2019 (4) TMI 532 - HC - Central Excise

Intervening period between the issuance of show cause notices and issuance of notice for personal hearing - issuance of notices in the year 2018 for personal hearing after about nearly thirteen years to seventeen years for the purpose of adjudication - difficulty in participating in the personal hearing - Held that - The case of the petitioners is covered by the decision in the case of SIDDHI VINAYAK SYNTEX PVT LTD. VERSUS VERSUS UNION OF INDIA & 2 2017 (3) TMI 1534 - GUJARAT HIGH COURT , where it was held that Revival of proceedings after a long time gap without any proper explanation therefor, is unlawful and arbitrary. The grievance voiced by the petitioners that they have closed down their business since 2004 to 2005 and issuance of notices for personal hearing in the year 2018 has caused immense prejudice to them. The department did not take any further steps after issuance of show cause notices and filing of reply by the respective petitioners to the said show cause notices for number of years. Even the show cause notices were transferred to call book even without intimation to the petitioners - issuance of notices in the year 2018 for personal hearing after about nearly thirteen years to seventeen years for the purpose of adjudication is unlawful, arbitrary and vitiates the entire proceedings. The impugned show cause notices issued in the case of respective petitions are hereby quashed - Petition allowed - decided in favor of petitioner.

Summary

Issues:
Challenge to show cause notices issued for central excise duty, penalty, and interest on grounds of being arbitrary, unjust, and illegal due to delayed adjudication process.

Analysis:
In a group of petitions, the petitioners contested show cause notices issued between 2000 to 2005, claiming them to be arbitrary and illegal as the authority sought to adjudicate them after a significant delay. The petitioners had submitted replies to the notices between February 2001 to June 2005, but the cases were later transferred to call book without their knowledge, causing further delays. The petitioners argued that due to the prolonged delay, it was challenging for them to effectively participate in the personal hearing, as crucial evidence and personnel might no longer be available. They relied on a previous court decision and requested to quash the show cause notices, contending that the delay in adjudication was not attributable to them.

The respondents, while unable to justify the delay in proceedings, informed that the matter had been taken to the Supreme Court regarding the circular providing for cases to be kept in call book. The High Court, after hearing both parties and considering the previous court decision, found that the petitioners' case aligned with the principles laid out in the previous judgment. The court emphasized the importance of adhering to statutory time limits for determining excise duty, highlighting that delays should only occur when genuinely unavoidable reasons exist, not due to extraneous factors like transferring cases to call book. The court agreed with the petitioners' argument that the delayed issuance of notices for personal hearing in 2018, after almost thirteen to seventeen years, was unlawful, arbitrary, and prejudicial to the petitioners.

Based on the analysis and in alignment with the previous court decision, the High Court quashed and set aside the impugned show cause notices issued to the respective petitioners, as the issue relied upon for determining the petitions was not under challenge before the Supreme Court. The court held that the delayed adjudication process, without valid reasons and without informing the petitioners about the status of their cases, was unlawful and vitiated the entire proceedings. The ruling was made absolute with no order as to costs, directing the registry to provide a copy of the order to each petitioner.