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

Held

The Court held that the assessment orders were barred by limitation due to the gross delay on the part of the respondents in adjudicating the show cause notices. The Court found that in Writ Petition No. 637 of 2024, the assessment order was passed after a period of 10 years from the issuance of the notice dated 24 August 2011. Similarly, in Writ Petition No. 639 of 2024 and Writ Petition No. 638 of 2024, the assessment orders were passed after delays of more than 10 years from the respective dates of the show cause notices. The Court relied on its previous decisions, particularly in Siemens Limited, Parle International Ltd., Sushitex Exports India Ltd., and The Bombay Dyeing and Manufacturing Company Limited, which established that show cause notices must be adjudicated within a reasonable period. The Court reasoned that keeping show cause notices in abeyance for extended periods, without communication, prejudices the assessee and prevents them from seeking timely relief. The Court found that the respondents were responsible for the gross delay, and therefore, could not be allowed to proceed with the adjudication. The Court made the Rule absolute in terms of prayer clauses (a) and (b) for Writ Petition No. 637 of 2024, and allowed the other petitions in similar terms.

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 24 August 2011, but the assessment order (Form-I) was passed on 21 August 2023, nearly twelve years later. The petitioner argued that the assessment order was passed after an inordinate delay, rendering it barred by limitation. The respondents, including the State of Maharashtra and Navi Mumbai Municipal Corporation (NMMC), contended that a review petition was filed against a previous judgment in a similar case (Siemens Limited). However, the review petition was rejected, making the Siemens Limited judgment binding.

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, and whether the impugned Assessment Order should be quashed and set aside? Petitioner's Arguments: The petitioner contended that the assessment orders were passed after an inordinate and unexplained delay, violating principles of natural justice and statutory limitations. They relied on Rule 25(5) of the Cess Rules and the High Court's judgment in Siemens Limited, which held that show cause notices should be adjudicated within a reasonable period. The petitioner also argued that the assessment was erroneous as it failed to consider evidence regarding petroleum products exported outside the municipal area, on which 90% of the cess was not payable. Revenue's Arguments: The respondents initially sought to defer proceedings citing a pending review petition against the Siemens Limited judgment. However, after the review petition was rejected, they did not present substantive arguments against the petitioner's claims regarding delay and limitation, implicitly accepting the binding nature of the Siemens Limited decision.