Fixing three successive dates of hearing in a single notice invalid as adjudicating authority had to pass specific orders for adjournment on each date fixed
In a recent judgment, the Hon’ble Allahabad High Court has quashed service tax demand and penalty holding that fixing three successive dates for hearing in a single notice invalid as adjudicating authority had to pass specific orders for adjournment on each date fixed.
ABCAUS Case Law Citation:
ABCAUS 4026 (2024) (05) HC
Important Case Laws relied upon:
Regent Overseas P. Ltd. and another v. Union of India and another; 2017 SCC OnLine Guj 2552
In the instant case, the Petitioner assessee had filed a Writ Petition before the Hon’ble High Court Challenging the adjudication order passed by the Assistant Commissioner, Central Goods and Services Tax & Central Excise demanding service tax and penalty under Section 78 of the Finance Act, 1994 read with Section 174 of CGST Act, 2017 and further five penalties of Rs. 10,000/- each and further penalty of Rs. 20,000/-.
The Hon’ble High Court observed that the notice for personal hearing in the adjudication proceedings were dispatched to the petitioner through e-mail as also through speed post at the permanent address that became known to the revenue authorities. In that regard, it may be noted, the petitioner was not registered under the Central Excise Act or the Finance Act, 1994.
The case of the Petitioner was that as per mandate of Section 33A of the Central Excise Act, 1994 (the Act), the respondent-authority could not have fixed three successive dates of hearing, by a single notice, that too within a span of seven days but solely with the object of defeating the purpose and intent of Section 33A of the Act.
Further, it was contended that in any case no order was passed on any of the three dates either granting or refusing adjournment. Without fixing any other date in the proceeding and without issuing any further notice in that regard, the impugned order was passed. Thus, the rules of natural justice had been completely violated.
The petitioner also denied that receipt of notice for personal hearing, on the assertion that he had never obtained registration at the address at which the respondent may have dispatched notice through speed post and in any case that notice was not received by the petitioner but by a distant relative of the petitioner. Thus, the petitioner was never informed about the proceeding.
The Hon’ble High Court observed that undoubtedly, the section 33A seeks to limit the adjournment that may be granted to a noticeee facing adjudication proceedings, to three dates. Thus, the mandate of the Act exists to conclude the adjudication proceedings expeditiously.
The Hon’ble High Court noted that the Hon’ble Gujarat High Court has observed that by virtue of the provisions of sub-section (2) of section 33A of the Act, when a personal hearing is fixed, it is open to a party to seek time by showing sufficient cause and in such a case, the adjudicating authority may grant time and adjourn the hearing by recording the reasons in writing. The provisions envisage fixing a date of hearing and in case if a party asks for time and makes out sufficient cause, then to adjourn the hearing. Since the number of such adjournments is limited to three, the hearing would be required to be fixed on each such occasion, and on every occasion when time is sought and sufficient cause is made out, the case would be adjourned to another day.
The Hon’ble High Court Gujarat High Court opined that the adjudicating authority is required to give one date at a time and record his reasons for granting adjournment on each occasion. It is not permissible for the adjudicating authority to issue one consolidated notice fixing three dates of hearing, whether or not the party asks for time.
In the case before the Hon’ble Gujarat High Court in the notice for personal hearing three dates have been fixed. The Hon’ble High Court opined that the absence of the petitioners on those three dates would be considered as grant of three adjournments. Further, as Section 33A provides for grant of not more than three adjournments, it envisages four dates of personal hearing and not three dates, as mentioned in the notice for personal hearing. Therefore, even if by virtue of the dates stated in the notice for personal hearing it were assumed that adjournments were granted, it would amount to grant of only two adjournments and not three adjournments, as grant of three adjournments would mean, in all four dates of personal hearing.
The Hon’ble High Court expressed complete agreement with the view taken by the Gujarat High Court and stated that once the legislature contemplates the limits the total adjournments to three dates, it does not contemplate denial of opportunity of hearing.
The Hon’ble High Court opined that fixing three successive dates within a period of one week was not a desirable course to be adopted as it does indicate a preconceived notion with the adjudicating authority qua the opportunity of adjournment that may be allowed. In any case the adjudicating authority had to pass specific orders to grant adjournment on each date fixed in the proceeding, if such adjournment was sought. It is at that stage that another date may have been fixed.
In the instant case, the Hon’ble High Court observed that it was not the case of the revenue that the assessing authority fixed the three dates either upon adjournment sought or the preceding date or interspaced in time as may have allowed the petitioner a reasonable opportunity to be acquainted with the fact of the adjournment granted on the earlier date. In any case the adjudicating authority did not communicate to the petitioner the order allowing the adjournment sought/deemed to have been sought and allowed on any particular date.
The Hon’ble High Court found it more glaring that the adjudicating authority did not pass any order on the third date. At the same time, he fixed the proceeding for another date i.e.. For that date, no notice is shown to have been issued to the petitioner inasmuch the next date would be the fourth date in the adjudication proceedings. The petitioner had a right to be informed of the same.
The Hon’ble High Court directed the petitioner depositing a sum of Rs. 5,00,000/- within a period of one month and also set aside the adjudication order. Further, the petitioner was directed to treat the adjudication order to be the part of show cause notice. He may submit his reply thereto within the same time.
The adjudicating authority was directed to fix a short date for hearing with fifteen days notice to the petitioner at his address as disclosed in the writ petition and the e-mail at which earlier communications may have been sent.
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