Facts of the Case

The petitioner, M/s Praudhi Property Management Pvt. Ltd., challenged the legality and validity of an ex-parte Order-in-Original dated 29.04.2022 passed by the Additional Commissioner of Central Tax. The adjudicating authority confirmed service tax demand along with interest and penalties without the petitioner participating in the proceedings.

The petitioner contended that neither the show cause notice nor the personal hearing notices were served upon it. Consequently, the petitioner argued that the adjudication proceedings were conducted in complete violation of the principles of natural justice. The writ petition was therefore filed seeking quashing of the impugned order instead of pursuing the statutory appellate remedy.

Issues Involved

  1. Whether an ex-parte adjudication order can be sustained when the assessee alleges non-service of the show cause notice and hearing notices.
  2. Whether the High Court can exercise writ jurisdiction despite the availability of an alternative statutory appellate remedy.
  3. Whether violation of the principles of natural justice justifies setting aside the adjudication order and remanding the matter for fresh consideration.

Petitioner’s Arguments

  • The impugned Order-in-Original was passed without proper service of the show cause notice.
  • No notice fixing personal hearing was served upon the petitioner.
  • The adjudication was conducted ex-parte in complete violation of the principles of natural justice.
  • Since there was a fundamental procedural defect, the existence of an alternative appellate remedy should not prevent the High Court from exercising its writ jurisdiction.
  • The order was arbitrary, illegal, unsustainable and liable to be quashed.

Respondent’s Arguments

  • The Department submitted that a show cause notice had been issued on 21.12.2020.
  • It was argued that the petitioner neither filed any reply nor appeared despite several opportunities for personal hearing.
  • The Department further stated that, as per the Panchnama dated 31.12.2020, the show cause notice was affixed at the petitioner's last known business premises because the petitioner's whereabouts were allegedly not known for several years.
  • Therefore, according to the Department, sufficient opportunity had been provided before passing the adjudication order.

Court Order / Findings

The Telangana High Court observed that although the records referred to issuance of the show cause notice, the material placed before the Court did not establish service of notices relating to personal hearing upon the petitioner.

The Court held that there was a prima facie violation of the principles of natural justice. Considering this procedural defect, the Court declined to relegate the petitioner to the statutory appellate forum and instead exercised its writ jurisdiction.

Accordingly, the Court:

  • Set aside the Order-in-Original dated 29.04.2022.
  • Directed that the impugned order itself shall be treated as the show cause notice.
  • Permitted the petitioner to file its reply within three weeks.
  • Directed the adjudicating authority to pass a fresh order strictly in accordance with law after granting adequate opportunity of hearing, including a personal hearing.
  • Clarified that if no reply is filed within the stipulated period, the authority would be free to pass an appropriate order in accordance with law.
  • Disposed of the writ petition without any order as to costs.

Important Clarification

This judgment reiterates that:

  • Mere issuance or affixture of a show cause notice does not automatically satisfy the requirement of natural justice where proper opportunity of hearing is not established.
  • High Courts may entertain writ petitions despite the existence of an appellate remedy where adjudication suffers from violation of natural justice.
  • Ex-parte tax adjudication orders are liable to be set aside if reasonable opportunity of hearing is denied.
  • Fresh adjudication after granting adequate hearing is the appropriate remedy where procedural fairness has been compromised.

Sections Involved

  • Section 73(2)
  • Section 75
  • Section 77(1)(c)
  • Section 77(2)
  • Section 78(1)
  • Section 85 (Statutory Appeal Provision)
  • Article 226 of the Constitution of India (Writ Jurisdiction)

Link to Download the Order

https://www.mytaxexpert.co.in/uploads/1785403102_2377compressed.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.