Introduction: In a significant ruling, the Bombay High Court has quashed a show cause notice that was issued 25 years ago by the Commissioner of Central Excise, Mumbai-III. The case, titled EPL Ltd. vs. Union of India, revolved around the inordinate delay in adjudicating the notice and the inability to locate the case records. This article delves into the details of the case and its implications.
The Petitioner’s Prayers
The petitioner, EPL Ltd., filed a writ petition under Article 226 of the Constitution seeking several reliefs. These included:
(a) Quashing the show cause cum demand notice issued on 14th February 1997. (b) Directing the respondents to refund the INR 10,69,666/- deposited by the petitioner under protest. (c) Seeking a writ of Prohibition to restrain further proceedings. (d) Requesting interim reliefs during the pendency of the petition.
Arguments by the Petitioner: Mr. Shah, the counsel for the petitioner, argued that the show cause notice should be quashed as it remained unadjudicated for more than 25 years. This delay, according to him, justified setting aside the notice.
The Respondent’s Dilemma: On the other hand, Mr. Mishra, representing the respondents, informed the court that despite repeated efforts to locate the case records, they were unable to do so. He presented a letter dated 28th March 2023, which detailed the difficulties faced by the authorities in finding the case papers.
Precedents and Legal Grounds: The court examined several legal precedents and established principles. It referred to the decision in ATA Freight Line (I) Pvt. Ltd. vs. Union of India & Ors., where the Special Leave Petition filed by the Union of India was dismissed. Additionally, the court considered judgments in cases such as CMA-CGM Agencies (India) Pvt. Ltd. vs. Union of India & Ors., Shreenathji Logistics vs. Union of India & Ors., Sushitex Exports (India) Ltd. & Ors. vs. Union of India & Anr., and more.
Previous Rulings: The article mentions the decision in Premier Ltd. vs. Union of India, where a Division Bench of the Bombay High Court ruled that the failure to adjudicate a show cause notice for about 25 years was illegal. This decision was later affirmed by the Supreme Court.
Conclusion: In light of the extensive delay in adjudicating the show cause notice, the Bombay High Court granted the prayers made by the petitioner. The court quashed the notice and directed the respondents to refund the amount deposited under protest, along with interest. This ruling aligns with previous judgments and establishes that undue delay in adjudication can render such notices invalid. The case of EPL Ltd. vs. Union of India serves as a reminder of the importance of timely and efficient administrative processes in taxation matters.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule, made returnable forthwith. Respondents waive service. By consent of the parties, heard finally.
2. This writ petition under Article 226 of the Constitution primarily prays that the show cause notice issued by the Commissioner, Central Excise, Mumbai-III, on 14 February 1997 i.e. about 25 years back, be quashed and set aside. The prayers as made in the petition read thus:-
“(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 Petitioner’s case and after going into the validity and legality thereof:
i. quash and set aside the impugned Show Cause cum Demand Notice F. No. CPU.K/case 2/96-97 dated 14.02.1997 issued by the Respondent No.2, with consequential reliefs;
ii. direct the Respondents to refund to the Petitioner INR 10,69,666/- deposited by the Petitioner under protest during the course of the investigation with interest at the rate of 12 per cent per annum from the date of deposit till the date of actual refund;
(b) That this Hon’ble Court be pleased to issue writ of Prohibition or any other appropriate writ in the nature of prohibition prohibiting the Respondents to refrain from taking any further steps or proceeding pursuant to or in furtherance of the impugned Show Cause cum Demand Notice F. No. CPUK/Case 2/96-97 dated 14.02.1997 issued by the Respondent No.2;
(c) that pending the hearing and final disposal of this petition, this Hon’ble Court by an interim order be pleased to restrain the Respondents by themselves, their officers, subordinates, servants and agents from taking any steps or proceedings pursuant to and in furtherance of the impugned Show Cause cum Demand Notice F. No. CPU.K/Case 2/96-97 dated 14.02.1997 issued by the Respondent No.2 including adjudication thereof;
(d) ad-interim reliefs in terms of prayer (c) above;
(e) pass such order or further orders as may be deemed just and proper by this Hon’ble Court in the facts and circumstances of the case.”
3. Shah, learned Counsel for the petitioner would submit that considering the settled principles of law, the show cause notice having not been adjudicated for more than 25 years, the show cause notice ought to be quashed and set aside.
