the essay of 12 June 2024 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="left"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">JUNE 12, 2024</font></strong></p> <p align="center"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Amusing Adjournments</strong></font></p> <p align="center"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><u>By Vijay Kumar</u></font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BY</strong> Finance Act, 2004, Section 33A was inserted in the Central Excise Act, 1944, prescribing limit on number of Adjournments of personal hearings. The provisions read: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">(1) The adjudicating authority shall, in any proceeding under this chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">(2) The adjudicating authority may, if sufficient cause is shown, at any stage of proceeding referred to in sub-section (1), grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">Provided that no such adjournment shall be granted </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">more than three times </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">to a party during the proceeding. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There is a similar provision in the GST Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">After the insertion of this Section, it became a common practice for many adjudicating authorities to give three dates in a single personal hearing letter, often the three hearing dates separated by not more than a day. In fact, the Section prescribes a limit on number of adjournments as three. That means, effectively there should be four dates of hearing, but not three. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">That is pure law. Now look at the applied law: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">An adjudication order dated 23.3.2023 was passed by the Assistant Commissioner, Central Goods and Services Tax demanding tax of Rs. 15,64,083/- and various penalties. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This order is challenged in the Allahabad High Court. <em>(Neutral Citation No. - 2024:AHC:90282-DB) </em></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to the petitioner, the order was served on him in March 2024. But the counsel for the revenue states that the notice in the adjudication proceedings were dispatched to the petitioner through e-mail as also through speed post at the permanent address that is known to the revenue authorities. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">It may be noted, the petitioner was not registered under Central Excise or Service Tax. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In paragraph-24 of the impugned order, it has been observed: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">24. The Noticee was given opportunities of personal hearing through virtual mode on 13.02.2023, 17.02.2023 and 20.02.2023 before the undersigned but they did not attend the hearing on the said dates nor they sought for any adjournment in this regard. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">It is worthwhile to note here that the letters meant for personal hearing were sent to the Noticee through Speed post/ e-mail. The Noticee neither responded in any manner nor attended the personal hearing on the scheduled date and time. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The petitioner submitted: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) it never became open to the respondent-authority to fix three successive dates of hearing, by a single notice, that too within a span of seven days, solely with the object of defeating the purpose and intent of Section 33A of the Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) In any case no order was passed on any of the three dates either granting or refusing adjournment. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) Without fixing any other date in the proceeding and without issuing any further notice in that regard, the impugned order was passed on 23.03.2023. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) Thus, the rules of natural justice are completely violated. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">On the other hand, the counsel for the revenue would contend that the petitioner failed to appear before the adjudicating authority despite notice dated 27.01.2023 served on him through e-mail. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In <em>Regent Overseas P. Ltd. (<a href="https://taxindiaonline.com/RC2/caseLawDet.php?QoPmnXyZ=MTI0NjAy" target="_blank"><strong>2017-TIOL-600-HC-AHM-CX</strong></a>)</em>, by a single consolidated notice dated 9.9.2015, the hearing was fixed on three dates, namely, 22.9.2015 or 29.9.2015 or 6.10.2015. The Gujarat High Court observed: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">On a plain reading of sub-section (2) of section 33A of the Act and the proviso thereto, what the same envisages is fixing a date of hearing and in case if a party asks for time and makes out sufficient cause, then to adjourn the hearing. Since the number of such adjournments is limited to three, the hearing would be required to be fixed on each such occasion, and on every occasion when time is sought and sufficient cause is made out, the case would be adjourned to another day. However, the adjudicating authority is required to give one date at a time and record his reasons for granting adjournment on each occasion. </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#FFFF00" span="span">It is not permissible for the adjudicating authority to issue one consolidated notice fixing three dates of hearing, whether or not the party asks for time, </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">as has been done in the present case. Thus, the notice itself suffers from a legal infirmity inasmuch as it fixes three dates of hearing at a time, which is not in consonance with the proviso to section 33A of the Act. