Annapureddy Srinivas Reddy v. 1. Union of lndia

Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an order or direction or a writ more pa(icularly one in the nature of Writ of Mandamos calling for the records relation to O.O.No.14112023-24- Adjn/(ADC)/ST dated 311O112024 and DIN No.20240156YQ000000456E issued by 3rd respondent and declare the same as illegal, arbitrary and violative of a(icles 14,21 of Constitution of lndia and beside violative of principles of natural justice and consequently quash the same. lA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant interim Suspension of impugned order passed by 3rd respondent in case No. O.O.No.14'll2023-24-Adjni(ADC)/ST dated 31lO1l2OZ4 and No.20240'156YQOOOOO0456E, pending disposal of the writ petition and pass DIN lA NO: 2 OF 2025 Petition rinder Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the Fligit Court may be pleased to direct,.the order passed by 3rd respondent in case No. O.O. No.l41 / 2023-24- Adjn / (ADC)/ST dated 311O112024 and DIN No.20240'156yQ000000456E passed by the Respondent No.1 lA NO: 3 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the Garnishee Notice dated 10-01-2025 (which was served upon the petitioner on 06-03-2025) vide Notice No. DIN-202S0156ye000000D0D7, issued by the office of the 3rd respondent by permitting the petitioner to operate the bank account, pending disposal of the Writ Petition. Counsel for the Petitioner: SRI PARSA ANANTH NAGESWAR RAO Counsel forthe Respondent No.1: SRt GADI PRAVEEN KUMAR, Dy. Counsel for the Respondent No.2: SRI DOMINIC.FERNANDES, SC FOR CBIC Counsel for the Respondent No.3: M/s. ANJALI AGARWAL, SC FOR CT SOLICTTOR GEN. OF INDTA The Court made the following: ORDER THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE NARSING RAO NANDTKONDA WRIT PETITION NO.419O OF 2025 ORDER: r Hon'ble Sri .trrstiee Narslng Rao N(r;ndlkonda) This Writ Petition, under Article 226 of the Constitution of India, is filed calling for the records relating to Order-in- Original No - 141 / 2O23-2a -Adjn I $DC) / ST, dated 3 1.O 1. 2024 kr DIN No.20240156YQ000000456E passed by the 3.d respondent and to quash the same.

2. Heard Mr.Parasa Ananth Nageswara Rao, learned counsel for the petitioner, Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India, appearing for respondent No. 1, Mr.Dominic Fernandes, learned Senior Standing Counsel for CBIC, appearing for respondent No.2 and Ms.Anjali Agarwal, learned Standing Counsel for respondeDt No.3.

3. In the present Writ Petition, challenge is made against the impugned order passed by Jra respondent viz., Order-in Original No.L4l/2023-2024, dated 31.O1.2024 in DIN No.2O24O156YQOOOOOO456E. The operative portion of the impup.ed order reads as under: 2 PSK,J&NN&J wp_4190_2025 "(1) I confirm the Income declared in ITR or listed in tl.e Form- 26A5 for the period 2016-17 and 2Oi7-18 (upto June 2017) as consideration received for provision of taxable services under ttre Finance Act, 7994i (ii) I tonfrrm ttre demand of Rs. 1,00,32,430/ - (Rupees One Thirty Two Thousand Four Hundred and Thirty Only) on M/s.AnnapureddySrinivas Reddy, towards sersice tax (ilclusive of cess) not paid for the period 2016-77 ar.d, 2Ol7-1a (Upto June, 20771 in terms of the provisions of Section 73 (2) ofthe Finance act, 1994 read with Section 174 of the CGST Act, 2Ol7 . I confirm the demand of interest at the applicable rates on the (iii) amount mentioned at (i) above on the taxpayer under Section 75 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017. I impose a penalty of Rs.1,00,32,430/ - on the taxpayer under (rv) Section 78 of the Finance Act, 1994 read witll Section 174 of the CGST Act, 2Ol7 for the reasons mentioned supra. This penaltV shall, houteuer be reduced to 25% of the seruice tox d.etermined at (i) aboue, if the seruice tox. omount determined at (i) and the interest at qpplicable rate(s) os demanded at (ii) aboue, are paid along with redu<:ed penaltV within thirtA (3O) dags from the dale of receipt oJ this ord.er, in terms of prouiso to Section 78 of tte Finance Act' 1994. (v) I impose a penalty of Rs.10,OO0/- (Rupees Ten Thousand only on the taxpayer under Section 77 of the Finance Act, 1994 for contravention of the provisions of the Finarrce Act, 1994. (vi) I confirm the t €.te Fee amount of Rs.60,0OO/- in terms of Section 70 of tfre Finance Act, lgg4 for non-frling ol the ST-3 returns in terms of Service Tax Rules 1994."

