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M/S. Kerala Co-Operative Development And Welfare Fund Board vs. Union Of INDIA

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WP(C)/1809/2018HC KeralaGSTCNR KLHC01033399201830 January 2018Bench: HONOURABLE MR. JUSTICE P.B.SURESH KUMAR9 pages

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Heard together (2 matters)

TC 25/35
TC 51/24

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR TUESDAY, THE 30TH DAY OF JANUARY 2018 / 10TH MAGHA, 1939 WP(C).No. 1809 of 2018 PETITIONER: M/S. KERALA CO-OPERATIVE DEVELOPMENT AND WELFARE FUND BOARD, TC 25/357(4), NEAR GANDHARI AMMAN KOVIL ROAD, STATUE, THIRUVANANTHAPURAM - 695 001, REPRESENTED BY ITS SECRETARY PADMAKUMAR T., RESIDING AT TC 51/2458, NJALIKONAM, KUNNAPUZHA, AARAMADA P.O., POOJAPURA, THIRUVANANTHAPURAM - 695 032. BY ADVS.SRI.SHAJI THOMAS SRI.JEN JAISON SMT.RAHANA JOSE RESPONDENT(S): 1. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI - 110 001. 2. COMMISSIONER OF CENTRAL GST AND CENTRAL EXCISE P.B.NO.13, GST BHAVAN, PRESS CLUB ROAD, THIRUVANANTHAPURAM - 695 001. R1 BY SRI.N.NAGARESH, ASG SMT.O.M.SHALINA, CGC R2 BY SRI.SREELAL N. WARRIER, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30-01-2018,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PBS WP(C).No. 1809 of 2018 (A) APPENDIX PETITIONER(S)' EXHIBITS EXHIBIT P1 TRUE PHOTOCOPY OF THE LETTER DATED 28.4.2015 ISSUED BY THE SUPERINTENDENT, CENTRAL EXCISE & CUSTOMS DEPARTMENT. EXHIBIT P2 TRUE PHOTOCOPY OF THE LETTER DATED 12.5.2015 ISSUED BY THE SUPERINTENDENT, CENTRAL EXCISE & CUSTOMS DEPARTMENT. EXHIBIT P3 TRUE PHOTOCOPY OF THE LETTER DATED 15.5.2015 OF THE JOINT REGISTRAR/SECRETARY OF THE BOARD ALONG WITH A WRITE UP SUBMITTED BY THE PETITIONER. EXHIBIT P4 TRUE PHOTOCOPY OF THE LETTER DATED 02.12.2015 SUBMITTED BY THE PETITIONER (WITHOUT ITS ENCLOSURES). EXHIBIT P5 TRUE PHOTOCOPY OF THE LETTER DAT ED 30.12.2015 ISSUED BY THE SUPERINTENDENT (PREV.), CENTRAL EXCISE & CUSTOMS DEPARTMENT. EXHIBIT P6 TRUE PHOTOCOPY OF THE STATEMENT DATED 01.3.2016 OF SMT.SULOCHANA, JOINT REGISTRAR/SECRETARY. EXHIBIT P7 TRUE PHOTOCOPY OF THE SHOW CAUSE NOTICE DATED 12.6.2017 ISSUED BY THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, THIRUVANANTHAPURAM. EXHIBIT P8 TRUE PHOTOCOPY OF THE LETTER DATED 29.7.2017 SUBMITTED BY THE PETITIONER TO THE 2ND RESPONDENT. EXHIBIT P9 TRUE PHOTOCOPY OF THE NOTICE DATED 30.8.2017 INVITING THE PETITIONER FOR PERSONAL HEARING. EXHIBIT P10 TRUE PHOTOCOPY OF THE REPLY DATED 28.9.2017 SUBMITTED BY THE PETITIONER. EXHIBIT P11 TRUE PHOTOCOPY OF THE ORDER-IN-ORIGINAL NO. TVM-EXCUS-000-COM-63-17-18 DTD 16.10.2017 ISSUED BY THE 2ND RESPONDENT. RESPONDENT'S EXHIBIT NIL /TRUE COPY/ PA TO JUDGE PBS P.B.SURESH KUMAR, J. ================== W.P.(C.) No.1809 of 2018 --------------------------------------- Dated this the 30th day of January, 2018

JUDGMENT

Petitioner is the Board constituted for administration of the Kerala Co-operative Development and Welfare Fund established in terms of Section 57A of the Kerala Co-operative Societies Act, 1969 and the Risk Fund established in terms of Section 57D of the said Act. As per Ext.P7 notice, the second respondent has called upon the petitioner to show cause, among others, why service tax amounting to Rs.17,13,34,094/- shall not be realised from them in respect of the various services rendered by them. Ext.P11 is the order passed on Ext.P7 show cause notice. Ext.P11 order is though appealable in terms of the Finance Act, 1994, the petitioner challenges Ext.P11 order in this writ petition under Article 226 of the Constitution of India on the ground that the same is W.P.(C).No.1809/2018 2 vitiated for non compliance of the principles of natural justice.

