M/S. Sai Constructions vs. The Assistant Commissioner Of Central Tax And 3 Others

Held

The Court held that there was no finding recorded by the first respondent (Assistant Commissioner) that the show cause notice was served on the petitioner or that the letters intimating virtual personal hearing were served. The Court emphasized that mere issuance of notices is insufficient; the Assessing Officer must record a finding that notices were issued and served, and despite service, the assessee failed to appear. Such a finding was absent in the impugned order. Consequently, the Court set aside the impugned Order-in-Original dated March 30, 2022, and remanded the matter back to the first respondent for a fresh decision. The petitioner was granted 15 days from the date of the order to submit its reply to the show cause notice dated December 24, 2020. The first respondent is to take a fresh decision in accordance with law after giving the petitioner due opportunity of hearing. The writ petition was allowed.

Facts

The petitioner, M/s. Sai Constructions, filed a writ petition challenging an Order-in-Original dated March 30, 2022, passed by the Assistant Commissioner of Central Tax. This order confirmed a demand of service tax amounting to Rs. 37,83,522 for the period 2014 to June 2017, along with interest and penalties under Sections 78, 77, and 70 of the Finance Act, 1994. The petitioner contended that the show cause notice and the notice for personal hearing were not served, violating principles of natural justice. The revenue, represented by the Assistant Commissioner, submitted a copy of the show cause notice dated December 24, 2020, claiming it was served on Srivani, identified as the petitioner's wife. The Order-in-Original noted that the petitioner neither filed a written reply nor attended virtual personal hearings, leading to an ex-parte decision.

Key Issues

1. Whether the Order-in-Original dated March 30, 2022, passed by the Assistant Commissioner of Central Tax is illegal and arbitrary for violation of principles of natural justice, specifically concerning the alleged non-service of the show cause notice and personal hearing notices upon the petitioner, as contemplated under Section 73 of the Finance Act, 1994? Petitioner's Arguments: The petitioner argued that the show cause notice and personal hearing notices were not served, leading to a violation of natural justice. The petitioner's counsel stated that the name 'Srivani' mentioned in the service record is not the petitioner's daughter, Sowmya, and that the petitioner did not receive the show cause notice dated December 24, 2020. Revenue's Arguments: The revenue's counsel submitted a copy of the show cause notice dated December 24, 2020, and contended that it was received by Srivani, who is identified as the petitioner's wife, indicating service. The revenue also pointed to the Order-in-Original which stated that the petitioner did not submit a reply or attend hearings, proceeding ex-parte.