2024 (6) TMI 682 - HC - Central Excise

Delay in adjudicating show cause notices (SCNs) - whether non-communication of transfer of the show cause notices to call book is fatal to the case of respondents? - HELD THAT - Admittedly petitioner s case was kept in abeyance in view of pending SLP in the Apex Court and it is accepted that the issue therein covered the issue in petitioner's case as well. It would therefore serve no purpose in adjudicating the show cause notice. Hence other suggestion not accepted that respondents should be permitted to proceed with the adjudication of show cause notices. It could be nothing but an exercise in futility. The two show cause notices dated 22nd October 2010 and 21st October 2011 are hereby quashed and set aside. Petition disposed off.

Issues Involved:
1. Delay in adjudication of show cause notices.
2. Non-communication of transfer of show cause notices to call book.
3. Procedural fairness and principles of natural justice.
4. Validity of show cause notices after a long delay.
5. Impact of pending Supreme Court litigation on adjudication.

Detailed Analysis:

1. Delay in Adjudication of Show Cause Notices:
The petitioner, a wholly owned subsidiary of ICICI Bank Limited, sought a declaration that the proceedings initiated pursuant to two show cause notices (SCNs) dated 22nd October 2010 and 21st October 2011 for FY 2005-06 and FY 2006-07, respectively, be declared non est due to the delay in adjudicating the same. The petitioner filed replies to the SCNs and attended a personal hearing for SCN-1. However, no personal hearing was provided for SCN-2. The petitioner received notices for personal hearings in November 2020 and January 2021, leading to the filing of this petition.

2. Non-Communication of Transfer of Show Cause Notices to Call Book:
It was revealed that both SCNs were transferred to the call book on 22nd June 2012 due to a pending appeal in the Apex Court in Malabar Management Services Pvt. Ltd. The petitioner was not informed about this transfer. The court emphasized that non-communication of the transfer of SCNs to the call book is fatal to the respondents' case, relying on the judgment in Shreenathji Logistics Vs. Union of India & Ors., which mandates that parties should be informed when SCNs are transferred to the call book.

3. Procedural Fairness and Principles of Natural Justice:
The court underscored the importance of procedural fairness and the principles of natural justice, highlighting that delay in adjudicating SCNs without informing the concerned party impinges on these principles. The court referred to the case of Godrej & Boyce Mfg. Co. Ltd. Vs. Union of India, which outlines that SCNs must be adjudicated within a reasonable time and that parties must be kept informed about the status of SCNs to safeguard evidence and contest the notices if necessary.

4. Validity of Show Cause Notices After a Long Delay:
The court noted that adjudication proceedings delayed for more than a decade, without informing the concerned party, defeat the purpose of issuing SCNs and are bad in law. The court found that the facts of the present case were similar to those in Parle and Raymond cases, where SCNs were resurrected after a long delay, causing irretrievable prejudice to the petitioner. The court held that such delayed adjudication is void and that the petitioner was justified in concluding that the respondents had abandoned the SCNs.

5. Impact of Pending Supreme Court Litigation on Adjudication:
The court acknowledged that the SCNs were transferred to the call book due to pending litigation in the Supreme Court in Malabar Management Services Pvt. Ltd. However, since the issues in Malabar Management Services Pvt. Ltd. had attained finality and were decided in favor of the assessee, the court found no purpose in adjudicating the SCNs. The court rejected the respondents' suggestion to proceed with the adjudication of the SCNs, deeming it an exercise in futility.

Conclusion:
The court quashed and set aside the two SCNs dated 22nd October 2010 and 21st October 2011 due to the inordinate delay of 9 to 10 years and the non-communication of their transfer to the call book. The petition was disposed of, with the rule made absolute in terms of prayer clause (a), declaring the adjudication proceedings in relation to the impugned SCNs as not maintainable.

← Previous Next →