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

Held

The Court held that the assessment orders were unsustainable due to gross delay on the part of the respondents in adjudicating the show cause notices. It was found that the show cause notices were issued more than 10 years prior to the passing of the assessment orders, which caused prejudice and hardship to the petitioner. The Court relied on its previous decisions in Siemens Limited, Parle International Ltd., Bhagwandas S. Tolani, Sushitex Exports India Ltd., and The Bombay Dyeing and Manufacturing Company Limited, which established the principle that show cause notices must be adjudicated within a reasonable period. The Court found that the respondents had "slipped into deep slumber" and could not be permitted to raise alternate remedies at such a late stage. The Court explicitly noted that the delay was the respondents' responsibility and that the petitioner could not be made to suffer for it. Consequently, the Court found that the assessment orders were not only in breach of Rule 25 of the Cess Rules but also impermissible under general principles of law due to the inordinate delay. The Court made the Rule absolute in terms of prayer clauses (a) and (b) for Writ Petition No. 637 of 2024, and similarly allowed the other two writ petitions.

Facts

The petitioner, Hindustan Petroleum Corporation Ltd., filed three writ petitions challenging assessment orders passed by the Cess Officer. The core issue revolved around the delay in adjudication of show cause notices. In Writ Petition No. 637 of 2024, a show cause notice (Form-H) was issued on August 24, 2011, but the assessment order (Form-I) was passed on August 21, 2023, over 12 years later. The petitioner argued that this delay rendered the assessment order barred by limitation. Similar delays were noted in Writ Petition No. 638 of 2024 (notice dated June 1, 2013, order dated August 25, 2023) and Writ Petition No. 639 of 2024 (notice dated June 15, 2012, order dated August 23, 2023). The petitioner had submitted returns and statements for the period April 2010 to March 2011, indicating goods exported outside the municipal area on which 90% cess was not payable.

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 and annual statements, particularly concerning petroleum products exported outside the NMMC area? Petitioner's Arguments: The petitioner contended that the assessment orders were passed after an inordinate and unexplained delay, making them unsustainable. They relied on Rule 25(5) of the Cess Rules and the High Court's judgment in Siemens Limited v/s. The State of Maharashtra & Ors., which held that show cause notices should be adjudicated within a reasonable period, even in the absence of a statutory limitation period. The petitioner also argued that the assessment failed to consider evidence regarding exported goods, leading to an erroneous assessment. Revenue's Arguments: The respondents (State of Maharashtra and NMMC) did not present specific arguments against the petitioner's contentions regarding delay and limitation. The judgment notes that the respondent-NMMC had filed a review petition against the Siemens Limited judgment, which was subsequently rejected. The court proceeded to hear the matter on merits.