Maan Steel And Power LTD vs. The Commissioner CGST And Cx Bolpur Commissionerate And Ors
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Three intra-court appeals were filed by Dhanbad Fuels Pvt. Ltd., Maan Steel and Power Ltd., and Maan Concast Pvt. Ltd. These appeals challenged the dismissal of their writ petitions by a learned Single Bench. The writ petitions had challenged an order of adjudication passed by the Commissioner, Durgapur Audit Commissionerate, CGST & CX on September 24, 2024. This order levied central excise duty and penalty on the assessees, their directors, and others. The assessees primarily raised grounds concerning the jurisdiction of the Audit Commissioner, violations of natural justice, a high-pitched demand, and the denial of cross-examination.
Held
The Court held that all the grounds raised by the appellants, including the jurisdictional issue, the denial of adjournment, the consideration of reconciliation data, and the denial of cross-examination, required a factual examination. Consequently, the Court was of the view that the appellants should exhaust the statutory appellate remedy available before the learned tribunal. The Court acknowledged the high-pitched nature of the assessment and the burden of pre-deposit (7.5% of the disputed demand) for filing an appeal before the tribunal, but noted that this statutory condition has been upheld by Constitutional Courts. Therefore, the Court directed the appellants to file their appeal before the learned tribunal within 90 days of receiving a server copy of the order, subject to compliance with the pre-deposit condition. The Court explicitly stated that it had not gone into the merits of the contentions, leaving it open for the appellants to canvass all points before the tribunal.
Key Issues
1. Whether the Audit Commissioner was entitled to exercise jurisdiction and pass an order of adjudication, considering reliance on Notification No. 14/2017-C.E.(N.T.) and the alleged irrelevance of Rule 3 of the Service Tax Rules to the case? (Petitioner's contention: The Audit Commissioner lacked jurisdiction due to reliance on an irrelevant notification and rule, rendering the adjudication order void.) 2. Whether there was a violation of the principle of natural justice due to the assignment of the case to the Audit Commissionerate mid-proceedings, the denial of personal hearing, and the refusal of adjournment requests? (Petitioner's contention: The Executive Commissioner issued the show-cause notice, but the matter was assigned to the Audit Commissionerate without proper notice or opportunity, violating natural justice.) 3. Whether the high-pitched demand, including that on alleged undeclared transactions, was considered appropriately, especially in light of reconciliation data provided by the assessees? (Petitioner's contention: A significant portion of the demand was based on undeclared transactions, for which reconciliation data of approximately Rs. 6 crores was provided but not considered.) 4. Whether the denial of the request for cross-examination of transporters, whose statements were relied upon for the demand, was illegal? (Petitioner's contention: The rejection of the request for cross-examination of transporters, whose statements formed part of the demand, was erroneous and rendered the adjudication order void.) Revenue's contentions were not explicitly recorded in the judgment.
Sections Cited
Rule 3 of the Service Tax Rules, Notification No.14/2017-C.E.(N.T.)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
hearing and are disposed of by a common judgment and order.
2
These intra-court appeals filed by the writ petitioners are directed against the orders dated 28th April, 2025, passed in WPA 1679 of 2025, WPA 1682 of 2025 and WPA 1643 of 2025 respectively by which the learned Single Bench dismissed the writ petitions challenging the order of adjudication passed by the Commissioner, Durgapur Audit Commissionerate, CGST & CX dated 24th September, 2024, levying central excise duty and penalty on the assessee, its directors and others.
We have elaborately heard Mr. Chakraborty, learned advocate appearing for the appellants/writ petitioners.
Primarily four grounds have been raised by the petitioners. The first is being as to whether the Audit Commissioner would be entitled to exercise juri iction and pass the order of adjudication when the Audit Commissioner places reliance on a notification issued by the Board being Notification No.14/2017-C.E.(N.T.) dated 9th June, 2017. It is submitted that this notification has been referred to the notice of personal hearing and there is a reference to Rule 3 of the Service Tax Rules which is of no relevance to the case on hand and, therefore, the Audit Commissioner has no juri iction to deal with the matter.
That apart, another subsidiary ground arising out of the same ground is that the Executive Commissioner
3 was the person who issued the show-cause notice before whom the reply was submitted and request letters were made to provide copies of legible documents, specifically indicating as to which of the documents are illegible and also copies of documents which were relied on in the show-cause notice for the first time and repeated representations were made in this regard and in the middle of the proceedings, the matters stood assigned to the Audit Commissionerate and, therefore, it is submitted that there is gross violation of principle of natural justice. More so, when the Audit Commissionerate did not grant a personal hearing and declined to accept the request for adjournment.
The third ground raised is that the demand made in the orders impugned in the writ petitions is a high- pitched demand and part of the demand is on the alleged ground of undeclared transactions when the appellants/assessees were able to provide reconciliation data to cover the transaction nearly to Rs.6 crores, which aspect was never considered by the adjudicating authority.
The other ground which has been canvassed is that the request of the cross-examination made by the appellants, specifically in their reply requesting for cross-examination of the transporters by specifying their names was rejected erroneously by referring to the statements recorded by the Officers/Directors of
4 the assessee Company, which would be irrelevant because part of the demand made in the order of adjudication is by relying upon statements of the transporters. Therefore, it is submitted that the denial of cross-examination is illegal which will go to the root of the matter thereby rendering the adjudication order as void in law.
We have heard Ms. Mukherjee, learned senior standing counsel on the above submissions.
It is no doubt true that the appellants have raised juri ictional issue but such juri ictional issue requires examination of facts of the case of the appellants qua the effect of the notification whether the order of assignment was justified and whether there is any misquoting of the relevant rules etc. which would undoubtedly require consideration of the factual position.
Regarding the aspect as to whether the request for adjournment was unjustly denied and that the reasons assigned by the adjudicating authority for refusing adjournment is justified or not also requires examination of facts.
The reconciliation data which is said to have been submitted by the assessees whether it was considered or not considered also would require examination of facts. Equally so, the issue as to whether the denial of cross-examination was just and proper would also require examination of facts.
5
Therefore, we are of the view that the appellants should exhaust the statutory appellate remedy available before the learned tribunal. As mentioned above, the assessment is a high-pitched assessment and the burden on the Directors of the Company on whom personal penalty has been imposed at very high rate will undoubtedly be a difficult proposition as 7.5% of the disputed demand is required to be paid when an appeal is filed before the tribunal. Nonetheless, the said statutory provision mandating pre-deposit as a condition precedent for preferring an appeal before the learned tribunal having been upheld by the Constitutional Courts, the appellants have no other option except to comply with this statutory condition.
Thus for the above reasons, we are of the view that the appellants should exercise the statutory remedy of appeal available before the learned tribunal.
Accordingly, the appeals along with the applications fail and are dismissed.
The appellants shall file the appeal before the learned tribunal within a period of 90 days from the date of receipt of server copy of this order and if the pre- deposit condition is complied with, the appeal shall be entertained by the learned tribunal and decided on merits and in accordance with law.
We make it clear that in the preceding paragraphs we have noted the submissions of the learned advocate appearing for the appellants to give a broad view of the
6 grounds which have been canvassed by the appellants but as we have relegated the appellants to avail the statutory remedy we have not gone into the merits of the contentions and the correctness of the submissions and it will be well-open to the appellants to canvass all points before the learned tribunal and equally open to the department to put forth their contentions.
Urgent Photostat certified copy of this order, if applied for, be given to the parties, on priority basis, upon compliance of all necessary formalities.
[T.S. SIVAGNANAM] CHIEF JUSTICE
[CHAITALI CHATTERJEE (DAS), J.]
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.