2021 (12) TMI 179 - HC - Central Excise

Legality and validity of the show cause notices issued by the respondent authorities - whether the said show cause notice is ex facie without jurisdiction and authority of law and in clear disregard to the binding order of the superior authority amounting to abuse of process of law, illegal and void? - HELD THAT - The impugned show cause notice once again of raising the very issue when the order of Commissioner (Appeals) has attained finality without any challenge by the department, which deserves indulgence. It is a judicial discipline which demands following the mandate of superior authority, even when it is a quasi judicial body as such discipline is an intigral part of this well laid down principle and deserves scrupulous observance by all concerned. No one is permitted to obliterate this well defined boundaries, even in a zeal to earn more revenue or profit the interest of the State as done by the respondent No.2. The show cause notice is issued without any new material in the matter and on the very ground which had been decided by the Commissioner (Appeals) and therefore it is ex facei without jurisdiction and hence, the interference under Article 226 of the Constitution of India despite the availability of the alternative remedy would be necessary in the instant case. This nowhere requires the reopening of the process which had already attained the finality and quietus. We accept the version of the learned ASG that this is not a case where we can impute any mala fides to the respondent No.2. It is over enthusiasm of the officer to advance the departmental cause that without grasping the ratio on the subject and disregard to the settled principles of law that he has initiated the action and hence, the interference is a must by quashing and setting aside the impugned show cause notice - Petition allowed.

Issues Involved:
1. Legality and validity of the show cause notices.
2. Jurisdiction and authority of the respondent authorities.
3. Binding nature of the superior authority's order.
4. Abuse of process of law.
5. Applicability of exemption notifications to Education Cess and Secondary & Higher Secondary Education Cess (ECSHEC).
6. Judicial discipline and adherence to precedents.
7. Retrospective application of subsequent Supreme Court judgments.
8. Issuance of show cause notices based on subsequent Supreme Court decisions.

Detailed Analysis:

1. Legality and Validity of the Show Cause Notices:
The petitions challenged the legality and validity of the show cause notices issued by the respondent authorities under Article 226 of the Constitution of India. The petitioners contended that the show cause notices were issued without jurisdiction and authority of law, in clear disregard of the binding order of the superior authority, amounting to abuse of process of law, and were thus illegal and void.

2. Jurisdiction and Authority of the Respondent Authorities:
The show cause notices were issued by the respondent authorities proposing to recover the amount refunded to the petitioners in respect of ECSHEC. The petitioners argued that the respondent authorities lacked jurisdiction and authority to issue such notices, especially when the matter had already been decided by a superior quasi-judicial authority.

3. Binding Nature of the Superior Authority's Order:
The petitioners emphasized that the binding order of the Commissioner (Appeals) dated 19.12.2018, which allowed the refund claim of ?54,10,810/- pertaining to ECSHEC, was accepted by the department and had attained finality. The issuance of the show cause notices by the respondent authorities was in clear disregard of this binding order, violating the principles of judicial discipline.

4. Abuse of Process of Law:
The petitioners argued that the issuance of the show cause notices was an abuse of process of law by the respondent authorities. The notices were issued based on the subsequent Supreme Court judgment in the case of Unicorn Industries vs. Union of India, delivered on 06.12.2019, which was much after the refund process was concluded.

5. Applicability of Exemption Notifications to ECSHEC:
The petitioners contended that Education Cess and Secondary & Higher Secondary Education Cess are in the nature of a surcharge levied as duty of excise and are therefore refundable under Notification No. 39/2001-CE. The Commissioner (Appeals) had allowed the refund claim of ECSHEC, relying on the decision of the Apex Court in the case of SRD Nutrients Pvt Ltd vs. CCE, Guwahati, and a Circular dated 10.08.2004 of the Central Board of Excise and Customs (CBEC).

6. Judicial Discipline and Adherence to Precedents:
The court emphasized the importance of judicial discipline and adherence to precedents. It held that the decision of the Commissioner (Appeals) was binding on the respondent authorities, and they were not permitted to question or challenge the refund order that had attained finality. The court referred to several judgments, including Union of India vs. Kamlakshi Finance Corporation Ltd., which stressed the need for adjudicating authorities to follow the orders of higher appellate authorities.

7. Retrospective Application of Subsequent Supreme Court Judgments:
The court held that the subsequent Supreme Court judgment in the case of Unicorn Industries vs. Union of India could not be applied retrospectively to reopen issues that had already attained finality. The decision in the case of SRD Nutrients Pvt Ltd vs. CCE, Guwahati, was the prevailing law at the time the refund was sanctioned, and the subsequent judgment could not furnish a reason to raise a demand retrospectively.

8. Issuance of Show Cause Notices Based on Subsequent Supreme Court Decisions:
The court found that the show cause notices were issued without any new material and were based solely on the subsequent Supreme Court decision. The issuance of such notices was ex facie without jurisdiction, and interference under Article 226 of the Constitution of India was necessary despite the availability of an alternative remedy.

Conclusion:
The court quashed and set aside the impugned show cause notices dated 08.10.2020 issued by the respondent authorities. It emphasized the need for judicial discipline and adherence to the binding orders of superior authorities. The court also highlighted that the subsequent Supreme Court judgment could not be applied retrospectively to reopen issues that had attained finality. The petitions were allowed, and the show cause notices were quashed without awarding costs, but with a note for the apt training of officers on the observance of judicial discipline.

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