2023 (4) TMI 773 - HC - Service Tax

Belated adjudication of SCN after a gap to 13 years - Time Limitation - whether the respondents can continue the proceedings for adjudication of the impugned show cause notice, after the lapse of almost thirteen years? - HELD THAT - Section 73 of the Act, as in force at the material time, did not stipulate any time period. However, by virtue of the Finance (No.2) Act, 2014, sub-section (4B) was introduced in Section 73 of the Act which stipulates that where it is possible to pass an order, the Central Excise Officer would determine the amount of service tax within a period of one year in respect of cases falling under the proviso to sub-section (1) or the proviso to sub-section (4A), and within a period of six months from the date of notice in cases falling under Section 73(1) of the Act - It is settled law that where there is no period stipulated for exercising jurisdiction, the same must be done within a reasonable period. Section 73 of the Act, as in force at the material time, did not stipulate any period within which the show cause notice was required to be adjudicated. It merely stipulated the period within which the show cause notice was required to be issued. However, there is no cavil that the authority conferred with the jurisdiction is required to exercise the same within a reasonable period - In the facts of the present case, it is not necessary for this Court to examine the validity of the procedure of placing the matter in the Call Book as it is apparent that there is a gross delay on the part of respondent no. 1 and there are no justified reasons for the same. In Sanghvi Reconditioners Pvt. Ltd. v. Union of India through the Secretary, Department of Revenue Ors. 2017 (12) TMI 906 - BOMBAY HIGH COURT , the Court had observed that the larger public interest requires that the Revenue and its officials adjudicate the show cause notice expeditiously and within a reasonable time. The Court had further observed that the term reasonable time is flexible enough and would depend upon the facts and circumstances of each case . However, there was no justification for not adjudicating the notice for more than fifteen years after its issuance. The Court had also highlighted that it is necessary for the Revenue to inform the assessee that the show cause notice has been kept in abeyance, otherwise there would be no necessity for the assessee to preserve the record for the inordinately long period. It is thus concluded that the proceedings pursuant to the impugned show cause notice are inordinately delayed and it is now impermissible for the respondents to continue the same. The respondents are, accordingly, interdicted from taking any action or continuing any proceedings pursuant to the impugned show cause notice. - petition allowed.

Summary

Issues Involved:
1. Whether the respondents can continue the proceedings for adjudication of the impugned show cause notice after a lapse of thirteen years.
2. Whether the delay in proceedings is justified by placing the matter in the 'Call Book'.
3. Validity of the 'Call Book' procedure.

Summary:

Issue 1: Continuation of Proceedings After Thirteen Years
The petitioner filed a petition to restrain the respondents from pursuing proceedings or taking further action regarding the show cause notice dated 27.02.2009 and a subsequent letter dated 02.08.2022. The petitioner argued that the proceedings were barred by limitation due to the respondents' failure to conclude them within a reasonable period. The court noted that Section 73 of the Finance Act, 1994, as in force at the material time, did not stipulate any time period for adjudication but emphasized that jurisdiction must be exercised within a reasonable period. The court concluded that the proceedings were inordinately delayed and it was impermissible for the respondents to continue the same.

Issue 2: Justification of Delay by 'Call Book'
The respondents claimed that the delay was due to the matter being placed in a 'Call Book' as per CBEC Circulars, pending a decision from the Supreme Court in a related case (M/s Sobha Developers Limited). The court observed that while the 'Call Book' procedure is contentious, even if assumed permissible, the inordinate delay after the Supreme Court's decision in 2017 was unjustifiable. The court noted that there were no justified reasons to condone the delay after the reason for placing the matter in abeyance had ceased to exist.

Issue 3: Validity of 'Call Book' Procedure
The court referenced the Gujarat High Court's observations that the 'Call Book' procedure does not relate to uniformity in classification of excisable goods or levy of duties and is not traceable to any statutory provisions. The court acknowledged that the validity of the 'Call Book' procedure is pending consideration before the Supreme Court. However, it found it unnecessary to examine the validity in this case due to the gross delay and lack of communication to the petitioner about the placement in the 'Call Book'.

Conclusion:
The court concluded that the proceedings pursuant to the impugned show cause notice were inordinately delayed and interdicted the respondents from taking any action or continuing any proceedings pursuant to the impugned show cause notice. The petition was allowed, and all pending applications were disposed of.