M/S. Venkata Reddy Pulusu vs. The Deputy Commissioner Of Central Tax

Facts

The petitioner, Mr. Venkata Reddy Pulusu, filed a writ petition challenging an Order in Original (No. 305/2023-24-ST) dated September 30, 2023, and a Show Cause Notice dated October 18, 2021, issued by the Deputy Commissioner of Central Tax for the financial year 2016-2017. The petitioner contended that the impugned order was passed in violation of principles of natural justice and was barred by limitation. The petitioner claimed he never received the show cause notice dated October 18, 2021, nor any notice for personal hearing on September 29, 2023, which he received only on October 6, 2023, after the order was passed. He also stated that two prior personal hearing notices, dated September 15, 2022, and September 22, 2023, were not effectively served, with one being left with a neighbor.

Held

The Court held that the impugned order was passed in violation of the principles of natural justice and therefore deserved to be set aside. The Court noted that the entire proceedings for personal hearing were initiated and concluded within a period of less than fifteen days, with three notices issued. This indicated a hasty approach by the respondents, particularly as the proceedings had to be concluded by September 30, 2023, due to statutory limitation. The Court found that the first notice, though served on a neighbor, was not effectively served on the petitioner. The second notice, dispatched on September 21, 2023, for a hearing on September 22, 2023, involved an impossibly short timeframe for proper service. Similarly, the third notice, dispatched on September 27, 2023, for a hearing on September 29, 2023, also presented a glaring lack of compliance with principles of natural justice. The Court reasoned that the exercise seemed to be merely completing formalities. Consequently, the Court set aside the impugned order and remitted the matter back to the first respondent. The impugned order was to be treated as a show cause notice for personal hearing, and the petitioner was directed to appear on March 22, 2023, to make submissions, after which the respondent was to pass a fresh order in accordance with law. The issue of limitation was not expressly left undecided but was overshadowed by the violation of natural justice.

Key Issues

1. Whether the impugned Order in Original No. 305/2023-24-ST dated September 30, 2023, passed by the Deputy Commissioner of Central Tax, is illegal, arbitrary, and violative of the principles of natural justice, specifically concerning the non-service of the show cause notice dated October 18, 2021, and notices for personal hearing for the financial year 2016-2017? (Question of law and fact, turning on principles of natural justice and procedural fairness). Petitioner's Arguments: The petitioner argued that he was not afforded a fair and reasonable opportunity to defend himself. He contended that the show cause notice dated October 18, 2021, was never received. Furthermore, the notice for personal hearing on September 29, 2023, was received on October 6, 2023, after the order was already passed. Prior notices for personal hearings on September 15, 2022, and September 22, 2023, were also not duly served, with one being left with a neighbor. The petitioner relied on decisions of the High Court where similar orders were set aside and matters remitted for fresh consideration after granting an opportunity for personal hearing. Respondents' Arguments: The Department conceded that they did not have proof of service for the show cause notice issued by post. Regarding personal hearing notices, they stated that the first notice dated September 7, 2023, dispatched on September 12, 2023, for a hearing on September 15, 2023, was served on a neighbor. The second notice dated September 18, 2023, dispatched on September 21, 2023, for a hearing on September 22, 2023, was allegedly not served on the petitioner. The third notice dated September 25, 2023, dispatched on September 27, 2023, for a hearing on September 29, 2023, was received by the petitioner on October 6, 2023, after the order was passed.