The High Court of Madras, on 2nd February struck down a notice demanding service tax on the ground of violation of natural justice principles.The Assistant Commissioner of Service Tax sent a notice to the petitioner company, engaged in generation of electricity power plant, requiring them to deposit Service Tax for the period from January to March 2014 on the activity of generation of electricity. The petitioner challenged the said demand letter on the ground that coercive measures to recover the tax cannot be taken without issuing a formal Show Cause Notice and it violates Articles 14, 19(1)(g) and 300 of the Constitution of India.
When the matter was first raised before the Court, it directed the respondents to proceed with the assessment by fulfilling the requirements of natural justice principles. Following this, a fresh assessment was started and an opportunity of personal hearing was granted to the petitioners. According to the petitioner, despite corresponding with the petitioner on a day-to-day basis for various other matters, the 2ndrespondent did not fix any hearing in the matter for almost one and a half years. The 2nd respondent created an impression in the mind of the petitioner that he is following the orders of this Court dated
02.04.2014, but changed his mind and filed a miscellaneous petition before this Court for modification of the earlier order in the month of October 2015. The said petition was filed in October 2015, however, the same has not yet been numbered or brought before the Court for hearing. Inspite of filing the application for modification, even without waiting for orders of this court, the 1st respondent, simultaneously, issued the impugned show cause notice dated 12.10.2015 with entirely different allegations. The issuance of the 2nd show cause notice dated 12.10.2015, contrary to the directions given by this Court in W.P.No.9496 of 2014, cannot be appreciated by this Court.
Justice Duraiswamy, while nullifying the notice pointed out that, “when the respondent is bound by the directions given by this Court and when this Court had directed the petitioner to submit their objections by treating the impugned proceedings as show cause notice and when this Court directed the respondent to consider the same and pass orders in accordance with law, after giving an opportunity of personal hearing to the petitioner Company, the issuance of the 2nd show cause notice, contrary to the direction of this court in W.P.No.9496 of 2014 is liable to be set aside.”
Read the full text of the judgment below.
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