2025 (7) TMI 403 - HC - GST

Maintainability of petition - availability of alternative remedy - Seeking for quashing and setting aside the ex parte order - HELD THAT - The order impugned in the present writ petition reflects that letters fixing dates for personal hearing were duly sent to the registered address of the petitioner scheduling hearings on 9th December 2021 23rd December 2021 and 19th January 2022 thereby calling upon the petitioner to appear before the adjudicating authority. However despite receipt of such letters and/or notices the petitioner failed to appear on the scheduled dates. As a consequence and in view of the petitioner s continued absence the adjudicating authority proceeded to pass an ex parte order dated 21st January 2022. It is informed that order dated 21.01.2022 is appealable order. Therefore admittedly there exists an efficacious alternative remedy - petition dismissed.

Summary

The core legal questions considered by the Court in this matter are:

• Whether the ex parte order dated 21st January 2022, passed by the Assistant Commissioner under the CGST and Central Excise Commissionerate, demanding service tax along with interest and imposing penalty, can be quashed on the ground that the petitioner was not afforded an opportunity of hearing prior to the order.
• Whether the order dated 21st January 2022 can be treated as a show cause notice, thereby requiring the adjudicating authority to provide an opportunity of hearing and pass a reasoned order thereafter.
• Whether the petitioner's failure to appear despite receipt of notices for personal hearings justifies the passing of an ex parte order.
• Whether the writ petition is maintainable in view of the existence of an efficacious alternative remedy in the form of an appeal against the impugned order.
• Whether the delay in preferring an appeal can be condoned or justified, including on the ground of the Covid-19 pandemic.

Regarding the first and second issues concerning procedural fairness and the nature of the impugned order, the relevant legal framework includes section 73(1) of the Finance Act, 1994, section 174 of the CGST Act, 2017, and section 78 of the Finance Act, 1994, read with section 174 of the CGST Act. These provisions empower the tax authorities to demand service tax, interest, and impose penalty for violations. The Indian Evidence Act, 1872 (section 68) and Service Tax Rules, 1994 (rule 6) are also invoked for evidentiary and procedural compliance.

The Court examined the adjudication order dated 21st January 2022 and the procedural history, noting that multiple notices were sent to the petitioner fixing personal hearing dates on 9th December 2021, 23rd December 2021, and 19th January 2022. Despite proper service of these notices, the petitioner failed to appear before the adjudicating authority. The Court interpreted this non-appearance as a waiver of the right to be heard, thereby justifying the passing of an ex parte order. The Court rejected the petitioner's contention that the order should be treated as a show cause notice, emphasizing that the order was a final adjudicatory order and not an initial notice.

In addressing the third issue, the Court gave weight to the evidence of notices sent and received by the petitioner, and the petitioner's failure to respond or appear at the hearings. The Court found that the adjudicating authority had provided sufficient opportunity to the petitioner, and the ex parte order was a consequence of the petitioner's non-compliance. The Court's reasoning aligns with established principles that a party's failure to avail the opportunity of hearing permits the authority to proceed ex parte.

On the fourth issue of maintainability of the writ petition, the Court noted that the impugned order is appealable under the relevant statutes. The statutory period for filing an appeal is sixty days, with an additional condonable period of thirty days. The petitioner did not file an appeal within the prescribed period and instead filed the writ petition nearly two years later. The Court relied on authoritative precedent which holds that once the statutory period for appeal expires, writ petitions challenging such orders should not be entertained, particularly when an efficacious alternative remedy exists. This principle ensures that statutory appellate mechanisms are respected and not circumvented by writ petitions.

Regarding the petitioner's argument about the Covid-19 pandemic causing delay, the Court acknowledged the circumstance but observed that the petitioner was not vigilant in prosecuting the matter. The Court clarified that the petitioner remains free to file an appeal and may raise the pendency of the writ petition as a ground to justify any delay in filing the appeal. This reflects a balanced approach recognizing pandemic-related difficulties while upholding procedural discipline.

The Court also considered competing arguments from the petitioner's counsel, who relied on an unreported Division Bench decision directing that similar ex parte orders be treated as show cause notices and that the petitioner be afforded an opportunity of hearing. The Court distinguished the present facts, emphasizing the petitioner's failure to appear despite repeated notices and the availability of appeal remedies. The CGST Authority's counsel's arguments on procedural compliance and statutory limitation periods were accepted as more persuasive.

In conclusion, the Court held that no interference with the ex parte order dated 21st January 2022 was warranted. The writ petition was dismissed with no order as to costs. However, the Court expressly permitted the petitioner to file an appeal before the appropriate authority and to raise any delay justification, including the pendency of the writ petition.

Significant holdings and core principles established by the Court include:

• "The order impugned... reflects that letters fixing dates for personal hearing were duly sent to the registered address of the petitioner... despite receipt of such letters and/or notices, the petitioner failed to appear on the scheduled dates."
• "In view of the petitioner's continued absence, the adjudicating authority proceeded to pass an ex parte order dated 21st January, 2022."
• "The said order was passed as far back as in 2022 and is an appealable one... the prescribed period of limitation for preferring an appeal is sixty days, with a further condonable period of thirty days."
• "Once the statutory period for preferring an appeal has expired, a writ petition should not be entertained."
• "This order shall not preclude the petitioner in preferring the appeal before the appropriate authority in accordance with law."
• "The petitioner shall be at liberty to raise the issue of pendency of this writ petition to justify the delay in preferring the appeal."

The Court thereby reaffirmed the principle that procedural fairness requires an opportunity of hearing, but such opportunity can be waived by non-appearance, allowing ex parte orders. It also underscored the importance of adhering to statutory appeal timelines and the limited scope for writ petitions where efficacious alternative remedies exist. The judgment balances procedural rights with the need for finality and administrative efficiency in tax adjudications.