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ST – VCES, 2013 application could not have been rejected without following the principles of natural justice: High Court

By TIOL News Service

BANGALORE, SEPT 20, 2017: THE petitioner prays for – Quashing by an appropriate writ or Order in the nature of Certiorari or otherwise the impugned letter/order C.No.IV/16/990/2013 D-III VCES/Gr.XXIII/8062/14 dated 23.12.2014 issued by the first respondent as being violative of the principles of natural justice and as being beyond the statutory mandate; as being arbitrary, illegal, erroneous and violative of Article 14 of the Constitution; direct the Respondents by an appropriate writ or order in the nature of Mandamus or otherwise to accept the VCES application filed by the petitioner; grant such other reliefs as the High Court may think fit including cost of the writ petition.

The short point is as to whether the impugned rejection of the Declaration filed by the petitioner under VCES, 2013 by the Deputy Commissioner of Service Tax, ST-I Commissionerate, Bangalore, without giving an opportunity of hearing to the petitioner is sustainable or not.

The petitioner draws the attention of the Court towards the Circular No. 170/5/2013-ST, dated 08/08/2003 in which it is clarified that before rejection of the Declaration, the Designated Authority will give an opportunity of hearing to the Applicant.

12

Whether declarant will be given an opportunity to be heard and explain his cases before the rejection of a declaration under Section 106(2) by the designated authority?

Yes. In terms of section 106(2) of the Finance Act, 2013, the designated authority shall, by an order, and for reasons to be recorded in writing reject a declaration if any inquiry/investigation of audit was pending against the declarant as on the cutoff date, i.e.,1.3.2013. An order under this section shall be passed following the principles of natural justice.

To allay any apprehension of undue delays and uncertainty, it is clarified that the designated authority, if he has reasons to believe that the declaration is covered by section 106(2), shall give a notice of intention to reject the declaration within 30 days of the date of filing of the declaration stating the reasons for the intention to reject the declaration. For declarations already filed, the said period of 30 days would apply from the date of this circular.

The declarant shall be given an opportunity to be heard before any order is passed by the designated authority.

The High Court observed -

"5. The aforesaid non-compliance with the principles of natural justice which was clarified by the concerned Ministry and Central Board of Excise and Customs to be read in the provisions of Section 106(2) of the Finance Act, 2013 were thus admittedly breached by the concerned Designated Authority in this case."

The High Court, therefore, allowed the petitions by setting aside the impugned order dated 23/12/2014, and remanded the matter back to the Designated Authority concerned with a direction to provide a reasonable opportunity of hearing to the petitioner and then pass appropriate speaking order, meeting all the objections and contentions of the petitioner separately in the said speaking order.

The petitioner was asked to appear before the Respondent Authority on 23/10/2017 and the said Authority was directed to pass appropriate speaking order within a period of two months thereafter.

No costs were imposed.

(See 2017-TIOL-1933-HC-KAR-ST)


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