2025 (1) TMI 67 - HC - Central Excise

Seeking a declaration that the adjudication proceedings which have remained pending for almost 12 years be held to be vitiated in law - challenge to SCN - challenge to final order of adjudication - HELD THAT - The respondents allude to the matter having been placed in the call book for many years and thereafter proceedings being delayed on account of repeated adjournments being sought by the petitioner. As was noticed in M/s Vos Technologies 2024 (12) TMI 624 - DELHI HIGH COURT , nothing constrained or detracted from the right of the respondents to proceed ex parte in case the adjudication proceedings were being unjustifiably delayed and frequent requests for adjournments being made. In fact, although the blame is sought to be deflected towards the petitioner, the principal ground for a failure to conclude with due expedition appears to be the matter having remained in the call book for many years and which fact is admitted to by the respondents themselves. The final order dated 31 January 2023 as well as the SCN proceedings emanating from the impugned SCN dated 21 April 2011 is quashed - petition allowed.

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily revolves around the following core legal questions:

Whether the prolonged adjudication proceedings, which have remained pending for approximately 12 years, are vitiated in law and should be quashed.
The validity of the original Show Cause Notice (SCN) issued on 21 April 2011 under Section 73(4B) of the Finance Act, 1994.
Whether the final order of adjudication dated 31 January 2023 is sustainable.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Prolonged Adjudication Proceedings

Relevant Legal Framework and Precedents: The court referenced Section 28(9) and 28(9-A) of the Finance Act, 1994, which outline the procedure for extending the time for adjudication and the requirement of notifying the parties involved. Precedents from similar cases, such as M/s Vos Technologies and ATA Freight Line, were considered.
Court's Interpretation and Reasoning: The court emphasized the obligation of the authorities to conclude adjudication proceedings with due expedition and not to let them linger indefinitely. The practice of placing matters in the call book without proper notification and periodic review was criticized.
Key Evidence and Findings: The respondents admitted that the matter was placed in the call book for years and that there was a delay in proceedings due to repeated adjournments requested by the petitioner.
Application of Law to Facts: The court found that the respondents failed to establish any insurmountable constraint that justified the delay. The frequent placement of matters in the call book and lack of timely action were deemed contrary to statutory obligations.
Treatment of Competing Arguments: The respondents argued that the delay was partly due to the petitioner's requests for adjournments. However, the court noted that the respondents could have proceeded ex parte if the requests were unjustified.
Conclusions: The court concluded that the prolonged delay in adjudication was unjustified and vitiated the proceedings.

Issue 2: Validity of the Show Cause Notice

Relevant Legal Framework and Precedents: The issuance and validity of SCNs are governed by statutory provisions requiring timely adjudication and notification to the parties involved.
Court's Interpretation and Reasoning: The court held that the SCN's validity was compromised due to the excessive delay and failure to adhere to procedural requirements.
Key Evidence and Findings: The SCN was issued on 21 April 2011, and adjudication was delayed without proper notification to the petitioner about the call book placement.
Application of Law to Facts: The court found that the lack of timely communication and procedural adherence rendered the SCN invalid.
Treatment of Competing Arguments: The respondents' reliance on the call book procedure was found inadequate due to the lack of notification and periodic review.
Conclusions: The SCN was deemed invalid due to procedural lapses.

Issue 3: Sustainability of the Final Order

Relevant Legal Framework and Precedents: The final order's validity is contingent on the legal and procedural validity of the preceding SCN and adjudication process.
Court's Interpretation and Reasoning: The court found that the final order could not be sustained due to the invalidity of the underlying SCN and procedural delays.
Key Evidence and Findings: The final order was passed on 31 January 2023, following years of delayed proceedings.
Application of Law to Facts: The court applied the principle that an invalid SCN and flawed procedure render the final order unsustainable.
Treatment of Competing Arguments: The court rejected the respondents' arguments about procedural adherence due to the established procedural lapses.
Conclusions: The final order was quashed due to its reliance on an invalid SCN and procedural deficiencies.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "The respondents are bound and obliged in law to endeavour to conclude adjudication with due expedition. Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together."
Core Principles Established: Authorities must adhere to statutory timelines for adjudication, ensure proper notification and periodic review of call book placements, and cannot rely on procedural delays to justify prolonged proceedings.
Final Determinations on Each Issue: The court quashed the final order dated 31 January 2023 and the SCN proceedings emanating from the SCN dated 21 April 2011. The petitioner was entitled to a refund of the moneys collected during the interregnum, along with statutory interest.

← Previous Next →