2.

Heard the learned counsel for the petitioner as also the learned Standing Counsel for the second respondent.

3.

Ext.P7 show cause notice is dated 15.06.2017. The petitioner received Ext.P7 show cause notice on 15.07.2017. Ext.P8 is the communication sent by the petitioner to the second respondent on 29.07.2017 on receipt of Ext.P7 notice. In terms of Ext.P8, the petitioner requested the second respondent to grant them time till September, 2017 to file objections against the proposal made in Ext.P7 notice. The second respondent has not responded to the request made by the petitioner in Ext.P8 communication. Instead, the second respondent called upon the petitioner to appear for hearing on Ext.P7 notice on 30.08.2017. A representative of the petitioner consequently appeared before the second respondent on 30.08.2017 and sought time till 30.09.2017 for filing objections against the W.P.(C).No.1809/2018 3 proposal. On the said request, the petitioner was granted time till the middle of September, 2017 and the hearing was, accordingly, adjourned to 20.09.2017. The case of the petitioner is that nobody appeared for the hearing on behalf of the petitioner before the second respondent on 20.09.2017 and nevertheless, Ext.P11 order has been passed as if the representative of the petitioner appeared for the hearing on 20.09.2017 and made submissions on behalf of the petitioner. Ext.P11 order recites that one Udayakumar appeared on behalf of the petitioner for the hearing on 20.09.2017. In order to substantiate the case of the petitioner, they have caused the said Udayakumar to file an affidavit also in this proceedings that he did not attend the hearing on 20.09.2017. 4. In the course of hearing, the learned Standing Counsel for the second respondent has made available the proceedings of the hearing held on 30.08.2017 and 20.09.2017. It is recited in the proceedings of hearing dated 20.09.2017 that Udayakumar had attended the W.P.(C).No.1809/2018 4 hearing on 20.09.2017 on behalf of the petitioner and sought time. The case set up by the petitioner that Udayakumar did not appear for the hearing on 20.09.2017 may not, therefore, be correct. I do not propose to render a finding on the correctness of the said case set up by the petitioner, for, according to me, it is unnecessary to render a finding on the said issue for the disposal of this matter.

5.

By virtue of Section 83 of the Finance Act, 1994, various provisions of the Central Excise Act, 1944 including Section 33 A dealing with the adjudication procedure have been adopted for adjudication contemplated under Finance Act, 1994. Section 33A of the Central Excise Act, 1944 reads thus : “33A. Adjudication procedure.— (1)The Adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires. (2) The Adjudicating authority may, if sufficient cause is shown, at any stage of proceeding referred to in sub-section (1), grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing: Provided that no such adjournment shall be granted more than three times to a party during the proceeding.”

W.P.(C).No.1809/2018 5 A reading of Section 33A of the Central Excise Act, 1944 indicates beyond doubt that the scheme of the Central Excise Act is that the adjudicating authority appointed in terms of the said statute shall complete the adjudication proceedings only after affording the parties concerned an opportunity of being heard, if they so desires. The only restriction imposed on the adjudicating authority in terms of the said provision is that there shall not be adjournments in adjudication matters beyond three times.

6.

Coming to the facts of the case, the second respondent has ignored Ext.P8 communication and posted the matter for hearing on 30.08.2017. The petitioner sought time on 30.08.2017. The matter was, accordingly, adjourned to 20.09.2017. The proceedings of hearing dated 20.09.2017 which is made available by the learned Standing Counsel for the second respondent indicates that the representative of the petitioner requested for time on 20.09.2017 also. The request made by the petitioner on 20.09.2017 has not been W.P.(C).No.1809/2018 6 considered. Instead, the order was passed on 16.10.2017 without affording the petitioner a further opportunity of hearing. It is seen that in the meanwhile the petitioner submitted their explanation to the show cause notice on 28.09.2017. Ext.P10 is the explanation. In Ext.P10 explanation, the petitioner specifically sought for an opportunity of hearing. In so far as the petitioner sought specifically an opportunity of hearing in the matter in Ext.P10 explanation filed before passing the impugned order, in the light of the provisions contained in Section 33A of Central Excise Act, the second respondent should not have passed orders on the show cause notice, without affording the petitioner an opportunity of hearing. It is all the more so since the petitioner sought time from the very beginning only till the end of September, 2017. It is all the more so also as the petitioner is a statutory body, and in terms of the show cause notice, substantial amounts running to several crores was proposed to be realised from the petitioner. In the said view of the matter, according to W.P.(C).No.1809/2018 7 me, the order passed on 16.10.2017 is vitiated for non- compliance of the principles of natural justice. In the result, the writ petition is allowed. Ext.P11 order is quashed and the second respondent is directed to pass fresh orders on Ext.P7 show cause notice after affording the petitioner an opportunity of hearing. This shall be done within one month from the date of receipt of a copy of this judgment. P.B.SURESH KUMAR

JUDGE hmh //// PA to Judge

Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.