The Supreme Court has issued notice in 40 cases challenging a Delhi High Court ruling concerning delayed adjudication by revenue authorities. The Delhi High Court, in the case of M/s. VOS Technologies India Pvt. Ltd. v. The Principal Additional Director General & Anr. [W.P. (C) 4831/2021 dated December 10, 2024], addressed 47 petitions where adjudication proceedings were significantly delayed. The court determined that statutory phrases like “where it is possible to do so” regarding time limits do not permit indefinite delays and placed the burden on the adjudicating authority to demonstrate genuine impediments for any delay. The High Court found that the authorities failed to prove insurmountable constraints preventing timely conclusion of the proceedings. Referencing amendments to Section 28 of the Customs Act, 1994, which removed the conditional phrase and added provisions for deemed non-issuance of show cause notices in case of delays, the court emphasized that matters potentially imposing financial or penal liabilities must be concluded with reasonable expedition. The principle established requires statutory authorities to justify delays by proving impracticality or factors beyond their control, applying across the Customs Act, the 1994 Act (likely Central Excise Act, 1944 or service tax related legislation), and the CGST Act.
The Court held as follows:
- Observed that, the term “where it is possible to do so” used in the statutes to conclude proceedings within a stipulated time cannot be allowed as a license to keep matters unresolved for years. Necessitating the burden of proof on the Adjudicating Authority that there was a genuine hindrance in solving the dispute with reasonable speed.
- Noted that, the Respondents 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. The failure of the Revenue to take the proceedings to a logical conclusion within a reasonable period, noted various amendments to the statute including Section 28 of the Customs Act, 1994 (“the Customs Act”) that were clearly intended to ratify and reinforce the jurisdiction which the Legislature recognized as inhering in them.
- Observed that, the removal of term “where it is possible to do so” in 2018 in Section 28 of the Customs Act, charts out the gist of petitions that would be covered by the position of law as it existed prior to the said amendment consequently quashing the proceedings on account of inordinate delay by observing that he second proviso where applicable would in any case deprive the Respondents of the right to continue a pending adjudication or frame a final order once the terminal point constructed by statute came into effect. Extensively interpreting the amendment to Section 28(9) in 2018 that prescribes insertion of second proviso that created a deeming fiction leading to the presumption that an Show Cause Notice has never been issued if the adjudicating proceedings are not concluded within the stipulated time frame in certain situations, reverts to Explanation-1 and Explanation-2 appended to the statute that charts out the applicability of the said provisions from various times.
Hence, the Hon’ble High Court held that:
- Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together.
- 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.
****
(Author can be reached at info@a2ztaxcorp.com)
Author Bio
