B. Rajender Reddy vs. The Commissioner Of Central Tax
Original PDF →Facts
The Petitioner, B. Rajender Reddy, a special class contractor, filed a writ petition challenging an Order-in-Original dated 02.11.2022 passed by the First Respondent, the Commissioner of Central Tax. This order confirmed a demand of Rs. 2,82,51,323.00, along with interest and penalty, for the periods 2016-17 and 2017-18 (up to June 2017). The Petitioner contended that the order was passed in violation of principles of natural justice as he was not afforded a proper opportunity for personal hearing. The Petitioner stated that after seeking time to file a reply to the show cause notice on 18.11.2021, he received no further communication, including notice for personal hearing. The Respondent argued that a notice for personal hearing was sent to the Petitioner's address on record, but it was returned unserved, and the Petitioner had not informed the department of any address change.
Held
The Court held that the impugned order dated 02.11.2022 passed by the First Respondent stands vitiated due to the failure to provide an adequate opportunity of personal hearing to the Petitioner. While the Respondent contended that a notice for personal hearing was sent, it was returned unserved, and the Petitioner claimed non-receipt. The Court found it questionable why the notice was sent by registered post when the show cause notice was sent via email. Therefore, the Court set aside the Order-in-Original. However, considering that the Petitioner is now aware of the allegations, the Court directed that the impugned order be treated as a show cause notice. The Petitioner was granted four weeks to file a reply. Upon receipt of the reply, the First Respondent was directed to proceed afresh and pass a new order within eight weeks, after giving due opportunity of hearing to the Petitioner. The Court also clarified that if the Petitioner defaults in filing the reply, the Respondent can pass an order as deemed fit. The ratio decidendi is that a statutory authority must ensure actual service of notice for personal hearing to comply with principles of natural justice, and failure to do so vitiates the order.
Key Issues
1. Whether the impugned Order-in-Original dated 02.11.2022, passed by the First Respondent, is vitiated due to a violation of the principles of natural justice, specifically the failure to provide an adequate opportunity for personal hearing to the Petitioner, as contemplated under the Finance Act, 1994? Petitioner's Arguments: The Petitioner argued that the impugned order was passed in violation of the principles of natural justice because he was not given a proper opportunity for personal hearing. He contended that after requesting time to file a reply to the show cause notice, he did not receive any further intimation from the department, including notice for personal hearing, and thus the adjudication proceeded without his participation. Revenue's Arguments: The First Respondent argued that a notice for personal hearing was sent to the Petitioner's registered address on 26.05.2022. However, it was returned unserved by the postal authorities. The Respondent further submitted that the Petitioner had not informed the department of any change of address, which prevented the notice from reaching him. The impugned order itself noted that the Petitioner neither submitted a reply nor attended the personal hearing.
Sections Cited
Section 73
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
The Court made the following: ORDER t il2/t I
THE HON'BLE THE CHIEF JUSTICE UJJAL BHIIYAN. AND THE HON'BLE SRI JUSTICE N. TUKARAMJI WRIT PETITION No.6859 of 2O23 ORDER: (Per the Hon'ble the Chief Justice ujjal Bhugan) Heard Mr. G.Narendra Chetty, learned counsel for the petitioner and Ms. B.Sapna Reddy, learned counsel for the 1"t respondent. We have also heard Mr. G.Praveen Kumar, learned Deputy Solicitor Generarl of India for the 2"d respondent.
This writ petition has been filed assailing legality and validity of the order-in-original dated 02.11.2022 passed by the l"t respondent conlirming demand of Rs.2,82,51,323.00 in terms of Section 73(21 of the Finance Act, 1994 besides confirming levy of interest and imposition of penalty under different pro'r'isions of the Finance Act, 1994. 3. Petitioner before us is a special class contractor engaged in the business of executing road construction works I I I
- HCJ 8., N'I'R.J W.P.No.6859 o.[ 2023 of Government Departments. He is a service provider and registered as such under the Finance Act, 1994. Show cause notice dated 18.10.2021 was issued to the petitioner by the l"t respondent a-lleging non-payment of service tax by the petitioner on the taxable services provided for the period 2016-17 and 2Ol7-18 (upto June, 2ol7l. It is stated that the a-foresaid show cause notice was e-mailed to the petitioner, to u'hich petitioner sought for time to file reply on 18.1 1.2021
It is contended by learned counsel for the petitioner that a-fter l8.lL.2O2l, petitioner did not receive any intimation from the 1"t respondent including notice for personal hearing. Ultimately the impugned order was passed which has been impugned in the writ petition on the ground of being in violation of the principles of natural justice.
