Toyota Construction Pvt. Ltd. vs Union of India

Sonia Gokani, J.—Rule. Learned Mr. Gaurang H. Bhatt waives service of rule on behalf of respondent No. 1. The petitioner herein has challenged the order of pre-deposit passed by the Central Excise and Service Tax Appellate Tribunal ("the Tribunal" for short) dated 30-11-2011, where brief factual background would be necessary.

1.1 The petitioner-company, which is engaged in the activity of construction of commercial and industrial buildings and structures, was issued a show cause notice on the ground that Daman Commissionerate conducted audit of the record of the petitioner-company and was of the opinion that there was wrongful availment of benefit of Notification Nos. 15/2004-S.T., dated 10-9-2004 and 1/2006-S.T., dated 1-3-2006 by availing reduction/abatement of 67% in value of taxable service under the Notifications.

It is averred in the petition that the Audit Officer was of the opinion that the petitioner-company was paying service tax at the rate of 2% or 4% on the value of contract under the Works Contract Scheme, where it did not include the value of material supplied free of cost by the clients and, therefore, based on the Panchnama recorded as well as statements of various persons, show cause notice dated 20-4-2010 had been issued, which was replied to and the Commissioner, Central Excise confirmed total tax liability of Rs. 3,10,55,022/- along with penalties and interest. It is also averred in the petition that the company had deposited a sum of Rs. 37,90,754/- towards the service tax liability and Rs. 2,76,895/- towards interest.

The petitioner-company preferred an appeal with the stay application before the Tribunal. On the ground of urgency a request was made for an early hearing of the matter and such a request of early hearing was granted by the Tribunal vide its order dated 14-11-2011 whereby it directed the listing of the main matter along with the stay application for hearing on 30-11-2011, It is the say of the petitioner that since the close relatives of petitioner No. 2 suffered a severe heart attack, he had to rush to his native place. On account of certain complicated facts, his presence being inevitable, adjournment was sought on that day and such request of adjournment was rejected by the Tribunal, which passed the order on. merits directing the pre-deposit of sum of Rs. 1 crore in addition to the amount already deposited by the petitioner-company.

Being aggrieved by the impugned order of the Tribunal, this petition is being preferred seeking following prayers.

(A) That Your Lordships may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate writ direction or order, quashing and setting aside impugned Stay Order No. S.1574/WZB/AHD/2011, dated 30-11-2011 (Annexure "H" hereto) passed by the CESTAT, Ahmedabad; and be further pleased to direct the CESTAT, Ahmedabad to restore Stay Application No. S.T./S-952/11-DB in Appeal No. S.T./433/2011 for deciding the stay application after hearing the petitioners;

(B) Your Lordships, may be pleased to issue a writ of prohibition or a writ in the nature of prohibition, or any other appropriate writ, order or direction, completely and permanently prohibiting the respondents herein from taking any action against the petitioner-company pursuant to Order No. S.1574/WZB/AHD/2011, dated 30-11-2011 passed by the CESTAT, Ahmedabad;

(C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to restrain the CESTAT, Ahmedabad from dismissing/rejecting Appeal No. S.T./433/2011 for noncompliance of condition of depositing Rs. 1 crore, thereby staying execution and implementation of Stay Order No. S.1574/WZB/AHD/2011, dated 30-11-2011;

(D) An ex-parte ad interim relief in terms of para 7(B) above may kindly be granted.

(E) Any other further relief that may be deemed fit in the facts and circumstances of the case may also please be granted,

On 13-1-2012, this Court had issued notice to the other side, in response to which learned Counsel Mr. Gaurang Bhatt appeared for the Revenue.

We have heard learned counsel Mr. Paresh Dave for the petitioner and learned counsel Mr. Bhatt for the Department and on having duly considered rival submissions of the parties, this petition is being allowed for the following reasons:-

6.1. On examination of the record, it appears clearly that at the request of the present petitioner, the Tribunal had fixed the date of hearing of stay application along with the main matter on dated 30-11-2011 and on the stipulated date, on having found that the petitioner had filed a Vakalatnama signed in favour of the advocate and on being assured that the request made for adjournment was "on a very flimsy" ground that the Director of the appellate-company had to rush to his native place in connection with serious illness of his close relative, Tribunal declined the request of adjournment.

It is submitted before us by learned counsel Mr. Dave that substantial amount has been deposited by the petitioner towards tax liability along with the sum of interest. However, additional amount of Rs. 1 crore has been further directed to be deposited by the Tribunal without affording any opportunity for hearing when there was a genuine ground presented before it. He also urged complete violation of principles of natural justice and passed such an order on merits.

Per contra, learned counsel Mr. Bhatt fervently submitted that out of the total amount of tax liability nearing to Rs. 7 crore, the direction of Tribunal is only for deposit of Rs. 1 crore, which is not even 20% the total amount and, therefore, no interference is required in the order passed by the Tribunal when it has taken due care of the interest of both the sides.

We are of the opinion that though the Tribunal has directed further deposit of the amount of Rs. 1 crore out of the total tax liability, which has been fixed by the Commissioner, the fact can neither be disputed nor challenged that there was no opportunity of hearing given to the petitioner-company. It is true that it was petitioner who had prayed for early hearing of the stay application and, therefore, there was a specific date which had been earmarked by the Tribunal and on the stipulated date the matter came up for the hearing as scheduled. However, due to the unavoidable reasons, which have been specifically mentioned in the adjournment application when a request was made by a fax message, opportunity of hearing could not have been denied to the petitioner by terming the ground of adjournment as flimsy. There is nothing to indicate that petitioner was either indulging into dilatory tactic or was on to forum shopping. Request for early hearing cannot bar the petitioner to request for adjournment on genuinely arisen contingencies. Even if the direction is for deposit of 20% of the total amount emphasized by learned counsel for the Revenue, since the petitioner has not been able to put-forth its case of complete waiver and even otherwise also, this order requires interference on the ground of denial of opportunity of hearing as also for violation of principles of natural justice.

Furthermore, as can be noted from the order of the Tribunal, learned advocate appearing for the petitioner-company also was not present when such an order was passed.

In such circumstances, in our opinion impugned order dated 30-11-2010 is required to be interfered with requiring quashment and therefore the same is quashed with following directions:-

(1) The Tribunal shall afford an opportunity of hearing to the parries before passing an order on the application of stay as well as application of pro-deposit made by the petitioner.

(2) On 10-2-2012, the petitioner shall remain present before the Tribunal, on which date the Tribunal shall fix any other date of hearing, convenient to both the sides and shall conduct its proceedings on future dates by thus informing both the sides adequately.

(3) Petitioner shall co-operate in the proceedings before the Tribunal.

The petition stands disposed of accordingly with no order as to cost. Rule is made absolute to the above extent. Direct service to respondent No. 2 is permitted.