Recently, it is seen that Adjudicating Authorities as well as Appellate Authorities are issuing notice of hearing in which three dates are specified. In some cases, the dates are even successive dates. The understanding appears to be that the Assessee or the Counsel or the Representative can appear on any of those dates at the time mentioned but has to appear by the last date mentioned therein. This apparently is the format in which the concept of three adjournments mandated by law is being implemented. In case a person fails to appear on the last date mentioned therein or seeks an adjournment on that date there is a refusal on the ground of exhaustion of all adjournments.
Section 33A(2) of the Central Excise Act, 1944 deals with adjudication procedure and the authority at any stage may adjourn the hearing if sufficient cause is shown. The proviso provides that no such adjournment shall be granted more than three times to a party during the proceedings. A similar proviso can be found in Section 35(1A) of the Central Excise Act in the context of appeals to Commissioner (Appeals). The procedure is the same even under the Finance Act, 1994.
The objective of introduction of Section 33A and Section 35(1A) by Finance (No.2) Act, 2004 was to ensure finality to proceedings and to avoid perpetual adjournments. The Parliament had thus contemplated and provided for three adjournments. Normally, one would visualize that a notice would be issued fixing a date for hearing and the assessee or his representative would conduct that case on that date or seek adjournment through a letter. Generally, the adjournments are sought to collate data, produce records, prepare submissions or on account of ill health of the assessee or its representative or the inability for the counsel or representative to attend on account of travel or other litigation matters posted on the same date. In any event, the maximum number of adjournment is only three as specified in the provision.
When one single notice is issued identifying all the three dates in the same notice, then in effect the entire concept of adjournment is defeated and there is a violation of the principles of natural justice. When a single notice specifies three dates and some times in succession it is as good as fixing only one date for the hearing and defeats the provisions of Section 33A and Section 35(1A) of the Central Excise Act.
The concept of limiting the number of adjournments by statute is not alien and was first introduced in the Civil Procedure Code. Even in that context, the Supreme Court held that more than three adjournments are also possible. The Supreme Court in the case of Salem Advocate Bar Association Vs. Union of India (2005) 6 SCC 344 in the context of a similar provision in Order XVII, Rule 1 of the CPC held that it cannot be said that even if the circumstances are beyond the control of a party, after having obtained the third adjournment, no further adjournment would be granted. There may be cases beyond the control of a party despite the party having obtained three adjournments. For instance, a party may be suddenly hospitalized on account of some serious ailment or there may be serious accident or some act of God leading to devastation. It cannot be said that though the circumstances may be beyond the control of the party, further adjournment cannot be granted because of the restriction of three adjournments as provided in the proviso to Order XVII, Rule 1.
The Supreme Court further observed that the limitation of three adjournments would not apply where adjournment to be granted on account of circumstances which are beyond the control of a party. Even in cases which may not strictly come within the category of circumstances beyond the control of a party, the court by resorting to the provision of higher costs which can also include punitive costs in the discretion of the court, adjournment beyond three can be granted having regard to the injustice that may result on refusal thereof, with reference to peculiar facts of a case.
While this the position of law, a single notice fixing all three dates of hearing in the same notice is violative of Section 33A and Section 35(1A) of the Central Excise Act. This exercise is equally illegal in the context of service tax since Section 33A is applicable to service tax through Section 83 of the Finance Act, 1994 and Section 85(5) of the Finance Act extends the appellate procedure prescribed under Central Excise to Service Tax.
The practice of issuing a single notice with three dates of hearing was examined by the Gujarat High Court in the case of Regent Overseas Pvt. Ltd. Vs. Union of India [(2017) 6 GSTL 15 = TS-429-HC-2017(GUJ)-EXC]. In the said case, a single notice dated 09.09.2015 had fixed the matter for final hearing on three dates namely 22.09.2015 or 29.09.2015 or 06.10.2015. The High Court held that thus by virtue of the provisions of Section 33A(2) of the Act, when a personal hearing is fixed, it is open to seek time by showing sufficient cause and in such a case, the adjudicating authority may grant time and adjourn the hearing by recording the reasons in writing. However, in view of the proviso thereto not more than three such adjournments can be granted. 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, apart from the fact that the notice of hearing has not been served in the manner contemplated under Section 37C of the Act, 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.
Similar view has been expressed by the Tribunal in the case of Imitiyaz Ahmed Vs. Commissioner of Customs (2014) 308 ELT 625 on a third member reference.
Natural justice is critical for any adjudication or appeal procedures and the same cannot be defeated through ornamental compliance or attempted compliance of statutory mandates. The Supreme Court in the case of Dhanajaya Reddy Vs. State of Karnataka reported in (2001) 4 SCC 9 has held that it is a settled principle of law that where a power is given to do a certain thing in a certain manner, the thing must be done in that way or not at all.
***
Recently, it is seen that
Adjudicating Authorities as well as Appellate Authorities are
issuing notice of hearing in which three dates are specified.
