M/S. N.R.Enterprise And Anr. vs. Union Of INDIA And 4 Ors.

Held

The Court held that the notice required under the Central Excise Act, 1994, before determining the arrear service tax of the petitioner firm was not duly served upon it. Consequently, the ex-parte decision of the respondent authorities dated March 28, 2018, was set aside and quashed. The consequential orders directing the State Bank of India to debit or freeze the petitioner's account for recovery of Rs. 83,45,044/- were also quashed. The Court reasoned that the respondents' affidavit lacked annexed reports regarding the service of notice and the statements made were not supported by records. The ratio decidendi is that statutory requirements for service of notice must be strictly adhered to, and ex-parte proceedings based on unproven service are unsustainable. The Court directed the petitioner to appear before the Assistant Commissioner, Central Goods & Service Tax, Dibrugarh Division, on June 28, 2019, at 10:30 A.M., where the authority would serve notice of the proceedings and proceed accordingly. Failure to appear would allow the authority to proceed as per law. No fresh notice is required as the order was passed in the presence of the petitioner's counsel.

Facts

M/s. N.R. Enterprise, a partnership firm, and its partner, Nihar Uddin Bhuyan (petitioners), challenged an ex-parte order dated March 28, 2018, passed by the Assistant Commissioner of Central Goods and Service Tax, Dibrugarh (respondent No. 3). This order, concerning default in payment of Rs. 83,45,044/- under the Central Excise Act, 1994, was forwarded to the petitioner firm. Subsequently, the Recovery Officer (respondent No. 4) directed the State Bank of India, Namrup Branch, to debit or freeze the petitioner's account to recover the assessed amount along with interest, citing Section 79(1)(C)(i) of the CGST Act, 2017, and Section 142(8)(a) of the CGST Act, 2017. The petitioners contended that no notice was served before initiating these proceedings. The respondents claimed notices were sent via speed post on various dates, with some returned undelivered and others allegedly delivered.

Key Issues

1. Whether the ex-parte order dated March 28, 2018, passed by the Assistant Commissioner, Central Goods and Service Tax, Dibrugarh, is liable to be set aside and quashed for non-service of proper notice on the petitioner firm, as required under the Central Excise Act, 1994? Petitioner's Contention: The petitioners argued that no notice was ever served upon the petitioner firm by the respondents before initiating the proceedings, rendering the ex-parte order and subsequent recovery actions illegal. They relied on the fact that some notices were returned undelivered and that the respondents' affidavit lacked supporting reports of service. Revenue's Contention: The respondents contended that notices were duly served on the petitioner firm through speed post on multiple occasions. They submitted that while some notices were returned with remarks like 'Not known', others were confirmed as delivered. They also stated that the petitioner failed to comply with requests to pay arrears of service tax amounting to Rs. 41,72,522/- with a penalty of Rs. 41,72,522/-, arising from Order-in-Original No. 21/ST/ADJ/ACD/17-18 dated April 2, 2018.