2020 (2) TMI 811 - HC - Central Excise

Validity of show cause notice (SCN) issued - Recall of Order - erroneous refund granted - invocation of Section 11A - Whether section 35E has overriding effect over section 11A - power of revision by the higher authority - HELD THAT - There are no merit in the contention raised by the learned counsel for the Assessee Companies that without the intervention of the higher Authorities under Section 35E of the Act, the Adjudicating Authority himself could not issue the impugned show cause notice under Section 11A of the Act. On a bare reading of the Scheme of Central Excise Act, 1944 in Chapter II dealing with levy of collection of Duty comprising from Section 3 to 12, we find that the said Chapter contains the provisions relating to charging provisions, Valuation, Assessment and Penalty etc. Section 11A in the said Chapter II pertaining to levy in collection of Duty provides for recovery of Duties not levied or not paid or short levied or short paid by the Assessees or or erroneously refunded to be recalled by the Adjudicating Authority and after issuance of appropriate notice, the proceedings under Section 11A can be decided by the Authority concerned. The suo motu power of the Principal Commissioner of Central Excise or Committee of Chief Commissioners, with effect from the amended provisions of Finance Act, 2005 dated 13.5.2005 deals with the revisional powers conferred upon such Committee to call upon and examine the record of any proceedings in which a lower Authority, as an Adjudicating Authority, has passed any decision or order under the said Act for the purpose of satisfying the said higher Authority as to the legality or propriety of such decision or order and such higher Authority, by an appropriate order, direct the lower Authority to pass appropriate orders in accordance with the directions given in such orders passed under Section 35E of the Act. If the exercise of jurisdiction under Section 11A of the Act was to be hooked or hinged upon the provisions of Section 35E of the Act, that would frustrate the very provisions of Section 11A of the Act, in our opinion. Section 11A of the Act does not refer or make it subject to any other provisions of Chapter VIA of the Act providing for Appeal or revisional powers to the higher Authority under the said Act. Therefore, to make an exercise of power under Section 11A of the Act, dependent upon the outcome of an order of higher Authority will render the provisions nugatory. Therefore, to contend on that basis that the impugned Show Cause Notice could not have been issued by the Authority and they should be held without jurisdiction is a preposterous contention and the same cannot be accepted. The learned Single Judge was perfectly justified in relegating the Petitioner/ Assessee before the Authority concerned, who issued the impugned show cause notices where the Assessee had to avail the opportunity to show cause before the Authority concerned that the refund in question was not erroneously made earlier so as to justify a recall or refund back to the Department under Section 11A of the Act - Without showing cause before the Authority concerned himself and directly approaching the Writ Court invoking extraordinary jurisdiction under Article 226 of the Constitution of India, in our opinion, is nothing, but an abuse of process of law. The Constitutional Courts, in the absence of proper factual foundation and findings, should not be flooded with premature Writ Petitions and such practice on the part of the Assessees deserves to be strongly put down with the iron hands of justice. Appeal dismissed.

Issues Involved:
1. Jurisdiction of the Authority to issue show cause notices under Section 11A of the Central Sales Tax Act.
2. Interplay between Section 11A and Section 35E of the Central Sales Tax Act.
3. Scope of writ jurisdiction in challenging show cause notices.

Detailed Analysis:

1. Jurisdiction of the Authority to Issue Show Cause Notices Under Section 11A of the Central Sales Tax Act:
The Assessee Companies filed intra-Court Appeals challenging the order of the learned Single Judge who dismissed their Writ Petitions. The Single Judge directed the Assessee Companies to appear before the Assessing Authority in response to the show cause notices issued under Section 11A of the Central Sales Tax Act for recovery of erroneously refunded amounts. The Assessee argued that the Authority lacked jurisdiction to issue these notices without intervention from higher authorities under Section 35E of the Act. However, the court held that Section 11A independently empowers the Adjudicating Authority to issue such notices within the prescribed limitation period and does not require prior orders from higher authorities under Section 35E. The court stated, "We find no merit in the contention raised by the learned counsel for the Assessee Companies that without the intervention of the higher Authorities under Section 35E of the Act, the Adjudicating Authority himself could not issue the impugned show cause notice under Section 11A of the Act."

2. Interplay Between Section 11A and Section 35E of the Central Sales Tax Act:
The Assessee relied on several judgments to argue that the show cause notices were issued without jurisdiction. However, the court clarified that Section 11A and Section 35E operate in different fields and are invoked for different purposes. Section 11A pertains to the recovery of duties not levied, short levied, or erroneously refunded, while Section 35E deals with the revisional powers of higher authorities. The court emphasized that "the powers under Section 11A of the Act conferred upon the Adjudicating Authority himself do not depend, in any manner, upon the exercise of revisional power under Section 35E of the Act." The court further noted that making the exercise of power under Section 11A dependent on Section 35E would render Section 11A nugatory.

3. Scope of Writ Jurisdiction in Challenging Show Cause Notices:
The court upheld the learned Single Judge's observation that the scope of interference in writ jurisdiction is very limited when show cause notices are challenged. The court quoted the Supreme Court's judgment in Kunisetty Satyanarayana, emphasizing that "interference in SCNs in writ jurisdiction should be in rare and exceptional cases." The court found that the present cases did not fall under such rare and exceptional cases warranting interference. The court stated, "Without showing cause before the Authority concerned himself and directly approaching the Writ Court invoking extraordinary jurisdiction under Article 226 of the Constitution of India, in our opinion, is nothing, but an abuse of process of law."

Conclusion:
The court dismissed the Appeals, affirming that the learned Single Judge was justified in rejecting the Writ Petitions at the preliminary stage of show cause notices. The Assessee Companies were directed to show cause before the Authority concerned, and the court emphasized that the multiplicity of cases in Constitutional Courts should be avoided to prevent delays and ensure proper adjudication by the relevant authorities. The court concluded, "Therefore, we dismiss the present Writ Appeals. No order as to costs. Consequently, the connected Miscellaneous Petitions are also dismissed."

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