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ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO.389 OF 2023
Bhushan Vora, Aged about 61 years, having office at 10 Adyaman Society, St. Francis Cross Road, Vile Parle (West), Mumbai 400 056. ...Petitioner
2. The Commissioner of Customs – IV
, (Export), having his office at
Air Cargo Complex, Sahar, Andheri (East), Mumbai Zone-III, Mumbai – 400 099.
3. The Deputy Commissioner of
Customs- IV (Export), having his office at Air Cargo Complex, Sahar, Andheri (East), Mumbai Zone-III, Mumbai – 400 099.
4. The Deputy Director, Directorate of Revenue Intelligence, Lucknow Zonal Unit, having his office
At, 2/31, Vishal Khand, Gomti Nagar, Lucknow, Uttar Pradesh – 226010.
5. The Principal Additional Director
General, Directorate of Revenue
Intelligence, 2/31, Vishal Khand, Gomti Nagar, Lucknow, Uttar Pradesh – 226010. ...Respondents
Mr. Prakash Shah a/w. Mr. Jas Sanghavi i/b. M/s. PDS Legal for
Petitioner.
Mr. P. M. Sharma for Respondent Nos.1 to 3.
Ms. Sangeeta Yadav for Respondent Nos.4 and 5.
DATED : 10th SEPTEMBER 2024
JUDGMENT
1. Rule. By consent of the parties the petition is taken up for final hearing since the pleadings are completed.
2. By this petition under Article 226 of the Constitution of India, Petitioner challenges the Show Cause Notice (SCN) dated 10th March 2015 issued by Respondent No.4-Directorate of Revenue Intelligence (DRI), which is now sought to be adjudicated after a period of almost 8 years. Brief facts:-
3. Petitioner, carries on business as a sole proprietor in the name of style of “Global Marking”. Petitioner is engaged in the business of import and export of saffron. On 10th March 2015, a SCN was issued to Petitioner by Respondent No.4 to show cause why import duty foregone amounting to Rs.3,66,360/- should not be demanded under Section 28 of the Customs Act, 1962 along with interest under Section 28AA/AB of 2 of 12 the said Act. Petitioner replied on 2nd April 2015 giving detailed written submissions as to why the SCN should be dropped. Petitioner also requested for a personal hearing. Thereafter, for almost about 3 years, no steps were taken for adjudication of the SCN. On 23rd February 2018, Petitioner was informed that Respondent No.2-Commissioner of Customs has been appointed as Adjudicating Authority for adjudication of the aforesaid SCN. Petitioner was informed that he has not replied to the SCN dated 10th March 2015. Pursuant to the said intimation, Petitioner informed Respondent No.2 that he has already replied to SCN vide letter dated 2nd April 2015. Copy of the reply dated 2nd April 2015 was also re-filed with Respondent No.2. A personal hearing was fixed by Respondent No.2 on 17th April 2018 in furtherance of the impugned proceedings. However, Petitioner sought adjournment since he was not in town on that day. Thereafter, Respondents did not take any steps for adjudication of the impugned SCN and after almost more than 4 years thereafter and after almost 8 years from the date of the impugned SCN, again a personal hearing was fixed on 13th December 2022.
4. It is on aforesaid backdrop that the present petition is filed. Primary ground is that Respondents have not adjudicated the SCN for almost 8 years and, therefore, the impugned SCN is required to be set aside. Petitioner has relied upon more than 30 decisions of this Court, where the SCN has been quashed on ground of delay in adjudication. 3 of 12
5. Mr. Sharma, learned counsel appearing for Respondent Nos.[2] and 3 and Ms. Yadav, learned counsel appearing for Respondent Nos.[4] and 5 sought to justify the delay in adjudication of the SCN by submitting that the case was transferred to call book in June 2018 in view of conflicting decisions on the issue. Respondents have also relied upon the decision of the Supreme Court in Collector of Central Excise, New Delhi Vs. Bagsons Paints Industry (India)1 and submitted that there is no statutory bar to adjudicate the matter even after lapse of 9 years after the issue of SCN.
