M/S Dexcel Electronics Designs PVT LTD vs. Prl Commissioner Of Central Tax

Facts

The petitioner, M/s Dexcel Electronics Designs Pvt. Ltd., filed a writ petition challenging an order dated 28.02.2023 passed by the Joint Commissioner of Commercial Tax (Respondent No. 2) under Section 73 of the Finance Act, 1994, for the period April 2016 to March 2017. The petitioner contended that it had no knowledge of the proceedings as the show cause notices and personal hearing notices were not served, particularly due to the COVID-19 pandemic lockdown, during which its registered office was not physically operational. The petitioner argued that the impugned order was passed without proper service of notice and thus violated principles of natural justice. The respondents contended that notices were served at the petitioner's registered address and the impugned order was legal.

Held

The Court held that the impugned order dated 28.02.2023 was clearly violative of the principles of natural justice. The Court noted that while the respondents' order mentioned that notices were issued to the petitioner at its registered address, it conspicuously lacked further details regarding the issuance and, crucially, the service of these notices. There was no finding recorded by the respondents about the date of service of notice in accordance with the law. The Court found that the petitioner's inability to submit a reply and participate in proceedings, in light of the COVID-19 pandemic and its status as a software company operating remotely, constituted bonafide reasons, unavoidable circumstances, and sufficient cause. Consequently, the Court allowed the petition, set aside the impugned order and the subsequent communication, and directed the petitioner to appear before the second respondent on 19.02.2024 to file its objections, reply, and documents, which the respondent was to consider before proceeding further in accordance with law. The issue of the actual quantum of tax in dispute was not expressly decided as the matter was remitted.

Key Issues

1. Whether the impugned order dated 28.02.2023, passed by the Joint Commissioner of Commercial Tax under Section 73 of the Finance Act, 1994, is violative of the principles of natural justice due to non-service of show cause notices and personal hearing intimations on the petitioner? Petitioner's contentions: The petitioner argued that it was not served with the show cause notices and personal hearing intimations. It asserted that during the COVID-19 pandemic lockdown, as a software company, it was not functioning physically from its registered office, which was locked. Therefore, it could not respond to the notices or participate in the proceedings. The petitioner highlighted that the impugned order itself, in paragraphs 9 and 10, failed to record any finding regarding the actual service of notices on a particular date, thus violating principles of natural justice. The petitioner sought to set aside the order and have the matter remitted for fresh consideration. Respondents' contentions: The respondents argued that the petitioner was served with notices at its registered address. They maintained that there was no illegality or infirmity in the impugned order that warranted interference by the High Court.