2015 (8) TMI 387 - HC - Customs

Refund of amount deposited during Investigation Delay in Adjudication Pendency of Proceedings Commissionerate learnt about the subject show cause notice only on receipt of copy of this writ petition. - Held that - Petitioner claims quashing of proceedings and refund of amount on account of pendency of proceedings for 17 years Affidavit filed on record indicated that as reorganization of Customs Commissionerate occurred year 1997, 2002 and 2014, records of case could not be located and traced Though there are no period of limitation prescribed in statute to complete adjudication proceedings, but Law is that they have to be exercised within reasonable time Petitioners cannot be faulted for having approached Court belatedly as contention of the Revenue Explanation placed on affidavit does not inspire confidence Department on going by settled legal principles, cannot pass adjudication order on show cause notice Therefore show cause notice hereby quashed and respondents prohibited from passing any adjudication order in furtherance thereof Liberty granted to petitioners to institute proceedings as permissible in law for recovery of sums deposited with accrued interest Decided in favour of Petitioner.

Summary

Issues:
1. Delay in adjudication of show cause notice
2. Violation of constitutional mandates by retention of deposited money

Issue 1: Delay in adjudication of show cause notice

The petitioners sought relief through a writ petition under Article 226 of the Constitution of India due to the delay in adjudicating a show cause notice issued in 1997. The petitioners had procured licenses for export under certain schemes and were accused of wrongful benefits by providing false information. Despite repeated attempts by the petitioners to have the notice adjudicated, the department failed to take action for 17 years. The Court noted that investigations were conducted in 1995, and the notice was issued in 1997, making the delay unreasonable. The department's failure to locate the file and provide an explanation for the delay was deemed unsatisfactory. Citing legal precedents, the Court quashed the show cause notice and prohibited the department from further adjudication.

Issue 2: Violation of constitutional mandates by retention of deposited money

The petitioners argued that the retention of the money deposited under protest for 17 years violated constitutional mandates, including Articles 14, 19(1)(g), 265, and 300A of the Constitution of India. They contended that the delay in adjudication and retention of the deposited sum were unjust. The Court acknowledged the petitioners' belated approach but emphasized that the delay in adjudication was unreasonable. Despite the department's objection to the petitioners seeking a refund after several years, the Court granted relief by quashing the proceedings and directing the department not to pass any adjudication order. The Court also allowed the petitioners the liberty to pursue legal proceedings for the recovery of the deposited sum with accrued interest, keeping jurisdictional objections open for both parties.

In conclusion, the High Court of Bombay held that the delay in adjudicating the show cause notice for 17 years was unreasonable and violated legal principles. The Court quashed the notice, prohibited further adjudication, and granted the petitioners liberty to seek recovery of the deposited sum. The Court expressed concern over the loss to the exchequer due to departmental delays and urged the Ministry of Finance to take necessary actions against those responsible for causing such losses.