2024 (3) TMI 1228 - HC - Central Excise

Clandestine removal - concealment of information of production capacities of its machines installed in the premises - manufacture and production of cigarettes - Evasion of GST and cess which is payable to the respondents - HELD THAT - The power of judicial review under Article 226 of the Constitution of India is to ensure whether the processes through which a decision is taken by the competent authority is in consonance with the Act and Rules or not but not the decision itself. Thus all disputed facts and circumstances are to be adjudicated before the competent authority or before the appellate authority concerned. This certainly is the reason why the High Courts are not entertaining a writ petition against the show cause notices and competent authorities and notices. The demand notices are issued based on initial determination made by the original authorities. A writ petition need not be entertained at this stage and High Court cannot adjudicate the issues relating to huge economic offence of stealthily procuring raw materials clandestine manufacturing and fraudulent supply of filter cigarettes of various brands during a particular period without payment of taxes as alleged by the respondents resulting into issuance of show cause notices which were issued after conducting a detailed investigation in the matter by them. Even if the procedures are not followed by the authorities before issuance of show cause notices they are bound to do so in accordance with the provisions of the Act and Rules. The interim order granted by this Court stands vacated. However the petitioner would be at liberty to avail the statutory alternative remedy in accordance with law if so advised - Petition dismissed.

Summary

Issues Involved:
1. Legality and validity of the show cause notices.
2. Assessment basis for excise duty and GST.
3. Jurisdiction of the High Court under Article 226.
4. Availability of alternative statutory remedies.

Summary:

1. Legality and Validity of the Show Cause Notices:
The petitioner challenged the legality, validity, and propriety of the show cause notices dated 08.06.2022 and 03.08.2022, alleging manipulation of cigarette manufacturing and evasion of GST and excise duty. The petitioner contended that the notices were issued without considering the actual production basis and were thus without application of mind.

2. Assessment Basis for Excise Duty and GST:
The petitioner argued that the duty should have been assessed on actual production rather than production capacity, emphasizing that the entire manufacturing process is monitored by the respondent officers, ruling out the possibility of tax evasion. The respondents countered that the demand was based on the utilization of filter rods and was supported by extensive evidence, not merely on production capacity.

3. Jurisdiction of the High Court under Article 226:
The court held that a writ against a show cause notice or demand notice is maintainable only on limited grounds, such as lack of jurisdiction or allegations of malafides. The court emphasized that it cannot adjudicate disputed facts and circumstances under Article 226, which should be resolved by the competent or appellate authority.

4. Availability of Alternative Statutory Remedies:
The court reiterated that when a statute provides for an efficacious remedy, it should be availed by the litigants instead of approaching the High Courts. The court cited several judgments, including "Union of India and Another Vs. Kunisetty Satyanarayana" and "Hindustan Coca Cola Beverage Private Ltd vs. Union of India," supporting this view.

Conclusion:
The petition was dismissed, and the interim order vacated, with the court directing the petitioner to avail the statutory alternative remedy in accordance with the law. The court emphasized that it cannot adjudicate issues relating to economic offenses involving tax evasion at this stage.