N.Shankar Reddy vs. Theassistant Commissioner Central Tax And 32 Others

Facts

The petitioner, N. Shankar Reddy, challenged an assessment order dated January 30, 2023, passed by the Assistant Commissioner, Central Tax. The order imposed a service tax demand of Rs. 44,99,271 for the financial years 2015-16 and 2016-17, along with interest, penalties under Sections 78 and 77(1)(a) of the Finance Act, 1994, and late fees for not filing ST3 statutory returns. The petitioner contended that the show cause notice dated December 2, 2020, and subsequent personal hearing notices were not served on him, thus violating the principles of natural justice and preventing him from defending himself. The respondents were directed to produce records related to the service of these notices.

Held

The Court held that the impugned assessment order dated January 30, 2023, was passed in violation of the principles of natural justice as the petitioner claimed non-service of the show cause notice and personal hearing notices. The Court accepted the respondents' submission to quash the order and remand the matter. The Court set aside the order in original dated January 30, 2023. However, it clarified that this setting aside would not preclude the respondent No. 1 from issuing a fresh show cause notice to the petitioner. The petitioner was granted three weeks from the date of receipt of the fresh notice to file a reply. Upon receipt of the reply, the respondent No. 1 was directed to pass an appropriate order in accordance with law after giving the petitioner an opportunity of hearing, including a personal hearing. All contentions were kept open. If no reply was filed by the petitioner, the respondent No. 1 would be at liberty to pass an order as deemed fit.

Key Issues

1. Whether the impugned assessment order dated January 30, 2023, is liable to be set aside for violation of the principles of natural justice due to non-service of the show cause notice and personal hearing notices on the petitioner? (Question of law and fact, turning on principles of natural justice and procedural fairness). Petitioner's Contention: The petitioner argued that the assessment order was passed in violation of the principles of natural justice because neither the show cause notice dated December 2, 2020, nor the notices for personal hearing dated May 6, 2022, June 15, 2022, and June 30, 2022, were served upon him. Consequently, he was unable to defend himself in the proceedings. Respondents' Contention: The respondents were directed to produce the relevant record pertaining to the service of notice on the petitioner regarding the order-in-original, including the show cause notice and notices of personal hearing. Their submission was that the impugned order may be quashed and the matter remanded to the respondent No. 1 for passing a fresh order in accordance with law.