6. Petitioner has filed a rejoinder affirmed on 5th September 2023 and denied any intimation from Respondents with regard to transfer of his case to “call book”. We had given an opportunity to Respondents to file a sur-rejoinder, but Respondents’ counsel informed us today that they do not wish to file any sur-rejoinder. It is also important to note that Respondents in the reply have not made a positive statement that Petitioner was informed about his case being transferred to call book.
7. At the outset, it is important to note that admittedly, Petitioner was not informed about his case being transferred to “call book”. There is no proof furnished by Respondents that they have intimated Petitioner about his case being transferred, nor it is stated so 1 2003 (158) E.L.T. 129 (S.C.) 4 of 12 in the reply or rebutted by filing a sur-rejoinder inspite of the fact that Petitioner has filed a rejoinder, wherein he has denied having received any such communication. Therefore, the justification sought for delay in adjudication of the SCN on the ground of transfer of case to “call book” cannot be accepted. The impugned proceedings relates to SCN issued in 2015 and although provision of Section 28 (9A) of the Customs Act was not in existence at the time of issuance of SCN but certainly even in the absence of the said provision also, it was mandatory and Respondents were duty bound to inform Petitioner about his case being transferred to “call book”, which undisputedly has not been done. It is also important to note that if order is not passed within time provided under Section 28(9) of the Customs Act then the notice would be justified in believing that SCN has been dropped.
8. Petitioner is justified in relying upon the series of orders passed by this Court, wherein on very similar fact situation, attempt to adjudicate the SCN after a long delay has been quashed. We do not wish to load the present order by referring to all the 30 judgments which are cited by Petitioner. Suffice to observe that none of them have been rebutted by Respondents. However, we reproduce paragraph Nos.[5] to 12 of the decision of this Court in ICICI Home Finance Company Limited Vs. The Union of India, Principal Commissioner of CGST & Cx. Mumbai[2]:- 2 2024 (6) TMI 682 5 of 12 “5. The facts as narrated above are not disputed. The stand taken in the affidavit in reply filed through one Milind Gawai affirmed on 20th January 2022 is that both show cause notices were transferred to call book on 22nd June 2012 in view of department's appeal in the Apex Court in Malabar Management Services Pvt. Ltd.
6. In additional affidavit in reply filed through one Sumit Kumar affirmed on 5th April 2023 pursuant to the directions given by this Court on 8th March 2023, the fact that petitioner was not informed about the show cause notices being kept in abeyance and transferred to call book becomes clear. In fact Ms. Desai in fairness states that petitioner was not informed about the fact that the matter has been transferred to call book.
7. The issue that comes up for consideration and which is raised by Mr. Motwani is not whether it should be transferred to call book, but whether non-communication of transfer of the show cause notices to call book is fatal to the case of respondents. In our view, the issue has to be answered in affirmative.
8. For this we are relying upon the judgment of this Court in case of Shreenathji Logistics Vs. Union of India & Ors. 2022 (11) TMI 709 (Bom) where the Court observed....... This Court has, time and again, held that if the show cause notice is being transferred to the call book, the party should be informed about the same.........In Shreenathji Logistics (supra), the Court also has relied and followed another judgment of this Court in Godrej & Boyce Mfg. Co. Ltd. Vs. Union of India 2022 (142) Taxmann.com 418 (Bombay) where paragraph 11 reads as under:
6 of 12 book,. This serves a two fold purpose, viz., (a) the answering party is put to notice that proceedings are still alive and the answering party can thus safeguard the necessary evidence etc. till such time as the show cause notice is taken up for adjudication, and/or (b) the answering party could at that stage itself contest the show cause notice and/or point out why the same should be taken up for adjudication. iv. Failure to keep the answering party informed about the fate of the show cause notice and delay in adjudicating the same (for no fault of answering party) impinges on procedural faimess and is thus a violation of the principles of natural justice; v. Adjudication proceedings, delayed for more than a decade (for no fault of answering party and without putting answering party on notice for the reason of delay), defeats the very purpose of issuing show cause notice/s and such delayed adjudication is bad in law; vi. An answering party who does not hear from the authorities for more than 10 years after issuance of show cause notice and submission of reply thereto is justified in taking the view that the reply had been accepted and the authorities had given a quietus to the matter; vii. It is not open to authorities to reopen adjudicating proceedings after