Manglesh vs. The Principal Commissioner CGST And Central Excise

Facts

The petitioners, P.W.D. Contractors, challenged orders dated 03.01.2022 and 06.01.2022 passed by the Deputy Commissioner of CGST & Central Excise, demanding service tax on services rendered to the Government. These orders stemmed from show cause notices issued on 19.12.2020 and 31.12.2020. The petitioners had previously challenged these show cause notices in other writ petitions, arguing that the services were exempted. While those earlier petitions were pending and transferred to the Principal Seat, the impugned orders were passed. A Division Bench of the Principal Seat, in a batch of writ petitions (W.P.No.24996 of 2019 etc.), had ruled that contractors are liable to pay service tax. The Division Bench had also directed that where show cause notices were issued, petitioners should provide detailed replies and participate in the adjudicatory mechanism, with the respondents to pass orders within ninety days after affording an opportunity of hearing.

Held

The Court held that the impugned orders dated 03.01.2022 and 06.01.2022, passed by the second respondent (Deputy Commissioner of CGST & Central Excise), are liable to be set aside on the sole ground that the petitioners were not provided with an opportunity of hearing. This failure to provide a hearing directly contravenes the directions issued by the Division Bench of this Court in W.P.No.24996 of 2019 etc. (batch) on 30.11.2022. The Division Bench's order explicitly stated that respondents shall pass appropriate orders on merits within a period of ninety days, after giving the respective petitioners adequate opportunity of being heard. The Court found that this procedural lapse alone vitiates the impugned orders. Consequently, the writ petitions were allowed, and the impugned orders were set aside. The matters were remanded back to the second respondent for fresh consideration, with a specific direction to provide an opportunity of hearing to the petitioners before passing fresh orders.

Key Issues

1. Whether the impugned orders passed by the Deputy Commissioner of CGST & Central Excise are liable to be quashed for non-compliance with the directions of the Division Bench of this Court in W.P.No.24996 of 2019 etc. (batch) dated 30.11.2022, specifically concerning the opportunity of hearing? (Question of law) Petitioner's contention: The petitioners argued that the impugned orders are liable to be set aside solely on the ground that they were not provided with an opportunity of hearing, as mandated by the Division Bench's order dated 30.11.2022. They contended that the Division Bench's order directed that petitioners should be given adequate opportunity of being heard before the respondents pass appropriate orders. Revenue's contention: The judgment does not record any specific arguments made by the revenue or the State in opposition to the petitioner's claim regarding the lack of opportunity of hearing.