Plant Lipids (P) LTD vs. Commissioner (Appeals) - Kerala High Court, 10 June 2021

W.P.(C)No.11739/2021 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. THUR AY, THE 10TH DAY OF JUNE 2021 / 20TH JYAISHTA, 1943 WP(C) NO. 11739 OF 2021 PETITIONER: PLANT LIPIDS (P) LTD KADAYIRUPPU, KOLENCHERY, KOCHI-682311, REPRESENTED BY ITS CHAIRMAN, SRI. C.J.GEORGE. BY ADVS. ENOCH DAVID SIMON JOEL S.SREEDEV RONY JOSE CIMIL CHERIAN KOTTALIL SUZANNE KURIAN RESPONDENTS: 1 COMMISSIONER (APPEALS) CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, COCHIN-682018. 2 ASSISTANT COMMISSIONER, CENTRAL TAX & CENTRAL EXCISE, PERUMBAVOOR DIVISION, G- ARCADE, PERUMBAVOOR -683542. BY ADVS. SRI.THOMAS MATHEW NELLIMOOTTIL, SC, CENTRAL BOARD OF EXCISE & CUSTOMS ENOCH DAVID SIMON JOEL OTHER PRESENT: SRI. SREELAL N. WARRIER SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.06.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

W.P.(C)No.11739/2021 2 JUDGMENT The petitioner is a Company incorporated under the Companies Act, 1956. It is engaged in the business of manufacture and export of spice oleoresins and spice extracts. For a period prior to the introduction of the Goods and Service Tax regime, the petitioner was required to pay service tax under the Reverse Charge Mechanism in respect of ocean freight paid for the import of materials. However, due to an oversight, the petitioner could not comply with the requirement to pay service tax on a Reverse Charge basis which admittedly was a requirement that came into force on 13.4.2017. Immediately, on noticing this, the petitioner voluntarily paid a sum of Rs.54,03,171/- as service tax in respect of ocean freight on a Reverse Charge basis on 29.6.2018 and 11.8.2018. 2. On the introduction of the GST Regime, the petitioner was required to claim any credit of input tax existing under any previous tax regime, by submitting a declaration in Form GST-TRAN-1. The petitioner had filed the above Form on 20.9.2017. Quite obviously, the Service Tax on ocean freight having been paid only on 29.6.2018 and 11.8.2018, was not claimed in the GST-TRAN-1 Form. The petitioner, therefore, claimed a refund of the amount paid as service tax obviously on the premise that it

W.P.(C)No.11739/2021 3 had not been able to avail input tax credit on the said amount. The claim was rejected through Ext.P1 order dated 17.5.2019. The petitioner challenged Ext.P1 order by filing an appeal before the 1st respondent. The 1st respondent has now issued Ext.P3 order rejecting the appeal. Ext.P3 is impugned in this writ petition principally on the ground that it has been issued in violation of principles of natural justice.

I have heard Ms. Suzanne Kurian, the learned counsel appearing for the petitioner and Sri. Thomas Mathew Nellimoottil, the learned Senior Standing Counsel appearing for the respondents.

The learned counsel for the petitioner submits that, though it is stated in Ext.P3 that an opportunity of personal hearing was extended to the petitioner on 4.2.2021, no such intimation was given to the petitioner. She refers to Ext.P4 and states that, admittedly, the notice stated to have been given is one for Video Conferencing and intimation regarding the same is stated to have been sent by email. She also submits that as per instructions issued by the Central Board of Indirect Taxes and Customs, consent for Video Conferencing has to be obtained in advance and further that in practice, a minimum of three adjournments is granted in order to enable the party concerned to attend the hearing. She, therefore, submits

W.P.(C)No.11739/2021 4 that Ext.P3 order is clearly one issued in violation of principles of natural justice.

The learned Standing Counsel for the respondents submits that a person, who fails to avail of an opportunity, cannot be heard to complain of a violation of principles of natural justice. He would also submit that all the contentions taken by the petitioner have been duly considered in Ext.P3 order. He states that he can file a detailed counter affidavit in the matter along with necessary records to show that an opportunity for a hearing had been extended to the petitioner.

Upon hearing the learned counsel, as above, I am of the opinion that this writ petition can be disposed of without going into the merits of the matter. I do not propose to enter into the merits of the controversy or to render any finding as to whether a notice for personal hearing was actually issued to the petitioner or not. The learned Standing Counsel is justified in asserting that a person who failed to avail an opportunity cannot be heard to complain of a violation of the principles of Natural Justice. However, one cannot lose sight of the fact that this is not a case where there has been a consistent default on the part of the petitioner in appearing for a personal hearing. Further, the notice stated to have been

W.P.(C)No.11739/2021 5 given through e-mail is not given to any particular officer but to ‘info@plantlipids.com’, according to Ext.P.

It is not possible to ascertain whether the notice sent to this e-mail was brought to the notice of the officer concerned. In such a situation, one cannot forget the classic statement of the law by Megarry.J in John v. Rees (as referred to in S.L. Kapoor v. Jagmohan, (1980) 4 SCC 379 at page 392) “It may be that there are some who would decry the importance which the courts attach to the observance of the rules of natural justice. ‘When something is obvious’, they may say, ‘why force everybody to go through the tiresome waste of time involved in framing charges and giving an opportunity to be heard? The result is obvious from the start’. Those who take this view do not, I think, do themselves justice. As everybody who has anything to do with the law well knows, the path of the law is strewn with examples of open and shut cases which, somehow, were not; of unanswerable charges which, in the event, were completely answered; of inexplicable conduct which was fully explained; of fixed and unalterable determinations that, by discussion, suffered a change. Nor are those with any knowledge of human nature who pause to think for a moment likely to underestimate the feelings of resentment of those who find that a decision against them has been made without their being afforded any opportunity to influence the course of events.” I am therefore clear in my mind that the appeal ought to have been

W.P.(C)No.11739/2021 6 adjudicated with proper notice to the petitioner.

In the light of the above, I am of the opinion that a further opportunity should have been granted to the petitioner for a personal hearing. In that view of the matter, this writ petition is allowed. Ext.P3 order will stand set aside and consequently, Ext.P2 appeal will stand restored to file. Ext.P2 appeal will be adjudicated afresh, with notice to the petitioner. Such notice may be served by e-mail on an e-mail address to be specified by the petitioner, in writing, to the office of the 1st respondent. This shall be done within a period of one week from the date of receipt of a copy of this judgment. The 1st respondent shall, thereafter, endeavour to dispose of Ext.P2 appeal within the shortest possible time and in any event, within a period of six months from the date of receipt of a certified copy of this judgment. GOPINATH P. JUDGE acd

W.P.(C)No.11739/2021 7 APPENDIX OF WP(C) 11739/2021 PETITIONER ANNEXURE Exhibit P1 AOF THE ORDER DATED 17.5.2019 AND NUMBERED AS C NO.V/18/11/2019 ST REFUND ISSUED BY THE 2ND RESPONDENT. Exhibit P2 AOF THE APPEAL MEMORANDUM DATED 16.8.2019 FILED BY THE PETITIONER AGAINST EXT. P1 BEFORE THE 1ST RESPONDENT. Exhibit P2(A) AOF THE RECEIPT DATED 29.1.2020 ISSUED BY THE 1ST RESPONDENT. Exhibit P3 AOF THE ORDER DATED 25.2.2021 IN APPEAL NUMBER A.NO.138/ST/CHN/2019-R PASSED BY THE 1ST RESPONDENT. Exhibit P4 AOF THE LETTER DATED 17.3.2021 ISSUED BY THE 1ST RESPONDENT.