Facts of the Case

The petitioners, clearing and forwarding agents, were issued a show-cause-cum-demand notice under Section 73(1) of the Finance Act, 1994 by the Commissioner, Central Tax, Kolkata North on 12th October 2018, to which they filed responses over nearly three years (November 2018, February 2019 and April 2021). Personal hearings were repeatedly re-fixed, at the petitioners' own instance on several occasions, on account of the incumbent Commissioner's transfer and re-assignment of the case; the petitioners' representative finally appeared and made submissions on 19th September 2023, and a further hearing was fixed for 17th October 2023. The Order-in-Original was passed on 16th July 2024 by the Commissioner, CGST & CX, Kolkata South. The petitioners challenged the order on three grounds: denial of an effective personal hearing on 17th October 2023; lack of competence of the Adjudicating Authority since the show-cause was issued by a different, since-transferred, authority; and delay in passing the order beyond one month of the personal hearing, contrary to a CBEC circular dated 10th March 2017.

Issues Involved

  1. Whether the order was vitiated for denial of a personal hearing on 17th October 2023.
  2. Whether the Adjudicating Authority who passed the order lacked competence because the show-cause notice had been issued by a different (though since re-assigned) authority.
  3. Whether an order passed more than a month after the personal hearing, contrary to paragraph 14.10 of the CBEC circular dated 10th March 2017, is liable to be set aside.

Petitioner's Arguments

  • Though the petitioners' representative appeared on 17th October 2023, the adjudicating officer was himself not present, so no hearing actually took place, and no further opportunity was granted before the order was passed.
  • Once the show-cause was issued by the Kolkata North Commissionerate, only that authority or its successor in the same seat, not a different re-assigned Commissioner, could adjudicate; reliance was placed on the CBEC circular dated 10th March 2017 and on Innovative Security Solutions, LMB Sons and Shantilal Jain.
  • The order was passed nearly ten months after the last personal hearing, in violation of paragraph 14.10 of the circular requiring communication of the decision within one month barring exceptional, recorded circumstances.

Respondent's Arguments

  • The officer who passed the order was the very officer who had earlier held the post of Commissioner, Kolkata North and had heard the matter, and was re-assigned the case on transfer -- consistent with, not contrary to, the circular.
  • The petitioners were given repeated opportunities of hearing over several years, of which they availed themselves; the claim that no hearing occurred on 17th October 2023 is a bald, uncorroborated assertion.
  • Paragraph 14.10 of the circular is only directory, not mandatory, since no consequence for its breach is prescribed, and adequate explanation for the delay exists in the impugned order itself; Innovative Security Solutions is distinguishable as that order was passed 20 months after the hearing.

Court Order / Findings

  • The petitioners had themselves sought repeated adjournments over more than three years, and the allegation that no hearing occurred on 17th October 2023 was an uncorroborated, belated assertion affirmed only by a deponent who was admittedly not present on that date -- the point was rejected as an afterthought.
  • The jurisdiction objection was never raised before the Adjudicating Authority, and in any case the officer who passed the order was the very Commissioner originally holding the notice-issuing post, re-assigned the case on transfer -- consistent with the CBEC circular's own provision for a successor-in-office to complete the hearing.
  • Paragraph 14.10 of the CBEC circular dated 10.03.2017, requiring communication of the order within one month, is directory and not mandatory, since the circular itself provides for exceptional delay and no adverse consequence for non-compliance is prescribed; adequate explanation for the delay existed on the facts, distinguishing Innovative Security Solutions and LMB Sons.
  • All three grounds having failed, the writ petition was dismissed with no order as to costs.

Important Clarification

  • A jurisdictional objection that a different officer adjudicated a show-cause notice is not sustainable where that very officer was the original notice-issuing authority who is re-assigned the matter on transfer, consistent with the CBIC circular on successor-in-office adjudication.
  • The one-month timeline in paragraph 14.10 of the CBEC circular dated 10.03.2017 for communicating an adjudication order after personal hearing is directory, not mandatory, absent any statutory consequence for delay, and will not by itself vitiate an order where the delay is otherwise explained.

Sections Involved

  • Section 73(1), Finance Act, 1994 -- show-cause notice for service tax not levied or paid.
  • CBEC Circular dated 10th March, 2017 (paragraphs 14.10 & 16) -- timelines for issue and communication of adjudication orders.
  • Section 37C, Central Excise Act, 1944 -- mode of service/communication of orders.

Decision – In Favour of

Department. The writ petition challenging the confirmed service tax demand was dismissed on all three grounds urged.

Case Details

High Court at Calcutta, Constitutional Writ Jurisdiction, Appellate Side; WPA 4165 of 2025; Coram: Justice Raja Basu Chowdhury; Judgment dated 27.10.2025.

Link to Download the Order

Click here to view/download the full order

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.