2006 (12) TMI 203 - SC - Indian Laws

Scope of Show cause notice - Determination of liability in the SCN - The question as to whether jurisdictional fact existed for issuance of the said notice order passed by the respondent was in question in the writ petition before high court, Held Yes - If in passing the order the respondent has already determined the liability of the appellant and the only question which remains for its consideration is quantification thereof, the same does not remain in the realm of a show cause notice. The writ petition, in our opinion, was maintainable. - writ petition restored to high court

Summary

Issues:
Interference of High Court in demand for payment of cess under Article 226 of the Constitution of India.

Analysis:
The case involved a multi-location company paying cess for goods supplied from its factory under the Bombay Provincial Municipal Corporation Act, 1949. The company questioned a demand for cess on supplies made to Navi Mumbai parties from its factory in Kalwe, claiming no jurisdictional fact existed. The High Court refused to interfere under Article 226, directing the company to file a reply to the show cause notice within two weeks, with no recovery for four weeks if adverse. The company filed a writ petition challenging the notice, arguing that the High Court should have exercised jurisdiction. The respondent corporation contended that the company was liable for cess evasion and needed to cooperate in determining liability under the rules.

The Supreme Court considered whether the jurisdictional fact existed for issuing the notice and the maintainability of the writ petition. It noted that even if a notice is issued with premeditation, a writ petition could be maintainable. The Court emphasized that if the statutory authority had already determined liability, the matter did not remain a mere show cause notice. Citing precedents, the Court held that in such cases, a post-decisional hearing may not serve any fruitful purpose, as the authority had already made up its mind. The Court found that the authority had applied its mind and formed an opinion on the liability of the company, making the writ petition maintainable.

As a result, the Supreme Court set aside the High Court's judgment, allowing the appeal and remitting the matter back to the High Court for fresh consideration on its merits. No costs were awarded in the case.