In some cases, the dates are even successive dates. The
understanding appears to be that the Assessee or the Counsel or the
Representative can appear on any of those dates at the time
mentioned but has to appear by the last date mentioned therein.
This apparently is the format in which the concept of three
adjournments mandated by law is being implemented. In case a
person fails to appear on the last date mentioned therein or seeks
an adjournment on that date there is a refusal on the ground of
exhaustion of all adjournments.
Section 33A(2) of the Central
Excise Act, 1944 deals with adjudication procedure and the
authority at any stage may adjourn the hearing if sufficient cause
is shown. The proviso provides that no such adjournment shall
be granted more than three times to a party during the
proceedings. A similar proviso can be found in Section
35(1A) of the Central Excise Act in the context of appeals to
Commissioner (Appeals). The procedure is the same even under
the Finance Act, 1994.
The objective of introduction of
Section 33A and Section 35(1A) by Finance (No.2) Act, 2004 was to
ensure finality to proceedings and to avoid perpetual
adjournments. The Parliament had thus contemplated and
provided for three adjournments. Normally, one would
visualize that a notice would be issued fixing a date for hearing
and the assessee or his representative would conduct that case on
that date or seek adjournment through a letter. Generally,
the adjournments are sought to collate data, produce records,
prepare submissions or on account of ill health of the assessee or
its representative or the inability for the counsel or
representative to attend on account of travel or other litigation
matters posted on the same date.
...
In any event, the maximum number of adjournment is only
three as specified in the provision.
When one single notice is issued
identifying all the three dates in the same notice, then in effect
the entire concept of adjournment is defeated and there is a
violation of the principles of natural justice. When a single
notice specifies three dates and some times in succession it is as
good as fixing only one date for the hearing and defeats the
provisions of Section 33A and Section 35(1A) of the Central Excise
Act.
The concept of limiting the number
of adjournments by statute is not alien and was first introduced in
the Civil Procedure Code. Even in that context, the Supreme
Court held that more than three adjournments are also possible. The
Supreme Court in the case of Salem Advocate Bar
Association Vs. Union of India (2005) 6 SCC 344 in
the context of a similar provision in Order XVII, Rule 1 of the CPC
held that it cannot be said that even if the circumstances are
beyond the control of a party, after having obtained the third
adjournment, no further adjournment would be granted.
There may be cases beyond the control of a party despite the
party having obtained three adjournments. For instance, a
party may be suddenly hospitalized on account of some serious
ailment or there may be serious accident or some act of God leading
to devastation. It cannot be said that though the
circumstances may be beyond the control of the party, further
adjournment cannot be granted because of the restriction of three
adjournments as provided in the proviso to Order XVII, Rule
1.
The Supreme Court further
observed that the limitation of three adjournments would not
apply where adjournment to be granted on account of circumstances
which are beyond the control of a party.
...
Even in cases which may not strictly come within the
category of circumstances beyond the control of a party, the court
by resorting to the provision of higher costs which can also
include punitive costs in the discretion of the court, adjournment
beyond three can be granted having regard to the injustice that may
result on refusal thereof, with reference to peculiar facts of a
case.
While this the position of law, a
single notice fixing all three dates of hearing in the same notice
is violative of Section 33A and Section 35(1A) of the Central
Excise Act. This exercise is equally illegal in the context
of service tax since Section 33A is applicable to service tax
through Section 83 of the Finance Act, 1994 and Section 85(5) of
the Finance Act extends the appellate procedure prescribed under
Central Excise to Service Tax.
The practice of issuing a single
notice with three dates of hearing was examined by the Gujarat High
Court in the case of Regent Overseas Pvt. Ltd. Vs.
Union of India [(2017) 6 GSTL 15 = TS-429-HC-2017(GUJ)-EXC].
In the said case, a single notice dated 09.09.2015 had fixed the
matter for final hearing on three dates namely 22.09.2015 or
29.09.2015 or 06.10.2015. The High Court held that
thus by virtue of the provisions of Section 33A(2) of the Act,
when a personal hearing is fixed, it is open to seek time by
showing sufficient cause and in such a case, the adjudicating
authority may grant time and adjourn the hearing by recording the
reasons in writing. However, in view of the proviso thereto
not more than three such adjournments can be granted. 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, apart from the fact that the
notice of hearing has not been served in the manner contemplated
under Section 37C of the Act, 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.
Similar view has been expressed by
the Tribunal in the case of Imitiyaz Ahmed Vs.
Commissioner of Customs (2014) 308 ELT 625 on a third
member reference.
Natural justice is critical for any
adjudication or appeal procedures and the same cannot be defeated
through ornamental compliance or attempted compliance of statutory
mandates. The Supreme Court in the case of
Dhanajaya Reddy Vs. State of
Karnataka reported in (2001) 4 SCC 9 has held that
it is a settled principle of law that where a power is
given to do a certain thing in a certain manner, the thing must be
done in that way or not at all.
***
Comments
3
Thanks for this informative article.