Ms. Sapna Reddy, learned counsel for respondent No.l submits on the basis of written instructions that notice of personal hearing was given to the petitioner in the address mentioned by him in the Goods and Services Tax (GST) record 2 on 26.05.2022. However, when sent by registered post, the HCI & NTRJ notice was returned unserved. She submits that petitioner did not inform the of{ice of respondent No. i about change of address, in which event the notice of personal hearing could have been sent to the changed address of the petitioner.
Be that as it may, paragraph 5 of the impugned order reads as under:
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The service provider had neither submitted reply to the Show cause Notice nor attended the personal hearing. The Service Provider requested for time to reply with the relevant documents vide their letter dated l8.ll.2o2l,. However, they have not submitted any documentary evidence relevant to the instant case. The personal hearing intimation sent to the service provider was returned undelivered by the postal authorities. Hence, tlre adjudication has been taken up on the basis of data/documents available on record." 7 . Admittedly, insofar personal hearing is concerned, notice was not served upon the petitioner. Even if we accept the contention of learned counsel for respondent No.i, then a-lso we fail to understand as to why the notice for personal hearing was sent by registered post when the show cause 3 notice was sent through e-mail.
- HCJ & N'I'RJ B. Be that as it may, for failure of the 1"t respondent to provide an opportunity of personal hearing to the petitioner, we are of the view that the impugned order stands vitiated. However, now that petitioner is aware of the allegations made by the l"t respondent, the impugned order may be treated as the show cause notice.
Accordingly and in the light of the above, we pass the following orders: (i) Order-in-original dated 02.11.2022 passed by the l"t respondent is hereby set aside. (ii) Though we have set aside the order-in-original dated 02.11.2022, the same shall now be construed to be the show cause notice. (iii) Petitioner shall file reply thereto within a period of four (04) weeks from today. (iv) Once reply is submitted by the petitioner as above, respondent No. 1 may proceed afresh 4 I
HCJ & NTR] W.P.No.6859 of 2O23 and thereafter pass fresh order in accordance with law after giving due opportunity of hearing to the petitioner within a period of eight (08) weeks from the date of receipt of the reply. (v) We however make it clear that if there is default on the part of the petitioner in submitting reply, it would be open to the 1"1 respondent to pass such order as may be deemed lit and proper.
Writ Petition is accordingly disposed of. Ho',vever, there shall be no order as to costs. 1 1. Miscellaneous applications pending, il any, in this Writ Petition shall stand closed. ) N.CHANDRA SEKHAR RAO ASSISTAIyIREGISTRAR //// LT, SECTION OFFICER The Commissioner of Central Tax, Ranga Reddy GST Commissionerate, Posnett Bhavan, Tilak Road, Ram Kote, Hyderabad - 500 001. The Secretary (Finance), Ministry of Finance, Union of lndia, North Block' New Delhi - 110001 . One CC to Sri G. Narendra Chetty, Advocate [OPUC] One CC to Ms. Bokaro Sapna Reddy, (SC FOR INCOIVE TAX) [OPUCI-..^. One CC to Srl Gadi Prave6n Kumar, Dbputy Solicitor General of lndia [OPUC] Two CD Copies I \ To, 1 2 3 4t 6 / cHq ,sF
HIGH COURT DATED:1410312023 ORDER DISPOSING OF THE WRIT PETITION WITHOUT COSTS HE STA 1[ iltAY ?[23 {.tl c() efl \*k i I I-t q
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.