13 years delay in adjudication of Show Cause Notice is not proper & legal

1. 13YEARSDELAYINADJUDICATIONOFSHOWCAUSE NOTICEIS NOTPROPER &LEGAL AUTHOR:CSDEEPAKP.SINGH https://taxguru.in/income-tax/13-years-delay-adjudication-show-cause-notice-not-proper-legal.html ParleInternationalLimitedVsUnionofIndiaWritPetitionNo12904of2019BombayHighcourtDate- 26/11/2020 Sub:DelayadjudicationofShowCauseNoticesafteraperiodof13yearswouldnotbejust,properand legal. BRIEFFACTS: 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-causenotices. 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 wasregisteredunderthecentralexcisedepartmentandusedtofilereturnsinaccordancewiththeCentralExcise Act, 1944 and the rules made thereunder. It is also stated that petitioner was availing CENVAT credit on inputs andcapital goods under CENVATcredit rules of differentyears. 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 amongstothers thatpetitioner hadwrongly availedexcess CENVATcredit of Rs.98,324.00. Petitioner responded to the above show-cause notices by submitting detailed replies on 04.09.2006 and 25.01.2007respectively denying the allegationsmade against it. 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 exciseauthorities hadaccepted its replysubmissions andhad given aquietus tothe matter.

2. After about 13 years, petitioner was served with a letter dated 13.08.2019 issued from the office of respondent No.3informingthepetitionerthatinconnectionwiththetwoshow-causenoticesdated01.06.2006and 28.11.2006, a personal hearing was fixed on 21.08.2019. This letter was followed by subsequent letters dated 23.08.2019and 04.09.2019. 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 nulland void. DECISIONOFHON’BLEBOMBAYHIGHCOURT 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 towardsCENVAT credit oninputs and capitalgoods under CENVATcredit rules. The court noted decision of Bombay High court in the case of Bhagwan S Tolani Vs B C Agarwal (1983) 12 ELT44thatevenwhennolimitationforpassinganorderisprescribedinlaw,limitationwouldhavetoberead 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 issuedwhich could not be permitted. TheCourtrefercaseof; 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 revieworder on01.10.2020 under section129D(2) of theCustoms Act, 1962. ThisCourtheldasunder:- “26.WhenthisCourthadtakencognizanceofthegrievancemadebythepetitionerandwasinseisinof the matter fixing 06.10.2020 for consideration, it was highly improper on the part of Commissioner of Customs(Import-II)tohavepassedtheorderdated01.10.2020withoutanyintimationtoortakingleave 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 itsown ipse dixit and recorda 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,whatwassoughttobedonewastopresenttheCourtwithanorderpassedinthemidstof 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 subsequentorder. As pointed out above, this amounts to interfering with the administration of justice and is thus not at all acceptable.Aview maybe takenthat suchan ordershould beignored asit iscontumacious.”

3. TheCourtheldthatFirstly,ashow-causenoticeissuedadecadebackshouldnotbeallowedtobe 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 adoptedby the respondents is notbinding on the Court. Onthesefactstheshowcausenoticeandorderpassedthereuponwerequashedandsetaside. CONCLUSION:The decision of Hon’ble Bombay High Court will help and give relief to innocent and law bindingassessees,whoarepayingtaxestogovernmentandfallinthehandoftaxauthoritiesandface harassmentandhumiliation.Anyproceedingshouldbetimeboundandyoucannotsleepafterissuingshow 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 timelimitation has been given. DISCLAIMER:The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, author assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws and take appropriate advice of consultants. The user of the information agrees that the information is not professional advice and is subject to change without notice. Author assume no responsibility for the consequences of the use ofsuch information.