2021 (5) TMI 671 - HC - Central Excise

Principles of Natural Justice - non-speaking order - non-payment of demand - HELD THAT - This Court is of the considered opinion that impugned demand notice reveals that the amount claimed pertains to the year 1997. However, the notice was issued in July 2004, after a lapse of about 7 years. Further, the order impugned is non-speaking and the details regarding the enquiry as well as the findings are not made available in the impugned order. Thus, the reason for arriving such a conclusion has not been elaborated in the impugned order. Such non-speaking orders, which was passed after considering the reply submitted by the petitioner cannot be appreciated by this Court. This being the Principles of Natural Justice to be complied with by the competent authority, more specifically, the Statutory authorities, this Court is of an opinion that the impugned order, which is non-speaking, cannot be sustained in the eye of law - this Court is inclined to consider the writ petition - Petition allowed.

Summary

Issues:
Challenge to demand notice issued by the 3rd respondent in O.C.No.451 of 2004 dated 12.8.2004 regarding excise duty payment.

Analysis:
The petitioner, M/s.Rasi Electrodes Limited, challenged the demand notice issued by the 3rd respondent, dated 12.08.2004, directing them to pay a sum of ?1,85,000 in excise duty. The petitioner claimed that the amount in the notice had already been paid, supported by TR6 Challans submitted to the authorities. However, the respondents contended that the challans were fabricated, leading to the issuance of the impugned order. The Court noted the lack of details in the impugned order regarding non-payment or fraudulent activities by the petitioner, emphasizing the necessity of clear reasoning in such orders.

The Court observed that the impugned demand notice related to the year 1997 but was issued in July 2004, after a significant lapse of around 7 years. The order was deemed non-speaking as it lacked details of the enquiry and findings, essential for understanding the basis of the decision. Emphasizing the principles of Natural Justice, the Court held that non-speaking orders, especially after considering the petitioner's reply, were unacceptable. Authorities were required to provide a speaking order post receiving objections or explanations from the concerned party.

Regarding the delay in issuing the demand after 7 years, the Court highlighted that actions under the statute should typically commence within 5 years. Even if the limitation period was disputed, any action must occur within a reasonable timeframe, with reasons for any delays or administrative issues duly recorded. The absence of such justifications rendered non-speaking orders unsustainable in the eyes of the law.

The Court stressed the importance of conducting an enquiry and documenting findings before concluding that a demand order was based on fabricated documents. In this case, no such evidence was presented in the impugned order, leading the Court to consider the writ petition. Consequently, the impugned order was quashed, and the writ petition was allowed without costs.