IDFC First Bank Ltd. Vs Union of India (Bombay High Court)
Summary: Bombay High Court quashed a service tax show cause notice dated 12 March 2010 after finding that its adjudication had remained pending for about 12 years without acceptable justification. The notice was originally issued to Infrastructure Development Finance Co. Ltd. (IDFC Ltd.), which subsequently ceased to exist following corporate restructuring: IDFC Ltd. merged into IDFC Bank Ltd. in 2015, and after a further merger with Capital First Limited, IDFC First Bank Ltd. became the resulting entity.
The Court noted that the petitioner was unaware of the old notice until it received a personal hearing intimation in March 2022 and did not possess the records necessary to defend the proceedings. Interpreting section 73(4B) of the Finance Act, 1994, the Court rejected Revenue’s contention that the prescribed six-month and one-year periods permitted unrestricted belated adjudication. Although the expression “where it is possible to do so” allows reasonable flexibility, it cannot justify unexplained, unreasonable and inordinate delay or permit adjudication at the officer’s discretion indefinitely.
The Court followed its earlier decisions concerning delayed adjudication and found that irreversible changes had occurred because the original noticee had ceased to exist. There was also no acceptable legal or factual basis to substitute the petitioner for IDFC Ltd. for adjudicating the old notice, particularly when the petitioner lacked the relevant records. Holding that the show cause notice had effectively stood frustrated by departmental inaction, the Court quashed it and allowed the writ petition.
