The Bombay High Court in its recent order in the case of Parle International Limited, while quashing the order passed by adjudicating authority, held that the adjudication of show-cause notices after 13 years is illegal, void and bad in law.
Facts of the case:
- The petitioner, Parle International Limited is a private limited company incorporated under the Companies Act, 1956 having its registered office at Silvassa, Dadra, and Nagar Haveli.
- The 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 the petitioner was availing CENVAT credit on inputs and capital goods under CENVAT credit rules of different years.
- A show-cause notice dated June 1, 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. This was followed by another show-cause notice dated November 28, 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.
- 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, the 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.
- After about 13 years, petitioner was served with a letter issued from the office of respondent authority informing the petitioner that in connection with the two show-cause notices, a personal hearing was fixed on August 21, 2019, which was followed by subsequent letters.
- 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.
Contention of the Petitioner
- Learned counsel for the petitioner strenuously argued that this Court has held in a series of decisions that show-cause notices issued long ago cannot be revived and adjudicated after an unreasonably long delay. In the present case, respondents sought to commence adjudication proceedings 13 years after issuance of the show-cause notices when the matter had become stale.
- Respondents cannot be permitted to indulge in this kind of activities as this will lead to unsettling settled position. Not content with belated initiation of adjudication proceedings, respondents have tried to circumvent the proceedings before this Court by passing the order-in-original dated 11.11.2019. He has placed reliance on a number of decisions to contend that such action on the part of the respondents is impermissible in law.
Arguments of the Revenue
- The learned counsel for the respondents submits that delay in adjudication was not intentional. The show-cause notices were kept in call book because of pendency of appeal in respect of the
petitioner itself before the High Court. After disposal of the High Court appeal, the two show-cause notices were retrieved from the call book whereafter on permission being granted by the higher authority, adjudication proceedings were commenced. When opportunity of personal hearing was granted to the petitioner, it did not avail the same whereafter the order-in-original was passed on 11.11.2019.
- Therefore, petitioner cannot argue that the order-in-original was passed by the adjudicating authority in violation of the principles of natural justice. Moreover, now that order-in-original has been passed, petitioner can avail the alternative remedy by challenging the said order before the appellate forum. Writ jurisdiction is not the proper forum for deciding correctness or otherwise of an order-in-original. Therefore, the writ petition should be dismissed
Ruling of Bombay High Court:
The two-member bench of Justice Abhay Ahuja and Ujjal Bhuyan clarified that the commencement of adjudication proceedings after an inordinate delay of 13 years post-issuance of show-cause notices and submission of reply is held to be untenable in law, any consequential decision or order based on such delayed adjudication would also be rendered invalid.
The court accordingly held that respondents were not justified in commencing adjudication proceeding 13 years after issuance of the show-cause notices. Such adjudication proceeding is therefore held to be invalid. Consequently, impugned order-in-original issued by respondent authority is accordingly set aside and quashed.
READ / DOWNLOAD ORDER:
***
[rainbow]Don’t miss the next GST Update / Article / Judicial pronouncement[/rainbow]
Subscribe to our newsletter for FREE to stay updated on GST Law
Resolve your GST queries from national level experts on GST free of cost.
Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
