M/S.Hvac And Electromechanicals Private Limited vs. The Assistant Commissioner Of Central Tax

Facts

The petitioner, M/s. HVAC AND ELECTROMECHANICALS PRIVATE LIMITED, filed a writ petition challenging an Order-in-Original dated June 20, 2022, passed by the Assistant Commissioner of Central Tax (Respondent No. 1). This order confirmed a demand of service tax amounting to Rs. 30,23,823/- for the periods 2015-16 and 2016-17, along with interest and penalties under Sections 78 and 77 of the Finance Act, 1994. The petitioner also sought to set aside a demand notice dated August 7, 2023, issued to IDBI Bank Ltd. (Respondent No. 4) under Section 87 of the Finance Act, 1994. The petitioner claimed they did not receive the show-cause notice dated December 30, 2020, nor were they afforded a personal hearing, thus violating principles of natural justice. The petitioner received the impugned order on December 13, 2022, but filed the writ petition on August 7, 2023, citing inadvertent misplacement of the order and delay in realizing the demand notice.

Held

The Court dismissed the writ petition, finding it devoid of merits. Regarding the first issue, the Court noted from the impugned order that a letter dated December 9, 2020, was sent requesting information, to which the petitioner did not respond. The Court also observed that the show-cause notice dated December 30, 2020, was issued, and personal hearings were fixed on April 5, 2022, May 3, 2022, and May 18, 2021 (though the date 18.05.2021 appears to be a typo and likely meant 2022, consistent with other dates). Notices for these hearings and for filing a reply were sent on March 29, 2022, April 25, 2022, and May 6, 2022, respectively. The petitioner failed to respond to these notices, leading the respondent to proceed with adjudication. The Court found the petitioner's explanation for the delay in filing the writ petition, attributing it to inadvertent misplacement of the order, unconvincing, especially given their conduct regarding the show-cause and hearing notices. The Court emphasized the petitioner's failure to avail the efficacious alternative remedy of appeal under Section 85(3A) of the Finance Act, 1994, and the unexplained delay in approaching the High Court. Therefore, the Court held that no grounds were made out to interfere with the impugned order.

Key Issues

1. Whether the impugned Order-in-Original dated June 20, 2022, passed by the Assistant Commissioner of Central Tax, is liable to be set aside for violation of the principles of natural justice, specifically for non-service of the show-cause notice and non-affordance of a personal hearing, as contended by the petitioner? 2. Whether the writ petition, filed approximately ten months after the receipt of the impugned order, is maintainable despite the existence of an efficacious alternative remedy of appeal under Section 85(3A) of the Finance Act, 1994, and considering the unexplained delay and alleged latches on the part of the petitioner? Petitioner's Arguments: The petitioner argued that the show-cause notice and personal hearing notices were never served, preventing them from submitting a reply and appearing for the hearing. Consequently, the impugned order was passed without their participation, violating natural justice. They relied on judgments from the Madras High Court and Telangana High Court. They also argued that setting aside the order and demand notice was necessary to avoid hardship and substantial loss. Respondents' Arguments: The respondents contended that the show-cause notice was sent to the petitioner's registered email on December 31, 2020, and personal hearing notices were sent on April 4, 2022, April 28, 2022, and May 7, 2022, with proof of service. They asserted that the petitioner's claim of non-service and non-hearing was factually incorrect and untenable. The respondents also highlighted that the petitioner received the impugned order on December 13, 2022, but failed to file an appeal within the prescribed two-month period under Section 85(3A) of the Finance Act, 1994, and approached the High Court belatedly.