[Central Excise Act] Fixing Consecutive Dates of Hearing on Very Short Notice Violative of Opportunity of Hearing U/S 33A: Allahabad High Court

The Allahabad High Court has held that fixing consecutive dates of hearing within the period of a week would be violative of the opportunity of hearing as envisaged under Section 33A of the Central Excise Act, 1994.

Section 33A of the Central Excise Act provides that opportunity of hearing be given to a party in a proceeding under the Act, if desired by them. Further, it lays down the procedure for granting adjournment in adjudication proceedings to either of the parties on the condition that a single party can only be granted a total of three adjournments during such proceedings.

The bench comprising Justice Saumitra Dayal Singh and Justice Donadi Ramesh held that the purpose of confining the total number of adjournments was not to deny the opportunity of hearing to the noticee, but to regulate the manner in which the adjudication proceedings were to be conducted.

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

Case Background

Petitioner was served with an order dated 23.03.2023 by which a tax demand and various penalties were levied on him, the total of which was in excess of Rs.47,50,000. It was the petitioner's case that he was served with said notice in March of 2024. However, counsel for Revenue argued that the notice in the adjudication proceedings was sent to the petitioner though email and speed post and that the said notice stated that petitioner was given opportunities of personal hearing on 13.02.2023, 17.02.2023, 20.02.2023. Revenue submitted that none of these opportunities were taken up and neither did the petitioner pray for an adjournment on any of the aforementioned dates.

Counsel for petitioner relied on Section 33A of the Central Excise Act, 1994 to submitted that the respondents did not have the authority to fix three consecutive dates of hearing by a single notice, that too within a span of seven days. It was submitted that this was done only with the object of defeating the purpose and intent of Section 33A of the Act.

Petitioner argued that the impugned order was passed without fixing any other date and without issuing any further notice, thereby violating the Principles of Natural Justice.

Reliance was placed on Regent Overseas P. Ltd. and Anr. v. Union of Inia and Anr., wherein while clarifying the procedure in terms of adjournments sought under the Act, the Gujarat High Court made a distinction with regard to the total dates of hearing in the case of three adjournments. It was held that in the case that a party sought for three adjournments, the total dates of personal hearing would be four, rather than three.

Counsel for the revenue submitted that the petitioner failed to appear before the adjudicating authority despite the notice dated 27.01.2023, served via e-mail. Further, it was submitted that such notice was also dispatched to petitioner via speed post and was received by them.

The Court noted that the written instructions produced by the Revenue indicated that the notice was indeed dispatched to the petitioner via email on the aforementioned date. However, petitioner denied receiving such notice. Regarding the notice said to be issued via speed post, petitioner submitted that they did not get it at the registered office where the respondent might have sent the speed post to. It was submitted that the notice was not received by the petitioner but by one “Anju Dubey”, a distant relative of the petitioner.

High Court Verdict

Examining Section 33A of the Central Excise Act, the Court held that the purpose of the Section was to limit the adjournment that might be granted to a noticee facing adjudication proceedings, to three dates. It was held that that mandate of the Act was to conclude the adjudication proceedings in an expedient fashion.

Considering the decision of the Gujarat High Court in Regent Overseas, the Court held that just because the total number of adjournments had been confined to three, that did not imply a denial of the opportunity of hearing. It was held that the purpose of restricting the total number of adjournments was to allow the proceedings to cease in a timely manner.

The Court held that in the case of the assesee, fixing three successive dates within the period of a week was not a “desirable course to be adopted” because it indicated a pre-conceived notion with the adjudicating authority regarding the opportunity of hearing that might be allowed. It was held that in the case an adjournment was sought, the adjudicating authority was to pass specific orders to grant adjournment on each date in the proceeding. Finding that not to be the case of the respondents, the Court held that the petitioner was not allowed a reasonable opportunity to be acquainted with the fact of the adjournment granted on the earlier date.

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

The Court held that the petitioner's right of hearing had been “seriously impaired”, relegating to him to alternate remedy was pointless.

However, it was held that in light of the original show cause notice dated 19.10.2021 being served on the petitioner, a fact that was not contested by him, petitioner must be put to terms for the relief sought by him. Thus, the Court held that adjudication order dated 23.03.2023 would be set aside if the petitioner were to deposit a sum of Rs.5,00,00/- within a period of one month from the date of the hearing. Further, the Court stated that the adjudication order dated 23.03.2023 was to be treated as part of the show-cause notice, to which he had the liberty to reply to within a week and that the course of proceedings would then continue, as established by law.

Accordingly, the writ petition was disposed of.

Case Title: M/s Avshesh Kumar v. Union of India and 2 Ors. 2024 LiveLaw (AB) 380 [WRIT TAX No. - 570 of 2024]

Case citation: 2024 LiveLaw (AB) 380

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