The Division Bench of the Delhi High Court set aside the service tax demand amounting to ₹20,74,77,321/- due to the failure to provide a copy of the Show Cause Notice ( SCN ), despite the assessee had requested for the SCN and certain other communications on at least three occasions.
The bench consisting of Justice Vibhu Bakhru and Justice Sachin Datta does not consider it apposite to conduct an inquiry in these proceedings regarding the question at hand. This decision is based on the undisputed fact that the petitioner had repeatedly stated it had not received the copy of the impugned SCN and claimed it was not traceable. The assessee had requested a copy of the impugned SCN and other communications on at least three occasions. Furthermore, the bench found no reason why the respondent could not forward a copy of the impugned SCN, without prejudice to their claim that the SCN had been served to the assessee earlier.
The assessee has contested an Order-in-Original dated March 12, 2024, issued by the Commissioner of Central Goods & Service Tax, Audit-II, Delhi .This order upheld the demand for service tax amounting to ₹20,74,77,321 (Rupees Twenty Crores Seventy-four Lakhs Seventy-seven Thousand Three Hundred Twenty-one Only) and Cenvat Credit totaling ₹10,49,42,030 (Rupees Ten Crores Forty-nine Lakhs Forty-two Thousand Thirty Only).
Additionally, the authority imposed penalties of ₹20,74,77,321 (Rupees Twenty Crores Seventy-four Lakhs Seventy-seven Thousand Three Hundred Twenty-one Only) for non-payment of service tax and ₹10,49,42,030 (Rupees Ten Crores Forty-nine Lakhs Forty-two Thousand Thirty Only) for the improper use of Cenvat credit, in accordance with Section 78 of the Finance Act, 1994.
It was the assessee’s case that it had not received the Show Cause Notice dated 26.11.2019 and therefore, was unable to tender a comprehensive reply to the same. The assessee contended that the impugned order has been passed in violation of the principles of natural justice.
Mr. Rajesh Mishra representing the respondent submitted that the impugned order clearly reflects that notices were sent to the petitioner by speed post at the correct address. However, it was not disputed that the assessee had on three occasions requested the respondent to provide a copy of the SCN and had unequivocally asserted that it had not received the same.
The first such request was made on 15.12.2020 by the authorized representative of the assessee. Thereafter by a communication dated 29.12.2020, the assessee requested copies of the letters dated 27.12.2017, 11.05.2018, 22.05.2018 as well as the impugned SCN, which were referred to in the summons dated 25.06.2019.
The assessee reiterated that a similar request was made on 15.12.2020 but it did not receive a response or a copy of the impugned SCN. Further stated that the notices were not traceable as the assessee’s erstwhile counsel was not cooperating in the matter.
The assessee sent an email on 23.01.2024, reiterating their grievance about the non-receipt of the impugned SCN. In response, the respondent communicated on 25.01.2024, asserting that the SCN had been delivered to the assessee’s address at B-280, Vivek Vihar, Delhi-110095, and requested the assessee to submit their defense on merits. However, the assessee replied, reiterating that the impugned SCN had not been received.
The court considered to set aside the impugned order and remand the matter to the adjudicating authority for consideration afresh. The respondent shall provide the copy of the impugned SCN and the other communications, if any, as sought by the petitioner in its email dated 15.12.2020 within a period of two weeks from date.
Further assessee shall respond to the impugned SCN within one week from the date of receipt of the aforesaid documents. The adjudicating authority is requested to pass a fresh order after affording the petitioner an opportunity of hearing as expeditiously as possible and preferably within a period of eight weeks thereafter. Accordingly, the petition was disposed of.
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