M/S Periyar Polymers Private Limited vs. Deputy Commissioner - Kerala High Court, 01 September 2021

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS WEDNE AY, THE 1ST DAY OF SEPTEMBER 2021 / 10TH BHADRA, 1943 WP(C) NO. 7840 OF 2021 PETITIONER : M/S PERIYAR POLYMERS PRIVATE LIMITED REPRESENTED BY ITS MANAGING DIRECTOR, SRI. ANOOB V.E, 35/587F, UNITED PLAZA, JANATHA, PALARIVATTOM, ERNAKULAM - 683025. BY ADVS. A.KUMAR SRI.P.J.ANILKUMAR SMT.G.MINI SRI.P.S.SREE PRASAD SHRI.JOB ABRAHAM SRI.AJAY V.ANAND RESPONDENTS : 1 DEPUTY COMMISSIONER, OFFICE OF DEPUTY COMMISSIONER, CENTRAL TAX AND CENTRAL EXCISE, PALAKKAD GST DIVISION, METTUPALAYAM STREET, PALAKKAD - 678001. 2 COMMISSIONER(APPEALS) CENTRAL TAX AND CENTRAL EXCISE, C.R BUILDINGS, I.S PRESS ROAD, ERNAKULAM - 682018 3 CENTRAL BOARD OF INDIRECT AND CUSTOMS REPRESENTED BY ITS COMMISSIONER(GST), MINISTRY OF FINANCE (DEPARTMENT OF REVENUE), GOVERNMENT OF INDIA, GST POLICY WING, NORTH BLOCK, NEW DELHI - 110001. BY ADV SHRI T.K.RAJESH KUMAR, CGC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.09.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) NO. 7840 OF 2021 2 BECHU KURIAN THOMAS, J. =-=-=-=-=-=-=-=-=-=-=-=-=-= W.P.(C).No.7840 of 2021 =-=-=-=-=-=-=-=-=-=-=-=-=-= Dated this the 1st day of September, 2021 JUDGMENT Writ petitioner's claim for refund, consequent to the introduction of Section 104 to the Finance Act, 1994, w.e.f.31.03.2017, was rejected by the 1st respondent. As per Section 104(1) of the Finance Act, 1994, no service tax is leviable on one time upfront amount (premium, salami, cost, price, development charge or whatever name it is called) in respect of taxable services provided or agreed to be provided by a State Government Industrial Development Corporation or undertaking, to industrial units by way of grant of long term lease of thirty years or more of industrial plots for the period from 01.06.2007 till 21.09.2016. By virtue of S.104(2) refund of the service tax already paid was stipulated.

Petitioner is registered under the Central Excise Act as well as under Chapter V of the Finance Act (Service Tax). By Ext.P1 order, petitioner's claim for refund of the service tax period or premium paid for long term lease of an industrial plot) was rejected. Ext.P2 appeal was filed before the 2nd respondent against the

WP(C) NO. 7840 OF 2021 3 aforesaid order of rejection which culminated in Ext.P3. The refund claim was thus rejected by the statutory appellate authorities.

Though a further appeal is provided against Ext.P3 to the Customs, Excise and Service Tax Appellate Tribunal under section 86(1) of the Finance Act, 1994, petitioner chose to file this writ petition invoking the juri iction of this Court under Article 226 on the sole ground that the order of the appellate authority is vitiated for violation of the principles of natural justice.

Adv.A.Kumar, learned counsel for the petitioner submitted that the procedure for hearing appeals through video conferencing during the Covid-19 pandemic has been laid down by the 3rd respondent stipulating, inter alia, maintenance of a record of personal hearing. According to the learned counsel, a copy of the record of personal hearing is mandated to be served upon the assessees as a means of compliance of natural justice. It is also contended that as per the instructions issued by the 3rd respondent, the record of personal hearing conducted through video conferencing ought to be communicated to the appellant or authorised representative, within a period of three days for verification/modification/acceptance. It is also contended that in the order impugned, the mandatory requirement of maintaining record of

WP(C) NO. 7840 OF 2021 4 personal hearing has not been complied with thereby rendering the order of the appellate authority as vitiated in law. Learned counsel also invited my attention to a judgment of this Court in W.P.(C) No.23270 of 2020 dated 21.12.2020. 5. Adv.T.K.Rajesh Kumar, the learned Standing Counsel for respondents 1 to 3 on the other hand contended that the order of the 2nd respondent is not vitiated merely for failure to maintain the record of personal hearing, as an opportunity for hearing had been granted to the petitioner.

