M/S. Innvectra Softech Private Limited vs. The Commissioner

Facts

The Petitioner, M/s. Innvectra Softech Private Limited, challenged an ex-parte Order-in-Original No. HYD-EXCUS.004.COM-025.2022-23 dated 02.11.2022, served on 03.02.2023, by Respondent No. 1, the Commissioner, Ranga Reddy GST Commissionerate. The order demanded Service Tax, Interest, and Penalty under Section 73(2) of the Finance Act, 1994, for the tax period 2016-17 to 2017-18 (up to June, 2017). The Petitioner contended that the order was passed without a show cause notice and a personal hearing, violating principles of natural justice, and was barred by limitation and without jurisdiction. The Court directed Respondent No. 1 to provide instructions regarding the service of notice.

Held

The Court held that while the Department claimed to have issued a show cause notice and a letter for personal hearing, there was no evidence available with the respondents to substantiate that these notices were duly issued and effectively served upon the petitioner before the impugned order was passed. The Court noted that the impugned order seemed to have been passed without a notice of personal hearing being effectively served, which is mandatorily required in terms of the Circular dated 10.03.2017 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs. Consequently, the Court found the impugned order to be unsustainable in law, passed in contravention of the aforesaid Circular and in violation of the principles of natural justice. The Court set aside the impugned order and remitted the matter back to Respondent No. 1 for fresh adjudication. The Petitioner was directed to treat the impugned order as a show cause notice and submit a response within ten days, and to appear for a personal hearing on 06.02.2024. The Court clarified that no further notice would be required for the personal hearing on 06.02.2024.

Key Issues

1. Whether the ex-parte Order-in-Original No. HYD-EXCUS.004.COM-025.2022-23 dated 02.11.2022, passed by Respondent No. 1, is liable to be set aside for being passed in violation of the principles of natural justice, specifically for not serving a proper show cause notice and notice for personal hearing to the petitioner, as mandated by Section 73(2) of the Finance Act, 1994 and relevant circulars? Petitioner's Arguments: The Petitioner argued that the impugned order was passed arbitrarily, contrary to law, barred by limitation, without jurisdiction, and in violation of the principles of natural justice and the rule of law, as no proper show cause notice or opportunity for personal hearing was provided. Revenue's Arguments: The learned counsel for the Department submitted that a show cause notice was issued to the petitioner on 20.10.2021 at their registered email, which was delivered on 23.10.2021, and a letter for personal hearing was also issued on 09.06.2022. However, the Petitioner did not reply to the show cause notice.