Delay adjudication of Show Cause Notices after a period of 13 years would not be just, proper and legal

Parle International Limited Vs Union of India Writ Petition No 12904 of 2019 Bombay High court Date-26/11/2020

Sub: Delay adjudication of Show Cause Notices after a period of 13 years would not be just, proper and legal.

BRIEF FACTS

1. This is a Writ Petition under Articles 226 / 227 of the Constitution of India. Initially the writ petition was filed seeking a direction to the respondents for a declaration that adjudication of the show-cause notices dated 01.06.2006 and 28.11.2006 after 13 years is illegal, void and bad in law and on that ground to quash the said show-cause notices. Subsequently following amendment of the writ petition, petitioner has challenged legality and validity of the order-in-original dated 11.11.2019 issued by respondent No.3 in terms of the above two show-cause notices.

2. Case of the petitioner is that it is a private limited company incorporated under the Companies Act, 1956 having its registered office at Silvasssa, Dadra and Nagar Haveli. Petitioner is engaged in the business of manufacture of excisable goods falling under Chapter No.39 of the Central Excise Tariff Act, 1985. Petitioner was registered under the central excise department and used to file returns in accordance with the Central Excise Act, 1944 and the rules made thereunder. It is also stated that petitioner was availing CENVAT credit on inputs and capital goods under CENVAT credit rules of different years.

3. A show-cause notice dated 01.06.2006 under Rule 25 of the Central Excise Rules, 2002 was issued by the Joint Commissioner of Central Excise and Customs, Vapi alleging amongst others that petitioner had availed excess CENVAT credit amounting to Rs.11,52,281.00. This was followed by another show-cause notice dated 28.11.2006 issued to the petitioner by the Deputy Commissioner of Central Excise and Customs, Vapi alleging amongst others that petitioner had wrongly availed excess CENVAT credit of Rs.98,324.00. 4. Petitioner responded to the above show-cause notices by submitting detailed replies on 04.09.2006 and 25.01.2007 respectively denying the allegations made against it.

5. Thereafter nothing was heard by the petitioner and there was no communication to the petitioner either from the office of Joint Commissioner of Central Excise and Customs or Deputy Commissioner of Central Excise and Customs. Since no consequential decision was taken, petitioner was under the bona fide belief that the central excise authorities had accepted its reply submissions and had given a quietus to the matter.

6. After about 13 years, petitioner was served with a letter dated 13.08.2019 issued from the office of respondent No.3 informing the petitioner that in connection with the two show-cause notices dated 01.06.2006 and 28.11.2006, a personal hearing was fixed on 21.08.2019. This letter was followed by subsequent letters dated 23.08.2019 and 04.09.2019.

7. Being aggrieved by the attempt of the respondents to revive the show-cause notices after a lapse of almost 13 years, petitioner filed the present writ petition on 06.09.2019 seeking a direction to the respondents for a declaration that such delayed adjudication would render the show-cause notices and consequential proceedings null and void.

DECISION OF HON'BLE BOMBAY HIGH COURT

8. The Bombay high court in the above case dealing with an order in original which was passed in the year 2019 in pursuance of a Show cause notice which was issued in the year 2006 and which was responded by the Company at that time itself and all of a sudden after 13 years the proceedings were revived and order passed towards CENVAT credit on inputs and capital goods under CENVAT credit rules.

9. The court noted decision of Bombay High court in the case of Bhagwan S Tolani Vs B C Agarwal (1983) 12 ELT 44 that even when no limitation for passing an order is prescribed in law, limitation would have to be read in to it otherwise if such contentions as to limitation were to be accepted, it would mean that the department can commence adjudication proceedings 10 years, 15 years or 20 years after the original show-cause notice was issued which could not be permitted.

10. The Court refer case of ; In M/s. Harihar Collections Vs. Union of India, decided on 15.10.2020, this Court was confronted with a similar situation when during the pendency of the writ petition, Commissioner of Customs had passed review order on 01.10.2020 under section 129D(2) of the Customs Act, 1962. This Court held as under:- "26. When this Court had taken cognizance of the grievance made by the petitioner and was in seisin of the matter fixing 06.10.2020 for consideration, it was highly improper on the part of Commissioner of Customs (Import-II) to have passed the order dated 01.10.2020 without any intimation to or taking leave of the Court. It needs no reiteration that when the court, that too the High Court, is in seisin of a matter, an administrative or executive authority cannot start a parallel proceeding on the very same subject matter at its own ipse dixit and record a finding.

It would amount to interfering with the dispensation of justice by the courts. In the instant case, when the Court was set to examine the grievance of the petitioner regarding non-release of the goods despite the order-in-original, what was sought to be done was to present the Court with an order passed in the midst of such examination keeping the Court totally in the dark saying that the order-in-original suffers from illegality or impropriety directing the subordinate authority to apply to the Commissioner (Appeals) to set aside the order-in-original and then contending that the writ petition should be dismissed because of the subsequent development or that the petitioner should be relegated to the appellate forum to contest the subsequent order. As pointed out above, this amounts to interfering with the administration of justice and is thus not at all acceptable. A view may be taken that such an order should be ignored as it is contumacious."

11. The Court held that Firstly, a show-cause notice issued a decade back should not be allowed to be adjudicated upon by the revenue merely because there is no period of limitation prescribed in the statute to complete such proceedings. Larger public interest requires that revenue should adjudicate the show-cause notice expeditiously and within a reasonable period. What would be the reasonable period would depend upon the facts and circumstances of each case but certainly a period of 13 years cannot be termed as a reasonable period. Secondly, WP12904_19.odt regarding keeping the show-cause notice in the dormant list or the call book, this Court held that such a plea cannot be allowed or condoned by the writ court to justify inordinate delay at the hands of the revenue. To accept such a contention would defeat the rule of law itself. Taking cognizance of such an aspect would amount to giving credence to extraneous matters. In any case such a procedure internally adopted by the respondents is not binding on the Court.

12. On these facts the show cause notice and order passed thereupon were quashed and set aside. CONCLUSION: The decision of Hon'ble Bombay High Court will help and give relief to innocent and law binding assessees ,who are paying taxes to government and fall in the hand of tax authorities and face harassment and humiliation. Any proceeding should be time bound and you cannot sleep after issuing show cause notices for more than a decade and at once issue adjudication orders and demand on the basis of those Show Cause Notices. There should be a time bound procedure in relation to those proceedings also ,where no time limitation has been given.

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