M/S. Season Logistics vs. The Additional Commissioner

Facts

The petitioner, M/s. Season Logistics, filed a writ petition challenging an adjudication order dated January 27, 2022, passed by the Additional Commissioner of Central Tax. This order confirmed a demand of Rs. 1,67,51,508.00 and imposed an equivalent penalty under the Finance Act, 1994. The petitioner contended that the order-in-original was passed without issuing a show cause notice and without providing an opportunity for a personal hearing. The respondents stated that notices sent for personal hearing were returned as undelivered. The Court noted that in a similar case, an order-in-original was set aside and the matter remanded for fresh consideration.

Held

The Court held that it would be in the interest of justice to remand the matter back to the first respondent and afford the petitioner an opportunity of hearing before the confirmation of demand and imposition of penalty. The impugned order-in-original dated January 27, 2022, was set aside. The Court treated the set-aside order-in-original as a notice to show cause for the petitioner. The petitioner was directed to submit a reply within three weeks from the date of receipt of a copy of this order. If the reply was filed within the stipulated period, the first respondent was to pass a necessary order on remand after granting due opportunity of hearing, including a personal hearing, to the petitioner. If no reply was filed, the first respondent was at liberty to pass such order as deemed fit. The Court noted that the issue of whether the adjudication order could be passed after dropping an audit proposal was not expressly decided but was implicitly addressed by remanding the matter for fresh consideration after due process.

Key Issues

1. Whether the adjudication order dated January 27, 2022, passed by the Additional Commissioner is void ab initio, illegal, arbitrary, unjust, improper, and unfair for being violative of the principles of natural justice, specifically for not issuing a show cause notice and not providing a personal hearing to the petitioner, as contended by the petitioner? 2. Whether the adjudication order can be passed when an audit proposal has been dropped, as argued by the petitioner? Petitioner's Arguments: The petitioner argued that the adjudication order was passed without issuing a show cause notice and without providing any personal hearing notices, making it contrary to law and violative of the principles of natural justice. They also contended that the order was void ab initio, illegal, arbitrary, and unjust. Furthermore, they argued that once an audit proposal was dropped, no adjudication order could be passed, which they claimed was contrary to the Finance Act, 1994, and the Constitution of India (Articles 14, 19(1)(g), 21, and 265). Respondents' Arguments: The respondents, through their counsel, submitted that notices sent to the petitioner for personal hearing were returned undelivered. They also referred to a previous order of this Court in a similar case (Writ Petition No. 26986 of 2022) where the order-in-original was set aside and the matter remanded.