M/S Kolkata Bricks PVT LTD vs. Additional Commissioner Central Tax CGST And Cx Kolkta North Commissionerate And Ors

Held

The Court held that the orders passed by the Commissioner (Appeals) were liable to be set aside due to a violation of the principles of natural justice. The Court found that notice was not effectively served on the appellants, and the department failed to adhere to the prescribed modes of substituted service, such as affixature. This failure meant the appellants were not afforded an adequate opportunity of hearing. Consequently, the Court set aside the orders of the Commissioner (Appeals) dated 28th June, 2019 and 12th October, 2021, and the order of the writ court. The matter was remanded to the Commissioner (Appeals) for fresh consideration. The Court directed the appellants to make good the shortfall in the pre-deposit within two weeks. Upon compliance, the Commissioner (Appeals) is to hear both the appellants' and the department's appeals together and pass fresh orders on merits. The Court also directed that notice be served on both the company and its Director. The issue of the department's appeal being time-barred was not expressly decided, as the matter was remanded.

Facts

M/s. Kolkata Bricks Pvt. Ltd. and its Director, Pravin Kumar Darolia (collectively, the appellants), filed intra-court appeals against a High Court order that upheld decisions of the Commissioner (Appeals). The Commissioner (Appeals) had dismissed the appellants' appeals on grounds of non-compliance with the mandatory pre-deposit requirement, noting a significant shortfall in the amounts deposited. The Commissioner (Appeals) had also entertained an appeal filed by the department, which the appellants argued was time-barred. A key fact was that notice was not served on the appellants before the Commissioner (Appeals) passed orders, with the notice returned endorsed as "left". The appellants had deposited only Rs. 25,000/- each against a required pre-deposit of Rs. 9,30,017/- each.

Key Issues

1. Whether the orders passed by the Commissioner (Appeals) are liable to be set aside for violation of the principles of natural justice due to non-service of notice on the appellants? (Question of law). The appellants contended that the Commissioner (Appeals) erred by passing orders without affording them an adequate opportunity of hearing, especially since notice was not properly served. They argued that the department failed to follow prescribed procedures for substituted service, such as affixature. The revenue did not record any specific arguments against this point, but implicitly supported the Commissioner (Appeals)'s orders. 2. Whether the Commissioner (Appeals) was justified in entertaining the department's appeal when it was allegedly time-barred? (Question of mixed law and fact). The appellants argued that the department's appeal was beyond the prescribed limitation period and should not have been considered. The revenue did not record any specific arguments against this point.