4. The brief facts of the case are that the petitioner involved in the business of executing the Government contracts. He is an income tax assesse uide PAN No.BAYPSS74OL and filing income tax returns regularly from time to time. It is the case of Se--Petitioner that the services rendered by him are exempted from service tax. It is further 3 PSK,J&NNR,J Wp_419O_2025 case of the petitioner that he is rendering civil contract works under proprietorship firm, sub-contract works and Government works during the period 2Ol4-2OlS to ,2OL6-2O17 and, 2OtT_ 2018 and the said works are exempted under Notification No.25/2OL2 ST dated 20.06.2012. It is further stated that in terms of the Memorandum of Understanding, dated 21.O7.2O2O entered between the Central Board of Direct Tax (CBDT) ard the Central Board of Indirect Tax, the 2.d respondent collected data from the petitioner and after obtaining information from the CBDT, it appears to have come to a conclusion that there is an evasion of Service Tax by the petitioner for the aforesaid period. It is also stated that since the nature of service being rendered by the petitioner is exempted, the petitioner has not obtained the Service Tax registration, but, in spite of the same 2nd respondent initiated proceedings on the basis of income tax returns ald - come to a conclusion that the petitioner has evaded Serrrice Tax to a tune of Rs. 1,00,32,430/- and on the basis of said allegations, the 3.d respondent initiated proceedings. As a matter of fact, respondent No.3 uide his verification report, dated, 26.02.2020 upon examination of petitioner's ITRs for the a-foresaid years, has certified that the 4 P5K,I&NNR,I Wp_4190-2025 nature of services being carried out by the petitioner are exempted under Notification No.25/ 2Ol2 ST, dated 20'06'2012 and respondent No.3 appears to have initiated the proceedings against the petitioner on the strength of summons' dated 22.04.2022. According to the petitioner, he was not put on notice at any point of time, more so, when his services were exempted under Notification No.25 of 2Ol2' Therefore' there is no occasion for the petitioner for filing of returns' However' 2'd respondent appears to have passed the impugned order' dated 31.01.2024 without any notice whatsoever served upon him and impugned. order was also not communicated to him through registered post. Recently the petitioner came to know about passing of impugned ord.er and respondents are initiating steps to attach his Bank Accounts, he filed the present Writ Petition. Copy of the impugned order was served upon the petitioner on O3.O 1.2025-

5. Though several grounds were raised in the Grounds of writ a-ffidavit, during the course of arguments learned counsel for the petitioner pointed out that the impugrred order is liable to be set aside on the ground that the same is passed without issuing any notice and without giving any opportunity 5 P5K,J&NNR,I Wp_4a9O-)O25 to the petitioner, which amounts to gross violation of principles of natural justice. He further contended that though show- cause notice was issued on 28.04.2022 i.e.,pior to passing of the impug-ned order, according to the respondents as the same was sent to the petitioner through Registered Post with Acknowledgment Due' and it was served on the petitioner, the respondents have not placed any evidence to show that same was served upon the petitioner. Learned counsel for the petitioner submitted that mere issuance of notice or dispatch of notice is not at all said to be compliance of principles of natural justice and hence, he prays to set aside the impugned order'

6. Learned counsel appearing for respondent No.3 has pointed out that the respondents have already sent notice to the petitioner and they also have frled a Memo, dated L}.O3.2O25, before this Court stating that show-cause notice was sent to th-e petitioner through Speed Post on 29.04.2022 and. impugned order, dated 31.01 .2024 was sent to the petitioner through Speed post on 19.O2.2024- The respondents also hled track report No.JD4O328O0981N along with Receipt of Register showing that the salne were sent to the petitioner' viz', Annapureddy Srinivas Reddy, sth Floor, Flat No'503, Lakshmi 6 PSK,J&NNR,J Wp_4190_202 5 Ambica Apartments, Kothapet. He also pointed that there is a seal on the show-cause notice that it was dispatched to the petitioner on 29.04.2022. He further contended that when the notice was a-lready dispatched, the question of non-service of notice upon the petitioner does not arise and same cannot be treated as non-service of notice. Therefore, the contention of the petiLioner that no notice was served upon him is false and cannot be accepted.

7. A perusal of the impugned order, dated 31.01.2024, passed by respondent No.3 at paragraph No.15 it was stated as under: "PERSONAJ, HEARING 15. Following principles of natural justice, opportunities of personal hearing were granted to the assessee on 26.10.2023, 02.11.2023 and 17.O1.2O23 requesting them to frle their reply to the show cause notice on or before the dates scheduled for personal hearing to represent their case but the assessee did not turn up and t}Ie attempt made by this oflice proved to be in vain." From above paragraph, according to respondent No.3 liberty was given to the petitioner for personal hearing on the aforementioned dates and requested the petitioner to file reply to the show-cause notice. But, the petitioner did not turn up and the attempt made by the respondents to be in vain.

