Shree Baba Exports Vs Commissioner (Panjab Haryana High Court)
In a significant ruling concerning the timely adjudication of tax disputes, the Chhattisgarh High Court has quashed show cause notices issued by the Central Excise Department more than 11 years ago that remained unadjudicated. The court emphasized that while Section 11A(11) of the Central Excise Act, 1944, uses the phrase “where it is possible to do so,” this does not grant authorities the power to indefinitely delay adjudication.
The judgment, delivered in a batch of three writ petitions including Shree Baba Exports Vs Commissioner, GST & Central Excise, addressed a common question of law regarding the fate of show cause notices that have languished without resolution for an unreasonably long period.
The petitioners, including Shree Baba Exports, are engaged in the manufacture of products like Menthol Crystal/Powder/Solution and various oils and terpenes. The dispute dates back to investigations conducted between 2008 and 2010 against various units in the industry. The petitioners were investigated regarding the availment of Cenvat Credit on raw materials purchased from suppliers based in Jammu & Kashmir and the North East between 2005 and 2010.
The core allegation in the show cause notices, issued in late 2009 and early 2010, was that the petitioners had availed Cenvat Credit against invoices from J&K and North East units without the actual supply of goods. The department alleged that this credit was then utilized to pay excise duty on final products, including those exported, and rebates were subsequently claimed on these exports.
