Hindustan Petroleum Corporation Limited vs. The State Of Maharashtra Thr. Government Pleader And Ors

Held

The Court held that the assessment orders were indeed barred by limitation due to gross delay on the part of the respondents. The Court found that the delay in adjudicating the show cause notices, which extended beyond ten years in all three petitions, was unacceptable and prejudiced the petitioner. The Court relied heavily on the principles laid down in the case of Siemens Limited v. The State of Maharashtra & Ors., and other precedents like Parle International Ltd. and Sushitex Exports India Ltd., which emphasize the necessity of expeditious adjudication of show cause notices within a reasonable period. The Court observed that the respondents had "slipped into deep slumber" and could not be allowed to raise the plea of alternate remedy at such a late stage, especially when the delay was solely attributable to them. The Court concluded that the respondents' failure to take the show cause notices to their logical conclusion within a reasonable time caused prejudice and hardship to the petitioner. Therefore, the assessment orders were quashed and set aside. The Court made the Rule absolute in terms of prayer clauses (a) and (b) of Writ Petition No. 637 of 2024, and similarly allowed the other two petitions in similar terms. The issue of reassessment or permission to file an appeal was not explicitly addressed in the final operative part of the judgment, as the primary relief of quashing the assessment orders was granted.

Facts

The petitioner, Hindustan Petroleum Corporation Ltd., filed three writ petitions challenging assessment orders passed by the Cess Officer. The primary contention was that these orders, dated 21 August 2023, 23 August 2023, and 25 August 2023, were passed after an inordinate delay, significantly exceeding the period prescribed by law and established judicial precedent. Specifically, for Writ Petition No. 637 of 2024, a show cause notice (Form-H) was issued on 24 August 2011, and the assessment order was passed on 21 August 2023, a delay of over 10 years. Similar delays were noted in the other two petitions, with show cause notices issued in 2012 and 2013, respectively, and assessment orders passed in 2023. The petitioner argued that the delay prejudiced their ability to respond effectively and that the assessment orders failed to consider crucial evidence like monthly returns and annual statements concerning petroleum products exported outside the municipal area.

Key Issues

1. Whether the Assessment Order dated 21.08.2023, passed by the Cess Officer, is barred by limitation as per Rule 25(5) of the Cess Rules, considering it was passed more than three years after the end of the year 31.03.2014. 2. Whether the Assessment Order dated 21.08.2023, passed by the Cess Officer, is barred by limitation, having been passed more than ten years from the date of issue of the show cause notice in Form-H, as held in the case of Siemens Limited. 3. Whether the Cess liability was assessed erroneously without considering and appreciating various evidences like monthly Returns, annual statement, etc., and whether the impugned Assessment Order dated 21.08.2023 should be quashed and set aside. Petitioner's Arguments: The petitioner argued that the assessment orders were passed after an inordinate and unreasonable delay, rendering them invalid. They relied on Rule 25(5) of the Cess Rules and the High Court's judgment in Siemens Limited v. The State of Maharashtra & Ors., which held that show cause notices should be adjudicated within a reasonable period, and a delay of over ten years is unacceptable. The petitioner also contended that the assessment was erroneous as it failed to consider evidence regarding petroleum products exported outside the municipal jurisdiction, on which 90% of the cess was not payable. As an alternative, they sought permission to file an appeal under Section 406 of the MMC Act without insisting on the deposit of confirmed tax. Revenue's Arguments: The respondents, including the State of Maharashtra and the Navi Mumbai Municipal Corporation (NMMC), initially contended that a review petition was filed against the Siemens Limited judgment. However, this argument was rendered untenable as the review petition was subsequently rejected on merits. The judgment does not record any other specific arguments made by the revenue regarding the merits of the delay or the assessment itself, other than the pendency of the review petition.