8. According to the respondents, the show-cause notice and the impugned order have been served upon the petitioner. -i J-,i \ I 7 P5K,J&NNR,J Wp_4190_2025 To substaatiate the same, the respondents have not filed any proof- A reading of paragraph No.1S of the impugned order would reveal that though notice has been served upon the petitioner and he did not choose to participate in the proceedings, the same appears to be without arry basis and on the said aspect the Division Bench of this court in Rohit Manepally v. Union of India and another (W.p.No.g96T ofi 2O23f held thus: "This Court has held on more than one occasion that mere . issualce of show cause notice to a dealer/taxable person is not enough; such a show cause notice has to.be served'and it must be indicated in the order itself. In the absence thereof, ii wouta not be erroneous te draw an inference that the notice was not served."

9. A perusal of the impugned order shows that libert5r of personal hearing being granted to petition er on 26.1O.2023, 02.77.2023 and lZ.Ol.2O24. The respondents filed a Memo, dated 19.03.2025 stating that show-cause notice was sent on 2g.O4.2O22 ald the impugned. order was sent on 19.02.2024 to petitioner. As seen from the impugned order, dated 31.O1.2024, no doubt personal hearing was granted to the petitioner on 26.10.2023, 02.17.2023 and 12.O1.2024, ttre said impugned order was served on the petitioner on 23.03.2024. Even as seen from the show-cause notice, it would reveal that the said notice was issued on 28.04.2022 atd. ttre impugned order was passed on 31.01.2024 subsequent to issuance of show_camse PSK,J&NNR,] Wp-4190_2025 . service alnd the impugned order was dispatched on 19.02.2024. The receipt which is placed before this Court does not pertain to of show-cause notice on the petitioner. This would clearly indicate that there is no proper and effective service of notice on the petitioner and the respondents before issuing the show-cause notice and passing the impugned order have not followed the principles of natural justice. Thus, there seems to be a glaring evidence of the principles of natural justice to have been not complied with.

10. As it is clearly established that show cause notice, 28.04.2022, which is alleged to have been dispatched by the respondents, has not been served upon the petitioner, we are of the considered opinion that the impugrred order, which is passed subsequent to issuance of show cause is in violation of the principles of naturar justice and the same is liabre to be set aside. 1 1. Since the impugned order is being vitiated for violation of the principles of natural justice, we deem it fit to hold that let tJle impugned order which has been set aside, be itself treated as show-cause notice and let the petitioner submit a ,,,.-*&'ia,;;Xl rg;,:r',l:.r.-t.i**i.,. 9 P5K,J&NNR,J Wp_4190_202S his reply/ representation to the s€une before respondent No.3 and respondent No.3 thereafter shall pass an appropriate ord,er, strictly, in accordance with law considering the contentions that have.been raised on behalf of either side. L2. Accordingly, the Writ petition is allowed setting aside the Order-in-Originat No. I4t / 2O23_24_Adjn/(ADC)/ST, dated 31.01.2024 in DIN No.2O24O156YeOOO0OO4S6E passed by the 3.d respondent and the matter is remanded to 3.d respondent for fresh consideration. We further make it clear that if the petitioner fails to reply to the notice within the period mentioned above,. it is open to 3.d respondent to thereafter pass appropriate orders as it may deems it proper. There shall be no order as to costs. Miscellaneous petitions, if any, pending in this writ petition shall stald close d. //TRUE COPYII SD/. K. AMMAJI DEPUry REGISTRAR SECTION OFFICER h Block, New Delhi-1 ,10 '1. The. Secretary, Union of lndia, Ministry of Finance 2 I["_9.o_8,_.sioner of Central Tax, Ranga Reddy GST Commissionerate ^ POSNETT Bhavan, Titak Road,Rjmkoi"", Hv"a-"?u-ro_500 001. 3. The Additionat Commis:ione, oi C"nirriti;, R;;;; Reddy GST commissionerate GSr Bhavan, n. M. l-e,i1i46, vl p iiirrri Ginind Encrave, Madhapur, Hyderabad- 500 08i 1 9n" CC to SRt PARSA 4I4[IH NAGESWAR RAo, Advocate ropucl 5 9fE c! to sRt GADI pRAVEET xurr,rnn'ov. ijoiiiiioi'cEj.r,"or"iilorn 9. 9nu CC to sRt DoMtNtc tE[lt4.ryDFq, sc FoR cBtc [opuc] I. 9n" cc to M/s. ANJALTAGARWAi;5c'r-oC dil6Fuci' -", B. Two CD Copies TOPUCI To PSK. GJP HIGH COURT DATED:2710312025 ORDER WP.No.4190 of 2025 ALLOWING THE WRIT PETITION WITHOUT COSTS .\\ -1. \\ o o ? $ ri-:; :uii * /(-' .:1.--. ,- i