2024 (10) TMI 898 - HC - Central Excise

Challenge to SCN based on statements recorded in the past - Jurisdiction of the court to interfere at the stage of show cause notice issuance - HELD THAT - Unless a case of the impugned show cause notice being ex-facie without jurisdiction is made out, we are usually not inclined or required to interfere at the stage of issue of the show cause notice. In this case, the impugned show cause notice does not attract the vices indicated in Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others 1998 (10) TMI 510 - SUPREME COURT . In Whirlpool, the Hon ble Supreme Court has explained that writ petitions may be entertained against show cause notices where the Petitioner seeks enforcement of any of the fundamental rights, where there is a violation of the principles of natural justice, or where the order or proceedings are wholly without jurisdiction or vires of the Act, is challenged. In Special Director and Another Vs. Mohd. Ghulam Ghouse and another 2004 (1) TMI 378 - SUPREME COURT the Hon ble Supreme Court has held that unless the High Court is satisfied that the show-cause notice was totally non-est in the eyes of the law for absolute want of jurisdiction of the authority to even investigate into facts, writ petitions should not be entertained for the mere asking and as a matter of routine. The writ petitioner should invariably be directed to respond to the show cause notice and raise all defences and contentions highlighted in the writ petition. Whether the show cause notice was founded on any legal premises is a jurisdictional issue the recipient can even urge before the authority issuing the notice. Such issues can also be adjudicated by the authority initially issuing the notice before the aggrieved party could approach the Court. In Malladi Drugs and Pharma Limited Vs. Union of India and another 2004 (3) TMI 67 - SC ORDER the Hon ble Supreme Court held that the High Court was absolutely correct in dismissing the writ petition against the mere show cause notice. The High Court, by the impugned judgment, held that the appellant should first raise all the objections before the authority that has issued the show cause notice. If any adverse order was passed against the appellant, liberty was granted to approach the High Court. Petition dismissed.

Summary

Issues:
Challenge to show cause notice based on statements recorded in the past, Jurisdiction of the court to interfere at the stage of show cause notice issuance.

Analysis:
The petition challenged a show cause notice issued to the petitioner by the 4th respondent, primarily based on statements recorded in the past during the Pre-GST regime. The petitioner argued that these statements were not recorded during any formal enquiry or proceeding and should not be considered as evidence. Citing a previous decision, the petitioner contended that such statements were non-est and insufficient to support the show cause notice. The petitioner urged that the notice should be set aside as it lacked substantial material besides the mentioned statements.

The respondents, however, argued that the notice was not solely based on the past statements but also on other materials revealed during the investigation. They suggested that the issue of the admissibility of these statements and the burden of proof on the revenue could be addressed during the adjudication process after the petitioner responds to the notice.

The court deliberated on the jurisdiction to interfere with show cause notices at the initial stage. Referring to various Supreme Court judgments, it emphasized that interference is warranted only if the notice is ex-facie without jurisdiction or violates fundamental rights or principles of natural justice. The court highlighted that the petitioner should respond to the notice and raise objections during adjudication, as challenging show cause notices prematurely is discouraged to avoid frivolous litigation.

In light of the arguments presented, the court declined to interfere with the show cause notice but granted the petitioner eight weeks to respond. It clarified that the time taken for the petition and the response would not count towards the limitation period for disposing of the notice. The court dismissed the petition with liberty for the petitioner to raise defenses during the adjudication process, ensuring they are duly considered and resolved according to the law.

The judgment concluded by dismissing the petition without costs and directing all concerned parties to act upon an authenticated copy of the order.