01.2024 before the respondent
Page No.# 3/5 No.3 for furnishing a copy of the show cause notice issued and with a prayer for not taking any coercive action for recovery of service tax. In view of such submission before the respondent authorities, on 18.01.2024, the petitioners were served with the Order-in-Original dated 19.07.2021 in e-mail wherefrom the petitioners came to know that the aforesaid order dated 19.07.2021 was passed pursuant to a show cause notice dated 07.07.2020. On receipt of the aforesaid information, the petitioners have approached this Court by filing the instant writ petition, contending that there is a violation of principles of natural justice since the aforesaid Order-in-Original has been passed without giving him any opportunity of hearing.
It is seen that an affidavit-in-opposition has been filed in the instant case, whereby the respondent authorities have taken a stand that several communications regarding the proceeding was sent to the petitioners by registered post and such communications had not been received unserved by the respondent authorities. Therefore, contention has been made by the respondent authorities that the petitioners must have received those communications.
The learned counsel appearing for the petitioners submits that the petitioners have not received any such communications with any show cause notice ever from the respondent authorities and thereby, they have been deprived of any hearing before passing the Order-in-Original dated 19.07.2021. 6. After hearing the parties, this Court is of the considered opinion that the instant case can be disposed of by a suitable direction to the respondent authorities to provide sufficient opportunities to the petitioners. Therefore,
considering the above mentioned facts, this Court is of the view that interest of Page No.# 4/5 justice would be served if the proceeding is directed to be done afresh whereby the petitioners would get an opportunity to submit their reply to the show cause notice that has been issued on 07.07.2020. 7. In view of the aforesaid, it is directed to the respondent authorities to initiate the proceeding afresh by issuing a copy of the original show cause notice dated 07.07.2020 to the petitioners and thereafter, giving them sufficient time to reply to the show cause notice which includes a personal hearing to the petitioners.
The learned counsel appearing for the petitioners has submitted that the petitioners would like to collect the aforesaid show cause notice personally from the office of the respondents. Therefore, it is directed to the respondent authorities that the respondent authorities shall hand over a copy of the aforesaid show cause notice dated 07.07.2020 to the petitioners on their approach to the office of the respondents. After receipt of the notice, the petitioners shall reply to the said show cause notice within a period of 30 (thirty) days and the whole proceeding shall be completed by the responding authorities as per provision of law.
In view of the aforesaid directions, the recovery notice dated 04.01.2024 is interfered with and thereby the same is set aside. Similarly, the Order-in-Original dated 19.07.2021 is also set aside in view of the aforesaid directions.
In the aforesaid terms, the instant writ petition is disposed of.
JUDGE
Page No.# 5/5 Comparing Assistant
Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.