Cma-Cgm Agencies (INDIA) PVT. LTD. (Formerly Known As Apl (INDIA) PVT. LTD. vs. The Union Of INDIA, Ministry Of Finance And Anr

Facts

The Petitioner, CMA-CGM Agencies (India) Pvt. Ltd., formerly APL (India) Pvt. Ltd., acted as a "steamer agent" for APL Co. PTE Limited, Singapore, receiving commission on ocean freight. An internal audit by the Service Tax Commissionerate, Chennai, alleged short-payment of service tax due to non-inclusion of Ocean Freight and allied charges. Consequently, four show cause notices were issued between September 2009 and October 2011, demanding service tax, interest, and penalty. The total disputed service tax amounted to approximately Rs. 39.66 crore. The Petitioner filed replies to some notices. Later, the Petitioner obtained centralized service tax registration, and the notices became answerable to the Commissioner, Service Tax-II, Mumbai. Despite several personal hearings scheduled from 2013 onwards, adjudication remained pending for over 12 years, leading the Petitioner to file the present writ petition seeking quashing of the notices due to inordinate delay.

Held

The Court allowed the writ petition, quashing the show cause notices. The Court found that the Respondents had not adequately explained the inordinate delay of over 12 years in adjudicating the show cause notices issued between 2009 and 2011. The Court emphasized that the law, particularly Section 73(4B) of the Finance Act, 1994 (though not explicitly discussed in detail for the period of the notices, the principle was applied), prescribes time limits for adjudication, and such delays are prejudicial to the assessee and can frustrate the entire adjudication process. The Court held that there is no provision to condone such gross and unjustifiable delay on the part of the adjudicating officer. The Court relied on settled principles of law that adjudication must happen within a reasonable period, and an inordinate delay denies fairness, judiciousness, and the fulfillment of principles of natural justice, embodying the maxim "lex dilationes abhorret" (law abhors delay). The Court distinguished the Supreme Court's order in Commissioner, GST and Central Excise, Commissionerate II and a co-ordinate bench judgment in Oil and Natural Gas Corporation Limited, finding they did not support the Revenue's position in cases of gross delay. The Petitioner's reliance on a co-ordinate bench decision in its own case (Writ Petition No.468 of 2021) was also noted.

Key Issues

1. Whether the inordinate delay of almost 11 years in adjudicating the show cause notices renders the proceedings invalid, illegal, and violative of the principles of natural justice, as argued by the Petitioner? The Petitioner contended that such delay is ex-facie invalid, illegal, and unsustainable in law, violating principles of natural justice and the mandate of law. The Petitioner also argued that the Respondents failed to explain the delay and that the delay caused significant challenges in collating documents. The Petitioner relied on various judgments emphasizing the need for timely adjudication. 2. Whether the Respondents have sufficiently explained the delay in adjudicating the show cause notices and whether any provisions permit condonation of such delay, as argued by the Respondents? The Respondents contended that personal hearings were fixed multiple times, but the Petitioner either did not attend or sought adjournments. They also claimed attempts were made to serve notices, including one returned as "left." The Respondents did not explicitly argue for condonation of delay but presented their attempts to proceed with adjudication.