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TMI Blog2024 (11) TMI 622X X X X Extracts X X X X X X X X Extracts X X X X ..... tice. Adjudicating Authority should have adjudicated the impugned SCN within a reasonable time; failure to do so is bound to cause prejudice to the Petitioners. This Court has repeatedly quashed such inordinately delayed adjudications backed by no compelling explanations in the precedents referred to above. - M. S. SONAK ASHWIN D. BHOBE, JJ. For the Petitioners : Mr Pratyushprava Saha I/by Khaitan co.. For the Respondents : Ms Niyati Mankad along with Mr. Akash Singh. JUDGMENT: (PER ASHWIN D. BHOBE, J) 1. Heard learned Counsel for the parties. 2. Rule. The Rule is made returnable immediately at the request of the parties and with the consent of learned counsel for the parties. 3. By the present Petition, the Petitioners have sought the following reliefs: a) issue a writ of Certiorari or a writ of prohibition or any other appropriate writ to call the records and prohibit adjudication of Show Cause Notice No. F. No. DRI/MZU/D/25/2001 dated September 2003 and Personal Hearing Notice F No. S/10-19/2002 Adj. Part-III dated 19.06.2024: b) issue a writ of Certiorari or a writ of prohibition or any other appropriate writ to quash the Personal Hearing Notice F No. S/10-19/2002 Adj. Part-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t vide Notification No.37/2003 CUS (NT) dated 03.06.2003 the impugned SCN was assigned to the Commissioner of Customs (Adjudication) for adjudication; That during the course of adjudication/hearing, the Petitioners sought copies of certain documents to enable them to file detailed submission; that without supplying the documents as sought by the Petitioners, the Respondent No.3 passed the Order-in-Original ( OIO ), No. 160/2007/CAC/CC/KS dated 30.11.2007, rejecting the declared value of the imported goods and ordered for confiscation; that the Respondent No.3 also confirmed differential duty and imposed penalty on the Petitioners; the Petitioners preferred an Appeal bearing No. S/522 to 524/08/CSTB/C-11 against OIO before the Customs Excise and Service Tax Appellate Tribunal, West Zonal Bench ( the learned Tribunal ); The learned Tribunal, after hearing the parties, was pleased to dispose of the said Appeal vide order dated 10.09.2008, holding that the OIO was passed in violation of principles of natural justice and, on such conclusion, set aside the OIO and remanded the matter to the Respondent No.3 to pass an order within a period of 6 months from the date of receipt after granti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal hearing is on 26th August 2024. 4. Mr. Kantharia states that respondents will be filing an affidavit in reply to oppose the petition and orally he also submits that petitioner did not even file reply to the show cause notice as directed in the order of the CESTAT. 5. Matter requires consideration and therefore, we pass following directions:- (i) Affidavit in reply to be filed and copy served upon petitioner on or before 6th September 2024. (ii) Rejoinder, if any, to be filed and copy served by 20th September 2024. (iii) Petition be listed on 30th September 2024. (iv) Until 31st October 2024, adjudication proceedings shall not be proceeded with. 6. Case of Respondent No. 2: Respondent No. 2 has filed a reply dated 05.09.2024. The case of Respondent No. 2 as set out in the reply, inter alia, is that the notices dated 25.07.2024, 19.06.2024 and 08.08.2024 for personal hearing are for de novo adjudication of the impugned SCN and that the Petitioners would be offered just and proper opportunity of hearing by following the principles of natural justice; that in the event the Adjudicating Authority passing an adverse order, the Petitioners would have an alternate remedy of filing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 24.09.2003 being a part of the main case of Shri Bhumish Shah and as the main case of Shri Bhumish Shah was kept in Call Book, even the case of the Petitioners was kept in the Call Book; That reference is made to further CBIC instructions concerning the matters in the context of Call Book; that on 17.05.2024, DRI informed that the case file of Petitioner No.1 was reconstructed and the matter was taken up for adjudication; that on 27.05.2024 personal hearing notice was issued fixing the date of appearance on 19.06.2024; that by letter dated 19.06.2024, the Petitioners were informed that the personal hearing was fixed on 09.07.2024. Respondent No. 2 contends that the Petitioners, having not complied with the order of the learned Tribunal, the Petitioners by this Petition are attempting to take advantage of their own wrong. Respondent No. 2 has relied on the provisions of Section 28(9) of the Finance Act, 2018 which came into effect on 29.03.2018, to support their case with reference to the limitation for disposal of show cause notices; that Respondent No. 2 referred to the judgments of the Hon ble Supreme Court. After that, Respondent No. 2 has dealt with the Petitioners content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . They submitted that the adjudication was affected by the spread of the COVID-19 pandemic during the 2019 Pandemic period, and according to them, the period from 15.03.2020 to 28.02.2022 would have to be excluded. Reliance is placed on the order passed by the Hon ble Supreme Court in Writ Petition (C)/3/2020, read with Miscellaneous Civil Application No.665 of 2021 and Miscellaneous Civil Application No. 21 of 2022. 