a long delay without having compelling and justifiable reasons. viii. Even where adjournments are sought frequently by the answering party, the same should not be granted liberally as this would give the impression that revenue is not interested in proceeding with the matter or rather has a vested interest in assisting the answering party. On considering the above, we find that the facts in the present case are squarely covered by the law laid down by this Hon'ble Court especially in the case of Parle (supra) and Raymond (supra). We find that the following facts of the present case are ad idem to the facts in the case of Parle (supra), viz., i. The impugned show cause notices were resurrected after 13 years (identical period in Parle); ii. Petitioner was never informed that the impugned notices had been transferred to call book; 7 of 12 iii. With the passage of time (and failure to inform) Petitioner was put in a position of irretrievable prejudice as the evidence was lost/not traceable and the concerned persons were no longer in the employment of Petitioner. iv. No delay was occasioned on account of Petitioner. In light of the above, we find that the adjudication of the impugned notices by Respondent No. 3 in the present case was clearly bad in law and consequently the impugned order is also void. Respondent No. 3 had taken up the impugned notices for adjudication after a period of thirteen years from the date of issuance thereof and after submission of reply. This by all counts is well beyond the reasonable period of time in which Respondents were expected and required to act. Additionally, Respondents did not inform Petitioner that the impugned notices had been transferred to call book this coupled with the sudden resurrection of the impugned notices after over a decade has impinged on procedural fairness and put Petitioners in a position of irretrievable prejudice. The principles of natural justice and fair play in this case have clearly been violated by Respondents. Though Respondents have contended that the impugned notices were transferred to call book as per the circular of the Board, we find that even the Affidavit in Reply does not mention either the date on which the impugned notices were so transferred, nor does it annex a copy of the circular upon which Respondents have placed reliance. The least that was expected from Respondents was that they would have produced a copy of the relevant circular on which reliance has been placed. Another fact that is to be noted is that the circular relied upon by Respondent is dated 2003 and the impugned notices were issued in the year 2008/2009. Hence, absent production of the said circular and/or a proper explanation as to the contents of the same, Respondents contention that the impugned notices had been transferred to call book based thereon is completely unintelligible and mere ipse dixit. Thus, in the facts and circumstances of the present case, we have no hesitation in holding that Petitioner was entirely justified in concluding that Respondents had abandoned the impugned show notices.
13. In this context, we consider it useful to also refer to paragraphs 11 and 12 of the decision in Commercial Steel Limited (supra) cited by the petitioner. Paragraphs 11 and 12 are quoted below:-
(iv) a challenge to the vires of the statute or delegated legislation.
12. In the present case, none of the above exceptions was established. There was, in fact, no violation of the principles of natural justice since a notice was served on the person in charge of the conveyance. In this backdrop, it was not appropriate for the High Court to entertain a writ petition. The assessment of facts would have to be carried out by the appellate authority. As a matter of fact, the High Court has while doing this exercise proceeded on the basis of surmises. However, since we are inclined to relegate the respondent to the pursuit of the alternate statutory remedy under Section 107, this Court makes no observation on the merits of the case of the respondent." (emphasis supplied) We therefore find that even though the remedy of Appeal is available, Petitioner is not required to exercise this alternate remedy in the facts and circumstances of the present case. The present Writ Petition is maintainable as the challenge in the present Writ Petition arises on account of the contravention of the rules of procedural fairness by Respondent. This conduct of Respondent as already held by us has resulted in grave prejudice being caused to Petitioner and amounts to a violation of the principles of natural justice. Thus, the present Writ Petition is squarely maintainable and Petitioner does not have to be relegated to the remedy of Appeal even though available.
9. This Court in ATA Freight Line (1) Pvt. Ltd. Vs. Union of India (2022) 1 Centax 32 (Bom) has held that non communication to petitioner about show cause notice being transferred to call book and being kept in abeyance would render the show cause notice to have lapsed. This view in ATA Freight Line (1) Pvt. Ltd. (supra) has been confirmed by the Apex Court in Union of India & Ors. Vs. ATA Freight Line (1) Pvt. Ltd. 2023 (2) TMI 1131.