I have considered the rival contentions. The procedure for maintaining a record of personal hearing was created by the 3rd respondent to ensure compliance with the principles of natural justice during hearings undertaken through video conferencing. The procedure so created was based upon the guidelines laid down by the Supreme Court in its order dated 27.04.202 in suo motu WP(C) No.5/2020. The measures directed by the 3rd respondent as per its instructions bearing No.F.No.390/MISC/3/2019-JC lays down the various instructions for conduct of virtual hearing through the facility of video conferencing. The salient features of the said guidelines are reproduced as below :-

WP(C) NO. 7840 OF 2021 5 “4. The guidelines for the conduct of virtual mode of personal hearing through video conferencing facility are as under : (vii) The submissions made by the appellant or their representative through the video conference will be reduced in writing and a statement of the same will be prepared which shall be known as “record of personal hearing”. A soft copy of such record of personal hearing in PDF format will be sent to the appellant through email ID provided by the advocate/ appellant/ respondent, within one day of such hearing. (viii) If the appellant/ their representative wants to modify the contents of the emailed record of personal hearing, they can do so and sign the modified record, scan and send back the signed record of the personal hearing to the adjudicating/ appellate authority. (ix) If, however, the appellant/ their representative do not resend the above emailed record of personal hearing within 3 days of receipt of such email as at point (viii) above, it will be presumed that they agree with the contents of emailed record of personal hearing and adjudicating authority/ appellate authority will proceed to decide the case accordingly. No modification in emailed record of personal hearing will be entertained after 3 days of its receipt by the appellant/ their representative. The date of receipt of the email by the appellant/ adjudicating authority will not be counted for this purpose.

WP(C) NO. 7840 OF 2021 6 (x) The record of personal hearing submitted in this manner shall be deemed to be a document for the purpose of Customs, Act, 1962 in terms of Section 138C of the said Act, read with Section 4 of the Information Technology Act, 2000. 7. The aforesaid instructions were later revised by order dated 21.08.2020 and the same are also similarly ordered.

On a perusal of Ext.P3 order of the Appellate Authority, it is evident that the procedure so framed, as mentioned above, had not been complied with by the 2nd respondent.

In a batch of similar cases, this Court had interfered with the order of the Appellate Authority and directed it to pass fresh orders after complying with the procedure delineated for hearing the assessees through video conferencing. The said judgment dated 21.12.2020 in WP(C) No.23270/2020 relied upon by the learned counsel for the petitioner, is apposite in this context.

10.

In view of the aforesaid consideration and in view of the decision referred to above, I am of the view that the Appellate Authority has infracted the procedure laid down for hearing appeals through video conferencing methods. The impugned order is therefore found to be issued in violation of the principles of natural justice and is liable to be set aside and fresh orders are required to be passed.

WP(C) NO. 7840 OF 2021 7 Accordingly, I quash Ext.P3 order and direct the 2nd respondent Appellate Authority to pass fresh orders after complying with the procedure and after hearing the petitioners. The Appellate Authority shall pass fresh orders as directed above within three months from the date of receipt of a copy of this judgment. The writ petition is allowed as above. BECHU KURIAN THOMAS, JUDGE RKM

WP(C) NO. 7840 OF 2021 8 APPENDIX OF WP(C) 7840/2021 PETITIONER'S EXHIBITS : EXHIBIT P1OF ORDER DATED 12.12.2017 ISSUED BY 1ST RESPONDENT. EXHIBIT P2OF THE APPEAL FILED BEFORE COMMISSIONER(APPEALS) EXHIBIT P3OF THE ORDER BY COMMISSIONER(APPEALS)