G Arun vs. The Additional Commissioner

Facts

The petitioner, G. Arun, filed a writ petition challenging an ex-parte order dated 28.11.2014 passed by the Additional Commissioner of Central Excise, confirming a demand proposed in a show cause notice dated 23.10.2013. The petitioner claimed to have closed his business long before and was unaware of the order until his bank account was attached in 2024, which led to a recovery notice dated 09.01.2024. The petitioner argued that the issue was covered in his favour by a CESTAT, Chennai decision dated 12.12.2019. The respondents contended that the writ petition should be dismissed due to latches and that the appeal would be time-barred, citing Supreme Court decisions. They also argued that the petitioner likely received the order in 2014, as the address used was the same as provided by the petitioner.

Held

The Court noted that part of the demand pertaining to commission received by the petitioner might not be liable to tax, as per the CESTAT, Chennai decision. However, it acknowledged that the petitioner might still be liable to pay tax on installation charges. To balance the interests of both parties, the Court suo motu impleaded the Commissioner of Central Excise (Appeals) as the third respondent. The petitioner was directed to file an appeal before the third respondent within 30 days of receiving the order, subject to depositing 10% of the disputed tax as pre-deposit. The appeal was to be entertained and disposed of by the third respondent without reference to the limitation period. Upon the pre-deposit, the petitioner's bank account was to be de-freezed, or if sufficient funds were available, the bank was to be requested to deduct the amount. The Court did not expressly leave any issue undecided, but the final determination of tax liability on installation charges was left to the appellate authority.

Key Issues

1. Whether the impugned ex-parte order dated 28.11.2014 and the consequential recovery notice dated 09.01.2024 are liable to be set aside and quashed as illegal? (Mixed question of law and fact, concerning principles of natural justice and the validity of tax recovery proceedings). 2. Whether the issue is covered in favour of the petitioner by the decision of the CESTAT, Chennai in ST/Appeal Nos.42786 of 2014, 41426 of 2015 and 40756 of 2016 vide final order Nos.41753-41755/2019 dated 12.12.2019? (Question of law, concerning the applicability of precedent). Petitioner's arguments: The petitioner argued that the impugned order was passed ex-parte, that he was unaware of it due to business closure, and that the matter was settled by the CESTAT decision. He also stated that he was under the impression the demand would be dropped suo motu by the department. Respondents' arguments: The respondents argued that the writ petition was liable to be dismissed due to latches, citing Supreme Court decisions in Assistant Commissioner (CT) LTU, Kakinada and others Vs. Glaxo Smith Kline Consumer Health Care Limited and Singh Enterprises Vs. Commissioner of C.Ex., Jamshedpur. They also contended that the petitioner likely received the order in 2014 and had replied to the show cause notice.