M/S. Nath Enterprises vs. Principal Commissioner GST And Cex, Bbsr

Facts

The Petitioner approached the High Court via a writ petition challenging a show cause notice (SCN) dated October 14, 2020, issued by the Opposite Parties-GST & Central Excise, for alleged non-payment of Service Tax on "Taxable Services." The Petitioner had not responded to the SCN, leading to a demand notice for recovery of the alleged service tax. The Petitioner, represented by counsel, undertook to file a reply to the SCN by February 8, 2021. The Court directed the Opposite Party to pass an order on the SCN after providing a hearing opportunity, not later than March 15, 2021, and to communicate it by March 22, 2021. Any adverse order and consequent demand were to be stayed for ten days thereafter.

Held

The Court held that the Petitioner should be given an opportunity to file a reply to the show cause notice (SCN) dated October 14, 2020. The Petitioner, as undertaken by its counsel, was directed to file this reply on or before February 8, 2021. Upon receipt of the reply, the Opposite Party was directed to provide the Petitioner with an opportunity of hearing. Subsequently, the Opposite Party was to pass an order on the SCN not later than March 15, 2021, and communicate this order to the Petitioner by March 22, 2021. The Court further directed that if the order passed was adverse to the Petitioner, the consequent demand would not be enforced for a period of ten days from the communication of the order, allowing the Petitioner to seek appropriate remedies. The ratio decidendi is that procedural fairness requires an opportunity to respond to a show cause notice before an adverse order is passed, especially when the taxpayer undertakes to file the reply within a stipulated time.

Key Issues

1. Whether the Petitioner is entitled to an opportunity to file a reply to the show cause notice dated 14th October, 2020, and for a consequential direction for the Opposite Party to consider the same before passing an order? Petitioner's Contention: The Petitioner, through its counsel, sought an opportunity to file a reply to the SCN and requested the Court to direct the Opposite Party to consider this reply before proceeding further. The Petitioner had not yet filed a reply to the SCN. Revenue's Contention: The judgment records no specific argument from the learned Senior Standing Counsel for the Opposite Parties-GST & Central Excise regarding the Petitioner's right to file a reply or any opposition to the directions sought by the Petitioner. The Opposite Parties were primarily the authority that issued the SCN and demand notice.