M/S Selmec Engineering Construction vs. The Commissioner, CGST, Rohtak And Ors.

Held

The Court allowed the writ petition, setting aside the impugned orders (Annexures P-3, P-6, and P-7). The Court reasoned that the petitioner's grievance that they were never given an opportunity of personal hearing was valid, as the letters sent by the respondents for personal hearing (Annexures R1/1) were not demonstrably received by the petitioner. The Court noted that while the show cause notice was admittedly received, and the final order was sent via email, the respondents failed to provide proof of dispatch or receipt of the communications intended to facilitate a personal hearing. The Court found that the petitioner's argument that these communications could have been sent via email, similar to how the final order was communicated, was persuasive, particularly given the prevailing COVID-19 situation. The ratio decidendi is that a party must be afforded a proper opportunity of hearing, and the burden is on the revenue to prove that such an opportunity was effectively offered and communicated. The Court directed the respondents to proceed with the show cause notice by providing the petitioner with an opportunity for personal hearing and thereafter passing a speaking order.

Facts

The petitioner, M/s Selmec Engineering Construction, sought to quash an appellate order dated 26.09.2022, which upheld an ex parte adjudication order dated 24.03.2021. The adjudication order, passed by respondent No. 3, imposed a demand of service tax, interest, and penalty totaling Rs. 1,89,19,518/-. The petitioner's primary contention was that despite receiving the show cause notice dated 23.10.2020, they were never afforded an opportunity for a personal hearing before the adjudication order was passed. The respondents, in their defense, submitted letters dated 18.02.2021, 03.03.2021, and 17.03.2021, purportedly sent to the petitioner for personal hearing via video conferencing, along with postal receipts for the show cause notice. The petitioner disputed the receipt of these hearing-related letters.

Key Issues

1. Whether the petitioner was denied an adequate opportunity for personal hearing before the Adjudicating Authority passed the ex parte order, thereby violating principles of natural justice, under Section 75 of the CGST Act, 2017 (or equivalent provisions for service tax era)? Petitioner's arguments: The petitioner argued that they never received the letters (Annexures R1/1) sent by the respondents for personal hearing. They contended that since the respondents could send the impugned order via email (Annexure P-5), they could have also sent the hearing notices via email, especially during the COVID-19 pandemic when video conferencing was the primary mode of communication. The lack of proof of postal dispatch for the hearing notices, contrasted with the admitted receipt of the show cause notice via post, further supported their claim of non-receipt. Respondents' arguments: The respondents asserted that they had made efforts to provide a personal hearing by sending letters offering video conferencing and requesting contact details. They placed on record postal receipts (Ex.R1/2) to show the show cause notice was sent and received by the petitioner, and also a manual receiving (Ex.R1/3) for the show cause notice, indicating the petitioner was aware of the proceedings.