4. Mishra, learned counsel for the respondents submits that he had time again sought adjournment to take instructions, however, the papers and proceedings of the case are not being located in the office of the Principal Commissioner. He has placed on record a letter dated 28 March 2023 addressed by the Additional Commissioner to the Principal Commissioner / Commissioner of CGST & C. Ex. to the different Commissionerates, the contents of which are self explanatory, which read thus:-
“F.No.IV/16-06/PCCO/CGST&CX/Legal/Court Cases/2017-18 Mumbai, the 28thh March 2023
The Principal Commissioner / Commissioner of CGST & C.Ex.,
Belapur, Bhiwandi, Mumbai Central, East, West, South,
Navi Mumbai, Palghar, Raigad and Thane Commissionerate,
Subject: – Writ Petition (l) No.28950 of 2022 filed before Bombay High Court in the case of M/s. EPL Limited (formerly known as Essel Packaging Ltd.) V/s. Union of India & Commissioner, CGST & Cx. Thane Rural – Regarding
Thane Rural Commissionerate vide letter F.No. V/HLC/ Legal/EPF/31/2022-23/4877 dated 17.02.2023 (copy enclosed) has informed that Writ Petition (L) No.28950 of 2022 has been filed by M/s. DPL Limited before the Hon’ble Bombay High Court for seeking to quash SCN F.No. CPU.K/Case 2/96-97 dated 14.02.1977 issued by erstwhile Commissioner, C.Ex., Mumbai-III, for the reasons of inordinate delay in adjudication of demand notice and also seeking refund of Rs.10,69,666/-deposited, under protest.
2. Thane Rural Commissionerate has informed that no such SCN has been received by them after the formation of GST Commissionerates.
3. As the matter is before the Hon’ble High Court and the next date of hearing is on 11.04.2023, it is requested to scrupulously go through your records to ascertain pendency / disposal of SCN F.No. CPU.K/Case 2/96-97 dated 14.02.1997 issued to M/s.EPL Limited (formerly known as Essel Packaging Ltd.).
4. Any positive outcome on the subject matter may kindly be conveyed to the Thane Rural Commissionerate.
5. This issues with the approval of the Chief Commissioner.
Encl. As above.
(V. V. Pandit)
Copy to the Commissioner, Thane Rural Commissionerate w.r.t letter F.No.V/HLC/Legal/EPF/31/2022-23/4877 dated 17.02.2023, for information.”
5. In the above circumstances, we are in complete agreement with Mr. Shah that it has become impossible for the respondent to proceed to adjudicate the show cause notice, not only for the reasons, which the Additional Commissioner is on record to say, but also in view of the settled principles of law as observed in the decision of the co-ordinate Bench of this Court in ATA Freight Line (I) Pvt. Ltd. vs. Union of India & Ors.1, against which Special Leave Petition (Civil) Diary No. 828 of 2023 filed by the Union of India came to be dismissed; as also the decisions in the case of CMA-CGM Agencies (India) Pvt. Ltd. vs. Union of India & Ors.2; decision of this Court in Shreenathji Logistics vs. Union of India & Ors.3; in Sushitex Exports (India) Ltd. & Ors. vs. Union of India & Anr.4; in Sanghvi Reconditioners Pvt. Ltd. vs. Union of India, through the Secretary, Department of Revenue & Ors.5; in Reliance Industries Ltd. vs. Union of India6; in Parle International Ltd. vs. Union of India7 and in Bombay Dyeing and Manufacturing Company Limited vs. Deputy Commissioner of CGST and CX, DIV-IX, Mumbai Central GST Commissionerate8, and in the recent decision by this Court in Coventary Pvt. Ltd. vs. The Joint Commissioner CGST and Central Excise & Anr.9
6. We may also usefully refer to the decision of the Division Bench of this Court in Premier Ltd. Vs. Union of India10 wherein in similar circumstances a Division Bench of this Court, being confronted with a similar issue pertaining to the belated adjudication of a show cause notice issued 25 years back, observed that failure of the adjudicating authority to adjudicate upon the same, for about 25 years, itself would be illegal, and that the authorities could not have been liberal in granting adjournment and not adjudicating the show cause notice for such a long lapse of time. Such view taken by this Court was confirmed by the Supreme Court in dismissing the Special Leave Petitions in Union of India & Ors. Vs. M/s.Premier Ltd. & Anr.11
7. In the above circumstances, the prayers as made by the petitioner are required to be granted. The petition is accordingly allowed in terms of prayer clause (a)(i) and (a)(ii) which reads thus:
(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 ffor the records pertaining to the Petitioners’ case and after going into the validity and legality thereof:
i. quash and set aside the impugned Show Cause cum Demand Notice F. No. CPU.K/Case 2/96-97 dated 14.02.1997 issued by the Respondent No.2, with consequential reliefs;
ii. direct the Respondents to refund to the Petitioner INR 10,69,666/- deposited by the Petitioner under protest during the course of the investigation with interest at the rate 12 per cent per annum from the date of deposit till the date of actual refund;
8. Rule is accordingly made absolute in the above terms. No costs.
1 Writ Petition No. 3671 of 2022
2 Writ Petition No. 1313 of 2021
3 Writ Petition No. 540 of 2020
4 2022 SCC Online Bom. 191
5 2017 SCC Online Bom 9781
6 2019 (368) E.L.T. 854 (Bom.)
7 2021 (375) E.L.T. 633 (Bom.)
8 2022 (382) E.L.T. 206(Bom.)
9 2023(8) TMI 352-Bombay High Court
10 2017(354)E.L.T. 365(Bom.)