12. They also contended that the Petitioners could not take advantage of their own wrong inasmuch as non-compliance of the directives passed by the learned Tribunal in its order dated 10.09.2008, submitted that no indulgence be shown to the Petitioners and the petition be dismissed. 13. The Petitioners have filed their rejoinder affirmed on 20.09.2024 in response to the reply filed by Respondent No. 2. The Petitioners, in their rejoinder, have inter alia contended that on account of a gap of almost 23 years in the disposal of the transaction, it would be impossible for someone to recall events truthfully after 23 years; that the opportunity of personal hearing on 04.12.2014 was a futile exercise; that the personal hearing notice challenged in the Petition is issued as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation why such directions were breached by Respondent No. 3. At least by May -June 2009, the SCN should have been disposed of. 17. Apparently, the Respondent kept the impugned SCN in the Call Book on 27.11.2017 (List of documents, Sr. No.15 on page 134.) Vide letter dated 04.12.2014 (Exhibit 4 to the reply) Appraiser (Adj) notified the Petitioners of the matter being fixed before the Additional Director General (ADJ) for a personal hearing on 22.12.2014. The Petitioners vide letter dated 22.12.2014 (Exhibit 5 to the reply) acknowledged receipt of the letter dated 30.11.2014. From 2014 till 27.05.2024, the proceedings of the impugned SCN were not taken up. It was only on 27.05.2024 (Exhibit -F to the Petition) that the Petitioners were notified of the personal hearing fixed on 19.06.2024. The Petitioners approached this Court by the above-said Petition on 08.07.2024 (as per the date mentioned on the memo of Petition). Again, there is no record of the Petitioners ever being intimated about transferring the matter to the call book. 18. Thus, the records would indicate that Respondent No.3 was under directions to dispose of the proceedings within 6 months from the date of receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lows:- It is of utmost importance that, in disposing of the quasi-judicial issues before them, revenue officers are bound by the decisions of the appellate authorities. The order of the Appellate Collector is binding on the Assistant Collectors working within his jurisdiction and the order of the Tribunal is binding upon the Assistant Collectors and the Appellate Collectors who function under the jurisdiction of the Tribunal. The principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. The mere fact that the order of the appellate authority is not acceptable to the department - in itself an objectionable phrase - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessees and chaos in administration of tax laws. 22. At any rate, in the event of any difficulty, it was always open to the Adjudicating Authority to apply for an extension of time or seek clarification from the learned Tribunal. Records do not indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping the same pending for such a long period itself is not what is conducive. 19. It is well said that time and tide wait for none. It cannot be overlooked that the pendency of show-cause notice not only weighs against the legal rights and interest of the assessee, but also, in a given situation, it may adversely affect the interest of the revenue, if prompt adjudication of the show-cause notice is not undertaken, the reason being a lapse of time and certainly a long lapse of time is likely to cause irreversible changes frustrating the whole adjudication. 20. We are also of the clear opinion that a substantial delay and inaction on the part of the Department to adjudicate the show-cause notice would seriously nullify the noticee s rights causing irreparable harm and prejudice to the noticee. A protracted administrative delay would not only prejudicially affect but also defeat substantive rights of the noticee. In certain circumstances, even a short delay can be intolerable not only to the Department but also to the noticee. In such cases, the measure and test of delay would be required to be considered in the facts of the case. This would however not mean that an egregious delay ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y suffer an order to facilitate conclusion of the proceedings, which was most likely to work out prejudice to them. The following are the observations as made by the Court: 15. We are also not persuaded, at this distance of time, to agree with Mr. Jetly that the respondents should be granted liberty to conclude the proceedings. It is the petitioners who have approached the court to have the impugned show-cause notice set aside. Had the petitioners not invoked the writ jurisdiction of this court, the show-cause notice would have continued to gather dust. The petitioners, in such circumstances, cannot possibly be worse off for seeking a Constitutional remedy and thereby suffer an order to facilitate conclusion of the proceedings which, because of the inordinate delay in its conclusion, is most likely to work out prejudice to them. 16. Article 14 of the Constitution of India is an admonition to the State against arbitrary action. The State action in this case is such that arbitrariness is writ large, thereby incurring the wrath of such article. It is a settled principle of law that when there is violation of a fundamental right, no prejudice even is required to be demonstrated. 27. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to base our decision on this factor. 29. In the case of Rachana Garments Pvt. Ltd. Vs Commissioner of Customs (Preventive), Mumbai Mumbai (2022) 1 Centax 190 (Bom.), by relying on the judgment in the case of Sanghvi Reconditioners Pvt. Ltd. V/s. Union of India 2018 (12) G.S.T.L.290 (Bom.) this Court made the following observations in paragraphs 18 and 19: 18. Therefore, it has been reiterated that where show cause notices were issued but adjudicating order has not been passed for such a long period, in this case almost 25 years, such show cause notices cannot be kept pending. Such delayed adjudication wholly attributable to the revenue would be in contravention of procedural fairness and thus violative of the principles of natural justice. The action, which is unfair, and in violation of principles of natural justice cannot be sustained. Various judicial pronouncements have taken a view that the weight of judicial pronouncements leaned in favour of quashing the proceedings if there had been an undue delay in deciding the same. In the absence of any period of limitation it is incumbent upon every authority to exercise the power of adjudication post issuance of show cause notice w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedural fairness and thus violative of the principles of natural justice. An action which is unfair and in violation of the principles of natural justice cannot be sustained. Sudden resurrection of the show-cause notices after 13 years, therefore, cannot be justified. 31. In the case of Reliance Transport and Travel Pvt. Ltd. V/s. The Union of India 2022 (62) G.S.T.L. 33 (Bom.), in paragraph 19 this Court has held as under: - 19. It is held that the respondent having issued the show-cause notice, it is their duty to take the the said show-cause notice to its logical conclusion by adjudicating upon the said show-cause notice within a reasonable period of time. In view of gross delay on the part of the respondent, the petitioner cannot be made to suffer. This Court accordingly was pleased to quash and set aside dated 16th September 2005 in that matter. The principles of law laid down by this Court in the above referred judgment would apply to the facts of this case. We are respectfully bound by the principles of law laid down by this Court in the said judgment. We do not propose to take a different view in the matter. 32. This Court in the case of Raymond Ltd., v/s. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Finance Co. Ltd., Bhushan Vohra, The Great Eastern Shipping Company Ltd held that when faced with a situation of inordinate and unexplained delay, the show cause notice must be quashed and cannot be allowed to proceed. We find that the inordinate delay in disposal of the adjudicating proceedings is unexplained and or the delay to which the justification sought to be offered is not satisfactory. Such delayed adjudication wholly attributable to the revenue would contravene procedural fairness that should inhere such matters and, thus, violates principles of natural justice. The principles of natural justice are now accepted as concomitants of the right to non-arbitrariness guaranteed by Article 14 of our Constitution. Any action which is unfair and in violation of the principles of natural justice cannot be sustained. 36. Regarding the contentions of the Respondents that the period from 15.03.2020 till 28.02.2022 is required to be excluded, it will have to be rejected, as, in the present case, we have observed that the period to dispose of the show cause notice had commenced w.e.f. 10.09.2008. By the order dated 10.09.2008, the learned Tribunal had fixed a period of four weeks to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Sr. No. XIX at page 136 has submitted as follows:- 17.05.2024: DRI informed about that the case file of M/s. Esjaypee Impex was reconstructed and the matter was taken up for adjudication. This suggests that the files were also not traceable with the Respondents for a long time, and the matter was sought to be revived only by reconstructing the files. 40. The Petitioners cannot be made to suffer for all this lethargy and callousness on the part of the revenue. If the sword of Damocles, in the form of the impugned SCN is kept hanging over the Petitioners for over 21 years, it would make it impossible for the Petitioners to plan their business or make provisions for any contingent liabilities. Such inordinate delay breaches fair procedures that should always inform the adjudication in fiscal matters. Prejudice, in the gross facts of this case, is evident. 41. For the reasons recorded hereinabove, we are satisfied that the inordinate delay/delayed adjudication was in contravention of procedural fairness and, thus, violative of principles of natural justice. The Adjudicating Authority should have adjudicated the impugned SCN within a reasonable time; failure to do so is bound to cau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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