JUNE 12, 2024

By Vijay Kumar

BY 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:

(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.

(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.

Provided that no such adjournment shall be granted more than three times to a party during the proceeding.

There is a similar provision in the GST Act.

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.

That is pure law. Now look at the applied law:

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.

This order is challenged in the Allahabad High Court. (Neutral Citation No. - 2024:AHC:90282-DB)

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.

It may be noted, the petitioner was not registered under Central Excise or Service Tax.

In paragraph-24 of the impugned order, it has been observed:

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.

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.

The petitioner submitted:

(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.

(2) In any case no order was passed on any of the three dates either granting or refusing adjournment.

(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.

(4) Thus, the rules of natural justice are completely violated.

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.

In Regent Overseas P. Ltd. (2017-TIOL-600-HC-AHM-CX), 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:

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. 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, 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.

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.

The Allahabad High Court, in agreement with the view taken by the Gujarat High Court, observed:

1. Once the legislature contemplates the limits the total adjournments to three dates, it does not contemplate denial of opportunity of hearing.

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.

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.

4. It is possible that in the course of adjudication proceedings, adjournment may or may not be sought at any particular date fixed.

5. That event would remain case/circumstance specific.

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.

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.

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.

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.

10. What is more glaring is, the adjudicating authority did not pass any order on the third date i.e. 22.02.2023.

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.

And the High Court ordered:

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.

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.

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.

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.

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.

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.

Personal Hearing at 12.53 hrs - Shubh Muhurt?

There was a Commissioner who knew the value of time - every minute is precious. He fixed a personal hearing at 12.53 hrs! 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.

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!

Ingenious are the ways of intelligent babus to invalidate the will of the Legislature.

Until next week