2022 (3) TMI 1163 - HC - Central Excise

Delay in adjudicating the show cause notices - seeking prohibition on respondents from adjudicating the said show cause notice against the petitioner - delay on the part of the respondent no.2 in proceeding with the said show cause notice - HELD THAT - It is an admitted position that there was no communication received from the respondent no.2 by the petitioner for any date for personal hearing since 17th February, 2006 till 19th February, 2019. The petitioner was never informed by the respondents about the objection raised by the respondents to the query raised by the office of the Comptroller and Accountant General. The respondents also did not inform the petitioner that the said show cause notice was transferred to call book at any point of time - There was thus gross delay of more than 12 years in adjudicating upon the said show cause notice dated 17th February, 2006. If the Respondent would have informed the Petitioner about the said show cause notice in the year 2005 itself, having been kept in call book, the Petitioner would have immediately applied for appropriate reliefs by filing the appropriate proceedings. It is not expected from the assessee to preserve the evidence/record intact for such a long period to be produced at the time of hearing of the Show-Cause Notice - In view of the gross delay on the part of the Respondent, the Petitioner cannot be made to suffer. A perusal of the record indicates that for more than 10 years there was no communication from the respondents to the petitioner about the objection alleged to have been raised by the respondents to the query raised by the Comptroller and Accountant General. Petition allowed.

Summary

Issues Involved:
1. Delay in adjudication of show cause notices.
2. Lack of communication about the transfer of show cause notices to the call book.
3. Violation of principles of natural justice due to delayed hearings.

Detailed Analysis:

Issue 1: Delay in adjudication of show cause notices

In Writ Petition No. 1194 of 2022, the petitioner sought to quash the Show Cause Notice dated 17th February 2006 and prohibit respondents from adjudicating it. The petitioner argued that there had been no communication from respondents since the notice was issued, and the delay in adjudication was unreasonable. The petitioner referenced the Gujarat High Court's judgment in Apollo Tyres Ltd. v/s. Union of India and a similar case in the Bombay High Court, emphasizing that the delay was unjustifiable.

The respondents admitted the delay but attributed it to administrative reasons, including the transfer of files due to the reorganization of the Central Excise department following the implementation of the Goods & Service Tax Act in 2017. The court found that there was a gross delay of over 12 years in adjudicating the show cause notice, which violated the principles of natural justice.

In Writ Petition (L) No. 1068 of 2021, the petitioner sought to quash multiple show cause notices issued between 2004 and 2007, citing similar delays and lack of communication. The court found that there had been no communication from the respondents for over 10 years, and the delay was unjustifiable.

Issue 2: Lack of communication about the transfer of show cause notices to the call book

The petitioner in Writ Petition No. 1194 of 2022 argued that they were never informed about the transfer of the show cause notice to the call book. The respondents admitted that the notice was transferred to the call book based on a CERA objection but failed to communicate this to the petitioner. The court noted that if the petitioner had been informed about the transfer, they could have sought appropriate reliefs earlier.

Similarly, in Writ Petition (L) No. 1068 of 2021, the petitioner argued that they were not informed about the transfer of the show cause notices to the call book. The court found that the lack of communication was a significant issue and contributed to the unjustifiable delay.

Issue 3: Violation of principles of natural justice due to delayed hearings

The court in both writ petitions emphasized that the delay in adjudicating the show cause notices violated the principles of natural justice. In Writ Petition No. 1194 of 2022, the court cited its previous judgment in The Bombay Dyeing and Manufacturing Company Limited case, which held that show cause notices should be adjudicated within a reasonable period to reach finality. The court found that the delay of 16 years in this case was unreasonable and unjustifiable.

In Writ Petition (L) No. 1068 of 2021, the court reiterated that the delay of over 10 years in adjudicating the show cause notices violated the principles of natural justice. The court noted that the reasons provided by the respondents for the delay were not sufficient to justify the prolonged inaction.

Conclusion:

The court quashed and set aside the impugned show cause notices in both writ petitions, allowing the petitions in terms of the prayer clauses. The court emphasized the importance of timely adjudication of show cause notices to uphold the principles of natural justice and prevent undue hardship to the petitioners. The judgments highlighted the need for clear communication from the authorities regarding the status of show cause notices and any administrative actions taken, such as transferring notices to the call book.