Facts of the Case:

In this case, the petitioner challenged a recovery notice dated 04.01.2024 issued on the basis of an Order-in-Original dated 19.07.2021, whereby a demand of service tax along with interest and penalty had been confirmed. The petitioners contended that they had neither received the show cause notice dated 07.07.2020 nor any intimation regarding personal hearing, and were also unaware of the Order-in-Original until the recovery proceedings were initiated. Upon receiving the recovery notice, the petitioners sought a copy of the relevant documents, following which the Order-in-Original was furnished through email on 18.01.2024.

The respondent authorities, in their affidavit, asserted that communications including the show cause notice had been sent through registered post and were not returned undelivered, thereby presuming service upon the petitioners. The petitioners, however, denied receipt of any such communications and argued that they were deprived of the opportunity to contest the proceedings.

Issue:

Whether an Order-in-Original passed without proper service of show cause notice and without granting an opportunity of hearing is violative of principles of natural justice? Whether recovery proceedings based on such an order can be sustained in law?

Held That:

The Court held that the petitioners had been deprived of a reasonable opportunity of hearing, as they were not effectively served with the show cause notice or given an opportunity to respond before the passing of the Order-in-Original. The mere assertion by the department that notices were sent by registered post was insufficient to conclusively establish proper service, particularly when the petitioners denied receipt.

Recognizing the violation of principles of natural justice, the Court set aside both the Order-in-Original dated 19.07.2021 and the consequential recovery notice dated 04.01.2024. The Court directed the respondent authorities to initiate the proceedings afresh by furnishing a copy of the original show cause notice dated 07.07.2020 to the petitioners and granting them adequate time, including an opportunity of personal hearing, to file their reply.

It was further directed that upon receipt of the show cause notice, the petitioners shall submit their reply within 30 days, and the adjudication shall thereafter be completed in accordance with law.

Case Name: M/s. S3 Enterprise, Abdul Kuddus Ali. Versus Union of India, The Commissioner of Central Goods And Service Tax Dibrugarh, The Assistant Commissioner Central Goods And Service Tax Central GST And Central Excise Division Dibrugarh., The Deputy Commissioner Central Goods And Service Tax Dibrugarh. dated 07.04.2026

To read the complete 2026 Taxo.online 857