2019 (8) TMI 962 - HC - Central Excise

Revival of abandoned SCN - gap between 14 to 17 years - grievance of the petitioner is that by issuing notices for personal hearing long after the impugned show- cause notices i.e. between 14 to 17 years of its issue and after 15 years of the last hearing in 2003 in respect of some of the impugned notices, is bad in law - HELD THAT - In the present facts, it is the case of the petitioner that because of long delay, papers and proceedings relevant to meet the show-cause notice are not available. Thus, seriously hampering the petitioners to appropriately meet the show cause notice. This delay in taking up the adjudication of the show -cause notice (in the absence of any fault on the part of the party complaining) is a facet of breach of principles of natural justice. It impinges on procedural fairness, in the absence of the party being put to notice that the show cause notices will be taken up for consideration, after some event and / or time, when it is not heard in a reasonable time. In the absence of the above, particularly as in this case, long delay has resulted in papers being misplaced. The reasonable period may vary for case to case. However, when the notices are being kept in abeyance (by keeping them in the call book as in this case), the Revenue should keep the parties informed of the same. This serves two fold purpose One it puts the party to notice that the show cause notice is still alive and is only kept in abeyance. The party can then safeguard its evidence, till the show cause notice is taken up for adjudication. Secondly, if the notices are being kept in the call book for some reason, the party gets an opportunity to point out to the Revenue that the reasons for keeping it in call book are not correct and the notices could be adjudicated upon immediately. This is the transparent manner in which the State administration must function. It was reasonable for the petitioners to proceed on the basis that the department was not interested in prosecuting the show cause notices and had abandoned it. These proceedings are now being commenced after such a long gap, after having led the petitioner to reasonably expect that the proceedings are dropped. Therefore, even if, notices can be kept in the call book to avoid multiplicity of the proceedings, yet the principle of natural justice would require that before the notices are kept in the call book, or soon after the petitioners are informed the status of the show cause notices so as to put the parties to notice that the show cause notices are still pending. Giving notices for hearing after gap of 17 years, as in this case, is to catch the parties by surprise and prejudice a fair trial, as the documents relevant to the show-cause notices are not available with the petitioners. Show cause notices quashed.

Summary

Issues:
Challenge to revival of show cause notices after a significant delay.

Analysis:
The petition under Article 226 challenges the revival of six show cause notices issued between 2001 and 2004 under the Central Excise Act. The petitioner argues that reviving these notices after 14 to 17 years causes prejudice as relevant documents are no longer available. Legal precedents are cited to support the argument that show cause notices must be disposed of within a reasonable time to ensure fairness. The Revenue justifies the delay by explaining that the notices were kept in abeyance due to ongoing appeals and CERA objections, following circular guidelines. The court examines whether initiating adjudication proceedings after such a long delay is justified when the party was not informed of the status of the notices. Previous judgments emphasize the importance of timely adjudication and the potential prejudice caused by delays without justifiable reasons.

The court notes that the petitioner was not informed of the reasons for keeping the notices in abeyance, leading to a lack of opportunity to defend the proceedings. The delay in adjudication, without fault on the petitioner's part, is seen as a breach of natural justice principles that impede procedural fairness. The court highlights the necessity for transparency in administrative processes and stresses the importance of keeping parties informed when notices are kept in abeyance. The failure to communicate the status of the notices to the petitioner is deemed unreasonable, leading to the petitioner assuming the proceedings were dropped. Initiating hearings after such a long gap without informing the parties is considered prejudicial to a fair trial, especially when relevant documents are no longer available.

In light of the above analysis, the court quashes and sets aside the impugned show cause notices and hearing notices, ruling in favor of the petitioner. The judgment emphasizes the need for procedural fairness, timely adjudication, and transparency in administrative actions to uphold principles of natural justice.