Principle of natural justice is a ground of agrument taken in a law, to ensure fairness, reasonableness, equality and equity. Audi Alteram Partem (or audiatur et altera pars) is a Latin phrase meaning "listen to the other side", or "let the other side be heard as well". It is the principle that no person should be judged without a fair hearing in which each party is given the opportunity to respond to the evidence against them.
Under this doctrine, both the parties have the right to speak. No decision can be declared without hearing both the parties. The aim of this principle is to give an opportunity to both the parties to defend themselves.
Can there be a situation where a notice or an order has been considered to be served on a particular person, but the same was not served to the said person? Yes, this situation is also very much a possibility. In such a situation the principle of natural justice would be violated, since the other party would not get a fair opportunity to put-forth his grounds and defend his case.
Under Section 169 of the CGST Act, 2017 any decision, order summons, notice or other communication under this Act or the rules made thereunder shall be served by any one of the following methods, namely:
- by giving or tendering it directly or by a messenger including a courier to the addressee or the taxable person or to his manager or authorised representative or an advocate or a tax practitioner holding authority to appear in the proceedings on behalf of the taxable person or to a person regularly employed by him in connection with the business, or to any adult member of family residing with the taxable person; or
- by registered post or speed post or courier with acknowledgement due, to the person for whom it is intended or his authorised representative, if any, at his last known place of business or residence; or
- by sending a communication to his e-mail address provided at the time of registration or as amended from time to time; or
- by making it available on the common portal; or
- by publication in a newspaper circulating in the locality in which the taxable person or the person to whom it is issued is last known to have resided, carried on business or personally worked for gain; or
- if none of the modes aforesaid is practicable, by affixing it in some conspicuous place at his last known place of business or residence and if such mode is not practicable for any reason, then by affixing a copy thereof on the notice board of the office of the concerned officer or authority who or which passed such decision or order or issued such summons or notice.
Under clause (a) and (b), it is clear that the notice or order shall be served only to a specified person and not to any person. This is to ensure that the notice or order reaches the person to whom it is intended to be served upon and he is provided with an opportunity to submit his grounds and defend his case. The option of serving of notice or order has been provided even by means of sending the same by email communication to the email address provided in the registration certificate or by making it available on the common portal (i.e. GST login of the registered person). The last two clauses are to be adopted only when it is not possible to serve the notice directly to the person to whom the said notice or order is issued.
In this article, we evaluate some of the situations where the notice was presumed to be served (view of the Department), where in fact the same was actually not served to the person to whom the said notice was issued, with reference to the view of the judiciary.
Service of notice to an agent who had filed refund claim, in the absence of any specific authorisation to receive notice
In the case of Commissioner of Customs, Bangalore v. Kabadi Chikkanagusa & Sons [2010 (251) E.L.T. 58 (Kar.)] the Hon’ble High Court examined whether the notice served on an agent who was authorized to file refund, can also be considered as the applicant for the purpose of service of notice.
We have examined the authorisation letter. It is for the purpose of making the refund application. The authorisation does not in any way indicate that it is a general authorisation which can go on to a large extent than what has been indicated therein. In this regard if this authorisation is one to be construed as an authorisation which is valid on the day when the notice was served on the agent perhaps as good a service on the importer. While the authorisation does not necessarily indicate so, the submission that authorisation can be implied even for the further proceedings under Section 28 of the Act for recovery of wrong refund cannot be accepted for the reason that while in fact the authorisation does not say so. The proceedings under Section 28 of the Act cannot be said as a proceedings which is part of refund application under Section 27. Therefore the argument has to be rejected.
In this case, the Court has held that service of notice to a person who is not specifically authorized to collect notice on behalf of the noticee, is invalid. In case of general authorization without any specific authorization to collect notice or order on behalf of the recipient, it cannot be implied that the said agent can represent the noticee for collecting the said notice.
Whether notice served to a clearing agent of an importer, can be considered as service of notice to the importer?
In the landmark judgment of Collector of Customs, Cochin v. Trivandrum Rubber Works Ltd. [1999 (106) E.L.T. 9 (S.C.)], the Hon’ble Apex Court had held as under
In the present case, notice has been given under Section 28 to the owner/importer as a person chargeable to duty. The notice must, therefore, be served on the owner/importer. A service on the clearing agent of the owner/importer long after the clearing agent has ceased to deal with the goods in question under the Customs Act, cannot be treated as valid service of notice on the owner/importer.
Notice sent by registered post is not received by the person to whom the said notice was issued
In a recent ruling, the CESTAT in the case of Hamid Basith v. Commissioner of Customs, Chennai [2021-TIOL-228-CESTAT-MAD] had held that the presumption that the notice sent by registered post is served on the noticee, is a rebuttable presumption. The Court had held as under
On perusal of this document, it is seen that a person named S. Mujahian has signed and received the registered post. The department is not able to explain who is Shri S. Mujahian or how he is related or known to the appellant. The appellant has denied receipt of the Order in Original by registered post and has affirmed this by affidavit. When a letter is sent by registered post a presumption is to be drawn that it has been received by the addressee. However, such presumption is a rebuttable presumption. A negative fact can be established only by affidavit. When the appellant has affirmed the negative by filing an affidavit, the burden shifts on the department to establish as to why they served the registered letter to Shri S. Mujahian.
Considering the current pandemic situation and the challenges in movement of operational staff, there could be lot of challenges and disputes with regard to serving of notices and orders. Serving of notice to any person, who is not authorized to receive the said notice could be the biggest challenge during this period. Hence one has to be clear under what situations it would be considered as a valid service of notice or order. One shall refer to the provisions of Section 169 of the CGST Act,2017 with reference to the various judicial precedents, in case of any challenges in this regard.
This article was published in Tax Sutra under the Experts’ Corner. For any feedback or clarification please write to [email protected]