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"style="background-color:#DFF3CB" span="span">By the notice for personal hearing three dates have been fixed and absence of the petitioners on those three dates appears to have been considered as grant of three adjournments as contemplated under the proviso to sub-section (2) of section 33A of the Act. In this regard it may be noted that sub-section (2) of section 33A of the Act provides for grant of not more than three adjournments, which would envisage four dates of personal hearing and not three dates, as mentioned in the notice for personal hearing. Therefore, even if by virtue of the dates stated in the notice for personal hearing it were assumed that adjournments were granted, it would amount to grant of two adjournments and not three adjournments, as grant of three adjournments would mean, in all four dates of personal hearing. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Allahabad High Court, in agreement with the view taken by the Gujarat High Court, observed: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Once the legislature contemplates the limits the total adjournments to three dates, it does not contemplate denial of opportunity of hearing. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Rather, it seeks to regulate and thereby restrict the number of total adjournments with the apparent intent to allow the adjudication proceedings to conclude in a time bound manner. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. In the course of adjudication proceedings, number of dates may be fixed. There is no prescription of law to restrict the total number of dates fixed in an adjudication proceeding to any number. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. It is possible that in the course of adjudication proceedings, adjournment may or may not be sought at any particular date fixed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. That event would remain case/circumstance specific. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Fixing three successive dates within a period of one week was not a desirable course to be adopted as it does indicate a pre-conceived notion with the adjudicating authority qua the opportunity of adjournment that may be allowed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. In any case the adjudicating authority had to pass specific orders to grant adjournment on each date fixed in the proceeding, if such adjournment was sought. It is at that stage that another date may have been fixed. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">8. Here, it is not the case of the revenue that the assessing authority fixed the three dates either upon adjournment sought or the preceding date or interspaced in time as may have allowed the petitioner a reasonable opportunity to be acquainted with the fact of the adjournment granted on the earlier date. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">9. In any case the adjudicating authority did not communicate to the petitioner the order allowing the adjournment sought/deemed to have been sought and allowed on any particular date. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10. What is more glaring is, the adjudicating authority did not pass any order on the third date i.e. 22.02.2023. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">11. At the same time, he fixed the proceeding for another date i.e. 23.03.2023. For that date, no notice is shown to have been issued to the petitioner inasmuch as 23.03.2023 would be the fourth date in the adjudication proceedings. The petitioner had a right to be informed of the same. </font></p> </blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">And the High Court ordered: </font></p> <blockquote> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. In view of the above, no useful purpose may be served in relegating the petitioner to the forum of the alternative remedy as his right of hearing has been seriously impaired. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. At the same time, in face of original show cause notice dated 19.10.2021 having been served on the petitioner and there being no denial as to that, the petitioner must be put to terms for the relief being claimed by him. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Accordingly, subject to the petitioner depositing a sum of Rs. 5,00,000/- within a period of one month from today, the adjudication order dated 23.03.2023 shall stand set aside. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. Further, the petitioner may treat the adjudication order dated 23.03.2023 to be the part of show cause notice. He may submit his reply thereto within the same time. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Subject to such compliance, the adjudicating authority may fix a short date for hearing with fifteen days notice to the petitioner at his address as disclosed in the writ petition and the e-mail at which earlier communications may have been sent. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The petitioner undertakes to appear in the proceeding on the date fixed such that the same may be concluded as expeditiously as possible preferably within a period of three months from today. </font></p> </blockquote> <p align="justify"><strong><font color="#CC3333" size="2" face="Verdana, Arial, Helvetica, sans-serif">Personal Hearing at 12.53 hrs - <em>Shubh Muhurt? </em></font></strong></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">There was a Commissioner who knew the value of time - every minute is precious. He fixed a personal hearing at <strong>12.53 hrs! </strong>And his Superintendent who sent the PH Intimation states that no adjournment will be granted and if the assessee fails to appear at the time fixed (mind you 12.53 by the minute - not a second before not a second later), the matter will be decided ex-parte. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Normally we find such precise time being fixed for occasions like wedding, but it is perhaps a good omen that the Revenue officers also follow these auspicious timings. Maybe the assessee should be given an option to choose the time so as to exclude durmuhurt and rahu kalam! </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Ingenious are the ways of intelligent babus to invalidate the will of the Legislature. </font></p> <p align="justify"><font color="#FF0000" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until next week</font></p> </body> </html>