Anuj Gupta vs. Commissioner Of Central Tax GST Delhi East

Facts

The petitioners, Anuj Gupta, Indu Gupta, and Rohit Negi, filed writ petitions challenging Orders-in-Original dated 14.09.2022, passed by the Commissioner of Central Tax, GST Delhi East. These orders adjudicated Show Cause Notices issued on 09.10.2017, 06.12.2018, and 27.12.2018, confirming demands for service tax and imposing penalties. The Show Cause Notices stemmed from searches conducted in April 2017 at the premises of M/s. Fineline Retails Pvt. Ltd., where Indu Gupta and Rohit Negi were directors. It was alleged that the company engaged in manufacturing and cleared goods without paying Central Excise Duty. The petitioners' primary grievance was the violation of natural justice due to the denial of personal hearing. Attempts to serve notices at the company's registered address were unsuccessful, with postal authorities returning them marked 'Left' and the company not being found at the location. An email from Anuj Gupta on 25.08.2022 informed the authorities that the company had been taken over by new management and directors had resigned.

Held

The Court held that the impugned Orders-in-Original were passed in gross violation of the principles of natural justice. The Court found the respondent's argument based on Section 37C(1) of the Central Excise Act, 1944, to be unmerited. Section 37C(1) mandates service by tendering or registered post with acknowledgment due, and if that fails, by affixing a copy to a conspicuous part of the factory, place of business, or usual place of residence. The Court noted that it was an admitted case that notices could not be served as no one was found at the premises. Furthermore, Anuj Gupta's email clearly stated that the company had been taken over by new management, and the respondent made no attempts to find the registered address of the company. Despite receiving this email on 25.08.2022, the authorities hastily passed the impugned orders on 14.09.2022. The Court acknowledged that the orders were appealable but, given the violation of natural justice and the petitioners' prompt approach to the Court, decided to grant one opportunity to present their case. The impugned orders were set aside, and the matter was restored to the Adjudicating Authority.

Key Issues

1. Whether the impugned Orders-in-Original, passed by the Commissioner of Central Tax, GST Delhi East, were in gross violation of the principles of natural justice, specifically concerning the grant of personal hearing to the petitioners? (Question of law) Petitioner's arguments: The petitioners contended that they were denied an opportunity for personal hearing. They argued that despite an email from Anuj Gupta on 25.08.2022, informing the authorities about the company's takeover by new management and the resignation of directors, the respondent authorities proceeded to adjudicate the Show Cause Notices without proper service or affording a hearing. They emphasized that notices were not effectively served as the company was no longer at the registered address, and the respondent did not make efforts to ascertain the new address or registered details. Respondent's arguments: The respondent claimed that personal hearing letters were sent to the known address of the petitioners and relied on Section 37C(1) of the Central Excise Act, 1944, asserting that service at the known address complied with the provision.