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TMI Blog2025 (1) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... which fact is admitted to by the respondents themselves. The final order dated 31 January 2023 as well as the SCN proceedings emanating from the impugned SCN dated 21 April 2011 is quashed - petition allowed. - HON'BLE MR. JUSTICE YASHWANT VARMA And HON'BLE MR. JUSTICE DHARMESH SHARMA For the Petitioner : Mr. J. K. Mittal, Ms. Vandana Mittal, Mr. Mukesh Choudhary and Ms. Shruti Garg, Advs For the Respondent : Mr. Shekhar Vyas, Ms. Neha Warrier, Mr. Jatin Singh, Advs. for R-1 Mr. Satish Aggarwala, SSC with Mr. Gagan Vaswani, Advs. for R-2,3 ORDER 1. The writ petitioner seeks a declaration that the adjudication proceedings which have remained pending for almost 12 years be held to be vitiated in law and thus consequently quashed. Additionally, the respondents also assail the validity of the original Show Cause Notice SCN which was issued on 21 April 2011 under Section 73(4B) of the Finance Act, 1994 Act . A challenge is also laid to the final order of adjudication which is dated 31 January 2023. 2. From the undisputed facts which emerge from the record, we find that the proceedings had commenced pursuant to the issuance of a SCN on 21 April 2011. The petitioner is stated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or two months. Further, due to covid period functioning of the Government was not optimal as there were restrictions, closed down etc. Noticee was given another opportunity of personal hearings on 04, 05, 06 January 2022. Noticee vide email dated 03.01.2022 sought adjournment of hearing by a period of 06 weeks to enable the company to designate an authorized representative and/or engage an Advocate to represent the Company before the adjudicating authority. Accordingly, Personal hearing to the Noticee to represent their case was given on 19.12.2022. In reply to that, Noticee vide their email dated 16.12.2022 requested adjournment of the hearing for 04 weeks since their authorized representative was in personal difficulty and was unable to attend the hearing on the prescribed dated. Therefore, another date for personal hearing was fixed on 30.01.2023. Noticee vide their letter dated 30.01.2023 submitted that they will not be able to represent/appear on the aforesaid date of hearing and will intimate its future course of action after taking legal advice in the matter. In view of the above mentioned facts, it is clear that the party had been continuously approached by way of letter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to conclude the adjudication. Upon such information and notice being provided, the provisions of sub-section (9) would have ceased to apply and it would have been open for the proceedings to remain suspended till the reasons, which had prompted the respondents to place proceedings in abeyance by virtue of sub-section (9-A), had ceased to exist. 80. The disclosures made in this batch, however, establish that the respondents in each case, adopted a repetitive exercise of placing matters in the call book, retrieval therefrom, followed by those matters being transferred back to that book yet again. These actions appear to have been taken mechanically and casually based solely on the directions of the Board and without any application of mind to the facts obtaining in individual cases or the formation of requisite opinion as contemplated under Section 28(9-A). 81. As per the writ petitioners, the action of placement of matters in the call book was not preceded by any notice or information that may have been provided. In Nanu Ram Goyal I, this Court had an occasion to address the issue of whether the respondents were obligated to inform the petitioner that the SCN was being place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intimation to the assessee. The Court had noted that the respondents had failed to notify the petitioner about the transfer or provide any updates, causing prejudice and hardship. It emphasized that such a delay was unreasonable, as the petitioner could have sought relief earlier if informed. The High Court made the following pertinent observations : 19. It is an admitted position that respondent No. 2 did not fix any date of hearing of those show-cause notices or did not send any other communication to the petitioner informing as to why the said show-cause notices were not being heard. Respondent No. 2 informed the petitioner for the first time on April 12, 2021 that the show-cause notices were transferred to call book by invoking the circulars referred to and relied upon in the earlier paragraphs of the judgment. 20. The first letter was addressed by respondent No. 2 on 5 th /7th June 2021 in response to the letter dated February 23, 2021 addressed by the petitioner seeking a copy of closure report, if any. 21. A perusal of the said reply from respondent No. 2 indicates that the only information provided to the petitioner was that files were transferred to call book as per the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d kept in abeyance without communication to the petitioner for more than 7 to 11 years, the respondents cannot be allowed to raise alternate remedy at this stage. Be that as it may, no order has been passed by the respondents on the said show-cause notices. The question of filing any appeal by the petitioner therefore did not arise. 83. The respondents also appear to have clearly failed to even undertake a periodic review of pending proceedings or make even a feeble attempt to accord closures to proceedings that had been pending for decades. The Board, in its Instruction dated 18 November 2021 had duly underscored the requirement of the concerned authorities intimating noticees regarding the placement of their proceedings in the call book and undertaking a periodic reviews of the matters placed in abeyance. The said Instruction read as follows: F.No. CBIC-90206/1/2021-CX-IV Section-CBEC Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs **** Room No. 244 C. North Block, New Delhi, dated: 18 November, 2021 INSTRUCTIONS To 1. All Principal Chief/ Chief Commissioners of CGST, Central Excise and Service Tax; 2. All Principal Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.10 of the Master circular No. 1053/02/2017-CX dated 10.03.2017 wherein, inter alia, it has been stated that : 14.10 Issue and Communication of order: In all cases where personal hearing has been concluded, it is necessary to communicate the decision as expeditiously as possible but not later than one month in any case, barring in exceptional circumstances to be recorded in the file. The order is required to be communicated to the assessee in terms of provisions of Section 37C of the CEA, 1944. Audit has observed that in certain cases, adjudication orders have been issued beyond stipulated period and no justification has been recorded in the file explaining delay. It is, therefore, reiterated that timelines of completing adjudication process must be followed and in exceptional cases of delay beyond stipulated period, reasons for the delay must be recorded on file. 4.4 Audit in its report has also pointed incidences of periodical non- review of Call Book cases, non/delayed retrieval of SCNs from Call Book, incorrect transfer of SCNs to Call Book, resulting in irregular retention of cases in Call Book. 4.4.1 Kind attention is invited to Board s D.O letter F. No. 101/2/92- CX.3 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to adjudication have not been produced before audit. 