10. Ms. Desai submitted that the issue of transfer to call book is still pending in the Apex Court and relying upon the order of the Apex Court in Union of India Vs. Siddhi Vinayak Syntex Pvt. Ltd. 2022 379) ELT 553 (SC) submitted that this Court should not make any observation regarding the show cause notices being transferred to call book and the effect thereof. We are not inclined to adopt the course of action suggested by Ms. Desai. In Siddhi Vinayak Syntex Pvt. Ltd. (supra) which was an SLP filed by Union of India impugning the judgment of the Hon'ble Gujarat High Court in Siddhi Vinayak Syntex Pvt. Ltd. Vs. Union of India 10 of 12 2017 (352) ELT 455 (Guj), the Hon'ble Gujarat High Court has held that the Central Board of Excise and Customs was not empowered under Section 37B of the Central Excise Act, 1944 to issue instructions to the Central Excise Officer to transfer the show cause notices to call book and keep the same in abeyance. In the case at hand, petitioner is not challenging transfer of show cause notices to call book and keeping the same in abeyance, but is only raising a ground that non communication of transfer to call book is fatal to the case of respondents. Therefore, in our view, there is no impediment in proceeding to decide this matter.
11. Moreover, as is clear from affidavit in reply and as submitted by Ms. Desai, the reason why the show cause notices were transferred to call book was because of the SLP pending in the Apex Court in Malabar Management Services Pvt. Ltd. The legality of the issues raised in Malabar Management Services Pvt. Ltd. admittedly has attained finality and read with Union of India & Anr. Vs. Intercontinental Consultants & Technocrats Private Limited 2018 (4) SCC 669, the issue is decided in favour of assessee. Therefore, admittedly petitioner's case was kept in abeyance in view of pending SLP in the Apex Court and it is accepted that the issue therein covered the issue in petitioner's case as well. It would, in our view, therefore serve no purpose in adjudicating the show cause notice. Hence we are not inclined to accept the other suggestion made by Ms. Desai that respondents should be permitted to proceed with the adjudication of show cause notices. In our view, it could be nothing but an exercise in futility.
12. In the circumstances, the two show cause notices dated 22nd October 2010 and 21st October 2011 are hereby quashed and set aside.”
9. The decision of this Court in the case of Coventry Estate Pvt. Ltd. Vs. The Joint Commissioner CGST & Central Excise & Anr.[3] has analysed this issue in depth and has held that such delay in adjudication of SCN is required to be quashed.
10. The decision relied upon by Respondents in Bagsons Paints Industry (India) (supra) is distinguishable on facts. The justification which is sought in the present case before us for the delay in adjudication of the SCN was not the fact case before the Supreme 3 2023 (8) TMI 352-Bombay High Court 11 of 12 Court. It is important to note that Section 28(9) provides for determination of the amount of duty or interest within 6 months/1 year from the date of notice as the case may be with further extension of the same period and subject to the conditions specified in the proviso therein. Therefore, insofar as, the provision with which we are concerned, i.e., Section 28(9) of the Customs Act, there is an express bar in passing the order. The decision of the Supreme Court relied upon by Respondents was not concerned with provisions of Section 28(9) of the Customs Act and, therefore, the said decision is not applicable to the facts of the present petition. The facts of the present Petitioner being different to the facts before the Supreme Court, the decision relied upon by Respondents can be of no assistance.
11. In view of above, we allow the petition in terms of prayer clause (a) which reads as under:- “(a) that this Hon’ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other writ, order or direction under Article 226 of the Constitution of India calling for the records pertaining to the Petitioners’ case and after going into the validity and legality thereof to quash and set aside the impugned Show Cause Notice No.DRI F. No.VIII/DRI/LZU/26/17/Global Mktg./2012/448 dated 10.03.2015 and letter dated 24.11.2022 (Exhibit-E), with consequential reliefs;”
12. Rule made absolute in above terms. [JITENDRA JAIN, J.] [K. R. SHRIRAM, J.]