Show Cause Notice Issued to Invalid Address and Order Passed without Intimation for Personal Hearing Is Violative of Natural Justice Principle: CESTAT [Read Order]

The Chennai bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a show cause notice issued to an invalid address and an order passed without intimation for a personal hearing is violative of the natural justice principle.

On verification of accounts of M/s. Ordnance Factory, it was noticed that Shri M. Pandidurari, the appellant had provided services to M/s. Ordnance Factoryand had not discharged the service tax under ‘cleaning services’.

Since the appellant failed to furnish details and discharge service tax liability, the original authority adjudicated the Show Cause Notice issued to the appellant and confirmed the demand along with interest and imposed penalty. On appeal, the Commissioner (Appeals)upheld the same.

Thecounsel Shri M. Karthikeyan appeared on behalf of the appellant and submitted that the order has been passed in violation of the principles of natural justice. The appellant was earlier residing in Trichy. Even though the department knew that the appellant is not residing at the address at Trichy, the Show Cause Notice was issued to the address at Trichy. The notice sent by post was returned with remarks ‘not claimed’. A copy of the Show Cause Notice was then pasted at the Trichy address. This was also sent back by the owner of the house with the remarks ‘the appellant has vacated the premises before two years’.

It was argued that the Show Cause Notice has not been served upon the appellant and the appellant could not reply to the Show Cause Notice. Further, the intimations of a personal hearing were also not received by the appellant and the adjudication order has been passed without granting a personal hearing to the appellant.

The department was fully aware that the appellant is not residing and not available at the address at No. 2/126-E, Dindigul Road, Ramjee Nagar, Trichy – 620 009. Even then the Show Cause Notice has been issued to the said address by the department. After the Show Cause Notice was returned as unclaimed, the department has not opted to issue the Show Cause Notice to the proper address and instead followed the procedure under sec. 37C(b) of the Central Excise Act r/w sec. 83 of the Finance Act, 1994 to paste and affix the Show Cause Notice at the Trichy address.

The appellant has not been served the intimations for a personal hearing and the order is seen to have passed exparte.

A two-member bench of Ms Sulekha Beevi C.S., Member (Judicial) and Shri M. Ajit Kumar, Member (Technical) held that the Show Cause Notice was not issued to the appellant and also that the order has been passed exparte, which establishes a clear violation of principles of natural justice. The Tribunal set aside the demand and allowed the appeal.

To Read the full text of the Order CLICK HERE
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