2018 (9) TMI 381 - HC - Central Excise

Non-service of notice - Principles of Natural Justice - Jurisdiction - petitioners are carrying on business in Kolkata but are wrongly implicated in the proceedings in Coimbatore - Held that - Without entering into the question of assumption of the jurisdiction by the Coimbatore authority, it would be proper, in the facts of the present case, to return a finding that, the proceeding stands vitiated due the breach of principles of natural justice - Since the petitioners were not issued a show cause notice, and not heard by the adjudicating authority, the adjudicating proceeding stands vitiated by the breach of principles of natural justice. The same stands quashed. Petition allowed - decided in favor of petitioner.

Issues:
Challenge to order in appeal passed by Commissioner (Appeals), Coimbatore; Jurisdiction of High Court to entertain writ petition; Breach of principles of natural justice in original order; Lack of jurisdiction in original order; Maintainability of writ petition despite statutory alternative remedy.

Analysis:

1. Challenge to Order in Appeal:
The writ petition challenges an order in appeal dated April 15, 2005, passed by the Commissioner (Appeals), Coimbatore. The petitioners, who conduct business in Kolkata, were wrongly implicated in proceedings in Coimbatore without being served a show cause notice. The petitioners argue that the order in original was passed in breach of principles of natural justice, and the findings by the Appellate Authority were based on surmises and conjectures. The petitioners seek to quash the impugned order in appeal on similar grounds.

2. Jurisdiction of High Court:
The respondents contend that the High Court lacks jurisdiction to entertain the writ petition since the order in appeal was passed by the Commissioner (Appeals), Coimbatore. However, the petitioners argue that a substantial part of the cause of action arose within the territorial limits of the High Court, making it appropriate for the High Court to assume jurisdiction under Article 226 of the Constitution of India.

3. Breach of Principles of Natural Justice:
The petitioners assert that the adjudicating proceeding was vitiated by a breach of principles of natural justice as they were not issued a show cause notice and not heard by the adjudicating authority. Despite the Appellate Authority surmising that the show cause notice was served, no evidence was produced to substantiate this claim. The lack of hearing at the adjudication stage was deemed to vitiate the entire proceedings, leading to the quashing of the order.

4. Lack of Jurisdiction in Original Order:
The petitioners question the jurisdiction of the Coimbatore authority and argue that the order in original suffered from a breach of the principles of natural justice. The Court found that the failure to serve a show cause notice and grant a right of hearing at the adjudication stage rendered the adjudicating proceeding vitiated by the breach of principles of natural justice, leading to its quashing.

5. Maintainability of Writ Petition Despite Statutory Alternative Remedy:
Although the impugned order in appeal was appealable, the existence of a statutory alternative remedy was not a complete bar to the maintainability of the writ petition. The petitioners were able to substantiate that the impugned order suffered from a lack of jurisdiction and was passed in breach of the principles of natural justice, justifying the writ petition despite the availability of a statutory alternative remedy.

In conclusion, the High Court held that the adjudicating proceeding was vitiated by the breach of principles of natural justice due to the failure to issue a show cause notice and grant a right of hearing to the petitioners. The order in appeal was quashed, allowing for the initiation of appropriate proceedings if legally permissible.

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