4.5.1 In Audit para 5.16 of Chapter-V of Audit report no. 01 of 2021 it has been stated that Despite Board s Instructions vide DO letter F. No. 232/Misc DAPs/2018-CX-7 dated 26.04.2018 regarding cooperation with the C AG during audit, by providing complete and comprehensive information, the department did not produce the complete records such as DSCN files, waiver of SCN files, SCNs pending for adjudication, adjudication cases, Call Book, transfer of records due to GST and List of total records. 4.5.2 In this regard it may be noted that vide aforesaid Chairman s D.O letter dated 26.04.2018, it was directed that full cooperation with the C AG team would be provided by providing complete and comprehensive information available with the concerned Commissionerate. Any feeble excuses in this regard would not be entertained. 4.5.3 In this regard reference is invited to Circular dated 29.04.1988 issued from F.No. 240/15/88-CX.7 wherein it has been communicated that the files leading to passing of adjudication/appellate orders need not be made available to the audit parties of the Accountant General. It may be seen that the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ases where injunction has been issued by Supreme Court / High Court/CEGAT etc.; (c) cases where audit objections are contested; (d) cases where the Board has specifically ordered the same to be kept pending and to be entered into the call book. It is submitted that the department has not gone in appeal against the order of the learned CEGAT and therefore the first condition is not fulfilled. So far as the conditions relating to grant of injunction mentioned under Clause B is concerned, there was no matter sub judice after the judgment of the Apex Court in Civil Appeal No. 3973 of 2001 dated 5th May 2004. The respondents in their counter affidavit have also not given any explanation as to why even after 2004 the proceedings were not revived for adjudication of the impugned SCN till December 2022. The instant case also does not relate to an audit objection or a direction of the Board to keep the SCN in a call book. It is further submitted that as per the CBIC circulars, the case can be referred to call book only after prior approval of Jurisdictional Commissioner. In the entire counter affidavit the respondents have not annexed or brought on record any document to show that necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also referred to the judgment of the Apex Court in Special Leave to Appeal (Civil) No. 12376 of 2022 passed in the case of Commissioner GST and Central Excise and Another Vrs. M/s. Shree Baba exports wherein such a view has been affirmed. Based on these submissions learned Senior Counsel for the petitioner has prayed that the impugned show cause notice be quashed. He has also referred to Rule 10 (3) of the Central Excise Rules 2002 which require an assessee to keep the relevant records up to a maximum period of five years. Rule 53(2) of the Central Excise Rules 1944 also contained a similar prescription of outer limit for maintaining the records. It is submitted that any adjudication on the impugned show cause notice dated 9 th December 1993 after 29 years at this stage would be illegal and in contravention of the mandate of Section 11A(11) of the CEA 1944. xxxx xxxx xxxx 16. Falling back upon the CBIC circular, it is contended that the competent authority i.e. the Commissioner, Central Excise has revived the proceedings and issued a notice of personal hearing to the petitioner since these SCNs/SODs were kept in call book on account of the matter pending before different courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod June 1993 to November 1993 and is of 9th December 1993. Learned counsel for the respondents has fallen back on Clause 2 of the condition stipulated in the CBIC circular as referred to in para 11 of their counter affidavit but he has not been able to show that at any point of time there was a stay in proceeding upon the impugned show cause notice by either the CEGAT or the High Court or the Hon ble Apex Court. Even if by stretching the argument to the extent that the show cause notice dated 13th August 1990 was subjudice before the Apex Court in Civil Appeal No. 3973 of 2001, there is no basis or explanation on the part of the respondents to have kept the show cause notice in its call book without proceeding for its adjudication after the judgment rendered in that case by the Apex Court on 5th May 2004. None of the other two conditions as indicated by the respondents at Clause 3 and 4 quoted above also stand satisfied in the present case. The respondents have not enclosed any document to show that prior approval of the Collector of excise was taken before keeping the case in the call book. There seems to be no reference of any periodic review of the call book, though the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng lethargy or indolence. Ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act. 86. When we revert to the facts that obtain in this batch, we find that the respondents have clearly failed to establish the existence of an insurmountable constraint which operated and which could be acknowledged in law as impeding their power to conclude pending adjudications. In fact, and to the contrary, the frequent placement of matters in the call book, the retrieval of matters therefrom and transfer all over again not only defies logic it is also demonstrative of due application of mind quite apart from the said procedure having been found by us to be contrary to the procedure contemplated by Section 28. The respondents have, in this regard, fail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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