M/S. Sri Lakshmi Gayathri Fabs vs. The Deputy Commissioner Of Central Tax

Held

The Court held that the impugned order-in-original dated January 31, 2023, was passed in violation of the principles of natural justice. The Court noted that the Department's counsel submitted that the show-cause notice was sent on September 22, 2022, but there was no endorsement of effective service upon the petitioner. Furthermore, the impugned order itself did not reflect due service of any show-cause notice. Given the petitioner's contention that their business had closed and registration surrendered in 2014, the Court found it apparent that the show-cause notices were not effectively served, denying the petitioner a fair opportunity to defend their case. Consequently, the Court set aside the impugned order. However, instead of outright quashing the demand, the Court treated the impugned order as a show-cause notice and remitted the matter back to the 1st Respondent for a fresh decision within four weeks, allowing the petitioner to respond to the show-cause notice and raise all contentions.

Facts

The petitioner, M/s. Sri Lakshmi Gayathri Fabs, challenged an order-in-original dated January 31, 2023, passed by the Deputy Commissioner of Central Tax for the tax period 2014-15. The order assessed short payment of taxable services amounting to Rs. 23,54,001, along with penalties under Sections 77 and 78 of the Finance Act, 1994, and late fees under Section 70. The petitioner contended that the order was passed without proper service of show-cause notices and that their business had closed and registration surrendered in 2014. The respondents are the Deputy Commissioner of Central Tax, Superintendent of Service Tax, Superintendent of Customs and Central Tax, and the Union of India.

Key Issues

1. Whether the order-in-original dated January 31, 2023, passed by the 1st Respondent for the tax period 2014-15 is arbitrary, contrary to the Finance Act, 1994, barred by limitation, without jurisdiction, and in violation of the principles of natural justice and rule of law? The petitioner argued that the show-cause notices were never effectively served, and their business had ceased operations and surrendered registration in 2014. They contended that the impugned order was passed without affording a fair and reasonable opportunity to be heard. The respondents, through their counsel, submitted that the show-cause notice was sent on September 22, 2022. The judgment does not record any specific arguments from the respondents regarding the merits of the assessment or the applicability of limitation provisions.