2022 (5) TMI 1246 - HC - Central Excise

Validity of revival notices - revival notices challenged on the ground that after issuance of original show cause notices, no intimation whatsoever was given to them regarding the status thereof or that the same had been consigned to the Call Book - HELD THAT - It is an admitted position that the original show cause notices were issued to the petitioners between the years 2007 and 2012. There is no denial on part of the respondents that the decision to send assessment proceedings sought to be taken under these show cause notices to the Call Book was never communicated to the petitioners. The revival notices were issued out of the blue in the years 2020 and 2021. Immediately on receiving the revival notices, the petitioners forwarded letters to the respondent Assistant Commissioner, CGST seeking reasons for sending the cases to the Call Book and for revival of the show cause notices after such inordinate delay. Request letters were also forwarded by the petitioners to provide link for VC so as to advance the arguments. It is undisputed that neither any reply was given to the petitioners despite their pertinent request nor was any link of hearing through VC was provided despite pertinent demand being made. Apparently, thus, the respondent authorities were playing a game of hide and seek with the petitioners. The respondents have failed to satisfy the court that as a matter of fact any conscious, considered decision was ever taken to transfer the original show cause notices to the Call Book and if so, with prior approval of the Commissioner in terms of the instructions issued vide Circular dated 14.12.1995. Further, the cases were never reviewed as is essential by effect of these circulars. Hence, revival of these proceedings after a gross inordinate and unexplained delay is clearly unjustified. Furthermore, non-intimation of the decision to transfer the original show cause notices to the Call Book to the petitioners herein, has resulted into grave prejudice being caused to them because on account of the delay in revival of the notices, the opportunity of contesting the assessment proceedings has been severely impaired. Thus, allowing continuance of the assessment proceedings against the petitioners as a consequence of the impugned show cause notices and the revival notices would be absolutely unjustified. There is no material on the record of the case to satisfy the court that the original show cause notices were actually transferred to the Call Book and if so, by following the due process as prescribed by the mandatory Circulars. The impugned show cause notices, the revival notices issued to the petitioners, as detailed, and the consequential orders, if any, deserve to be and are hereby quashed - Petition allowed.

Summary

Issues Involved:
1. Validity of revival notices after a significant delay.
2. Compliance with mandatory circulars for transferring cases to the Call Book.
3. Communication of transfer to Call Book to petitioners.
4. Prejudice to petitioners due to non-communication and delay.
5. Justification for delay in adjudication and revival of proceedings.

Detailed Analysis:

1. Validity of Revival Notices After a Significant Delay:
The petitioners challenged the revival notices issued by the respondent Assistant Commissioner, CGST, Division-D, Pali, arguing that the revival of adjudication proceedings after an inordinate delay of 8 to 13 years post issuance of the original show cause notices is arbitrary and untenable in law. The original show cause notices were issued between 2007 and 2012, and the revival notices were sent in 2020 and 2021. The Court found that the revival notices were issued without any prior intimation or communication to the petitioners regarding the status of the original notices or their transfer to the Call Book, resulting in gross and inordinate delay.

2. Compliance with Mandatory Circulars for Transferring Cases to the Call Book:
The petitioners relied on several circulars issued by the Ministry of Finance and Central Board of Excise and Customs, which outline the procedure for transferring cases to the Call Book. These circulars mandate that cases should be transferred to the Call Book with the approval of the Commissioner and require periodic reviews. The Court noted that the respondents failed to provide evidence of compliance with these mandatory circulars, including obtaining the necessary approval from the Commissioner before transferring the cases to the Call Book.

3. Communication of Transfer to Call Book to Petitioners:
The petitioners argued that they were never informed about the transfer of their cases to the Call Book, which is a violation of the mandatory circulars. The Court observed that the respondents did not communicate the decision to transfer the show cause notices to the Call Book to the petitioners, nor did they provide reasons for this decision. This lack of communication led the petitioners to believe that the proceedings might have been dropped, causing them to not retain relevant evidence for their defense.

4. Prejudice to Petitioners Due to Non-Communication and Delay:
The Court recognized that the non-communication of the transfer to the Call Book and the subsequent delay in revival caused severe prejudice to the petitioners. The petitioners' right to defend against the impugned show cause notices was impaired as they could not be expected to retain defense evidence for such an extended period. The Court cited judgments from the Bombay High Court and Gujarat High Court, which held that delayed adjudication attributable to the revenue is unfair and violates the principles of natural justice.

5. Justification for Delay in Adjudication and Revival of Proceedings:
The respondents claimed that the cases were transferred to the Call Book due to the pendency of similar issues before the Supreme Court and other higher forums. However, the Court found that the respondents failed to provide satisfactory explanations or evidence supporting this claim. The Court noted that the reason attributed to the transfer, such as the pending case of M/s. J.K. Cement Works, did not align with the timeline of the original show cause notices issued to the petitioners.

Conclusion:
The Court concluded that the respondents failed to justify the revival of proceedings after an inordinate delay and did not comply with the mandatory procedures for transferring cases to the Call Book. The lack of communication and the unexplained delay caused significant prejudice to the petitioners. Consequently, the impugned show cause notices, revival notices, and any consequential orders were quashed. The writ petitions were allowed, and no costs were imposed.