M/S Krishna Jute Company And Another vs. Principal Commissioner Central Goods And Service Tax And Another

Held

The Court held that it is fundamental to the principles of natural justice that an affected party must be heard before an adverse order is passed by a quasi-judicial authority. This requires clear communication of hearing dates to allow reasonable time for response and confrontation with adverse material. The Court found no material to support the Revenue's claim that all RUDs were provided to the petitioners before fixing dates. Crucially, the impugned order was not passed on 11.09.2020, the date the petitioners had notice of, but on a subsequent date for which the petitioners had no notice. The Court emphasized that rules of natural justice are not mere formalities but must be enforced to ensure decisions are informed and consider the defense of the noticee. The adjudication order creates civil liability, necessitating due process. Consequently, the adjudication order and the confiscation order were set aside. The matter was remitted to the respondent to pass a fresh order after affording the petitioners a due opportunity of hearing, confronting them with all RUDs, and making available copies of all adverse material.

Facts

The petitioners, M/s Krishna Jute Company and Another, challenged an order dated 31.03.2021 passed by the Principal Commissioner of Customs CGST, Noida. The petitioners' sole grievance was that they were not afforded a reasonable opportunity of hearing before the order was passed. They claimed they were not informed of the last hearing date and were not confronted with the adverse material relied upon. The Adjudication Authority noted three hearing dates (26.08.2020, 11.09.2020, 19.02.2021) for which notices were dispatched, but the petitioners did not attend. The petitioners contended that notices for 26.08.2020 and 19.02.2021 were not served, and for 11.09.2020, they sought adjournment and copies of Relied Upon Documents (RUDs), which were not provided, nor was the next hearing date communicated. The Revenue argued that RUDs were provided with the show-cause notice, and while the hearing on 11.09.2020 was adjourned, notices for the subsequent date (19.02.2020) were dispatched but returned undelivered.

Key Issues

1. Whether the petitioners were afforded a reasonable opportunity of hearing in accordance with the principles of natural justice before the impugned order dated 31.03.2021 was passed by the Principal Commissioner of Customs CGST, Noida, turning on the principles of natural justice and adequate notice. Petitioner's Arguments: The petitioners argued that they were not served with notices for all hearing dates, specifically 26.08.2020 and 19.02.2021. They also contended that their adjournment request on 11.09.2020, which included a plea for RUDs, was not properly addressed, and neither the subsequent hearing date nor the requested documents were provided. This prevented them from effectively participating in the proceedings. Revenue's Arguments: The Revenue contended that RUDs were supplied along with the show-cause notice. They further argued that although the hearing on 11.09.2020 was adjourned at the petitioner's request, the petitioners failed to note the next date. Notices for the subsequent hearing date (19.02.2020) were dispatched, but returned undelivered with a remark that the addressee could not be located, thus constituting valid service.