2025 (1) TMI 1047 - HC - Customs

Delay in adjudicating the Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) - HELD THAT - The issue raised in the petition is no longer res-integra. Section 28(9) of the Act unamended and amended have been considered in detail by the Coordinate Benches of this Court in SWATCH GROUP INDIA PVT LTD ORS. VERSUS UNION OF INDIA ORS. 2023 (8) TMI 864 - DELHI HIGH COURT as also M/S. VOS TECHNOLOGIES INDIA PVT. LTD. 2024 (12) TMI 624 - DELHI HIGH COURT where it was held that A statute enabling an authority to conclude proceedings within a stipulated period of time where it is possible to do so cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence. Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act the 1994 Act or the CGST Act. The impugned SCN which was issued way back in 2014 due to repeated placing in the call book has not been adjudicated for so long. Repeated placing and removing from the call book is not a valid justification for non-adjudication of the impugned SCN for about 9 years. Moreover the gaps between the said periods is also inexplicable. Hearing notices have been given to the Petitioners but there is no reason for non-adjudication of the impugned SCN for long period. Conclusion - The statutory timelines for adjudication must be adhered to and failure to do so without valid justification results in the lapsing of the SCN. The delay in adjudication was unjustified and the SCN was quashed. Petition allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

Whether the delay in adjudicating the Show Cause Notice (SCN) issued by the Directorate of Revenue Intelligence (DRI) is justified under Section 28(9) of the Customs Act, 1962.
Whether the SCN should be quashed due to the failure to adjudicate within the specified time frame as per the Customs Act, 1962.
Whether the repeated placement of the SCN in the call book constitutes a valid reason for the delay in adjudication.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of Delay in Adjudication

Relevant Legal Framework and Precedents: The relevant legal framework involves Section 28(9) of the Customs Act, 1962, which mandates adjudication within six months to one year of issuing the SCN. The court also referred to precedents such as Swatch Group India Pvt. Ltd. v. Union of India and M/s Vos Technologies India Pvt. Ltd. v. The Principal Additional Director General, which emphasize timely adjudication.
Court's Interpretation and Reasoning: The court noted that the phrase "where it is possible to do so" does not allow indefinite delays in adjudication. The legislative intent is to ensure timely resolution, and the department's failure to act within the prescribed period without valid reasons results in the SCN lapsing.
Key Evidence and Findings: The court found no substantial evidence that it was not possible for the proper officer to determine the amount of duty within the prescribed period. The department's reliance on the phrase "where it is possible to do so" was deemed insufficient to justify the delay.
Application of Law to Facts: The court applied the statutory requirement of timely adjudication and found that the delay of nine years in adjudicating the SCN was unjustified, as no valid reasons were provided for such an extended delay.
Treatment of Competing Arguments: The court considered the department's argument regarding the placement of the SCN in the call book due to pending legal proceedings and instructions from higher authorities but found these insufficient to justify the prolonged delay.
Conclusions: The court concluded that the delay in adjudication was not justified under Section 28(9) of the Customs Act, 1962, and the SCN had lapsed.

Issue 2: Quashing of the SCN

Relevant Legal Framework and Precedents: The court referenced Section 28(9) and 28(9A) of the Customs Act, 1962, and various judgments that underscore the necessity of adjudicating SCNs within the statutory time frame.
Court's Interpretation and Reasoning: The court interpreted the statutory provisions to mean that failure to adjudicate within the prescribed time frame results in the SCN being deemed concluded as if no notice had been issued.
Key Evidence and Findings: The court noted the repeated placement and removal of the SCN from the call book without adequate justification for the delay in adjudication.
Application of Law to Facts: The court applied the legal principles to the facts of the case, determining that the SCN, which had been pending for over nine years, should be quashed due to the failure to adjudicate within the statutory period.
Treatment of Competing Arguments: The court considered the department's arguments regarding procedural delays and instructions from higher authorities but found them insufficient to justify the prolonged delay.
Conclusions: The court concluded that the SCN should be quashed due to the department's failure to adjudicate within the statutory time frame.

3. SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "The indifference of the concerned officer to complete the adjudication within the time period as mandated, cannot be condoned to the detriment of the assessee. Such indifference is not only detrimental to the interest of the taxpayer but also to the exchequer."
Core Principles Established: The court established that statutory timelines for adjudication must be adhered to, and failure to do so without valid justification results in the lapsing of the SCN.
Final Determinations on Each Issue: The court determined that the delay in adjudication was unjustified, and the SCN was quashed. The petition was allowed, and the SCN dated 20th March 2014 was set aside.

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