Order confirming Service Tax without issuing SCN is invalid: Telangana HC [Read Order]

The Telangana High Court has held that the Order confirming service tax without issuing SCN is invalid.

Sai Constructions, the petitioner filed an appeal seeking the quashing of Order- in-Original, dated 30.03.2022, passed by the first respondent. The first respondent has confirmed the demand for service tax to the tune of Rs.37,83,522.00 for the period 2014 – 2018 in terms of proviso to Section 73(2) of the Finance Act, 1994 r/w Section 174 of the Central Goods and Services Tax Act, 2017 (briefly ‘the CGST Act’ ) besides imposing a penalty of equivalent amount under Section 78 of the Finance Act, 1994. That apart the first respondent has also levied interest etc., on the petitioner.

It was contended by the petitioner that the show cause notice issued preceding the Order-in-Original as well as the notice for personal hearing, were not served upon the petitioner and are thereby violating the principles of natural justice.

In the impugned order, it was stated that despite the despatch of four letters to the petitioner for a virtual personal hearing, the petitioner neither responded nor produced any documents and proceeded with the matter exparte and passed the impugned order.

Chief Justice Ujjal Bhuyan and Justice C V Bhaskar Reddy observed that there is no finding recorded by the first respondent that shows cause notice was served on the petitioner or that the four letters intimating virtual personal hearing were served upon the petitioner. Mere issuance of show cause notice or letters of personal hearing to an assessee is not adequate. The assessing Officer is required to record a finding that notices were issued and served upon the assessee but despite the service of notice, the assessee did not come forward to contest the proceeding.

The Court set aside the impugned Order-in-Original dated 30.03.2022 and remand the matter back to the first respondent for a fresh decision. Mr K. Durga Prasad, counsel appeared for the petitioner and Mr B. Narasimha Sarma, counsel appeared for the respondents and Mr G. Praveen Kumar, Deputy Solicitor General of India for Union of India representing respondent No.4.

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