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

Held

The Court held that the Respondents had failed to explain the inordinate delay of approximately 10 years in completing the adjudication proceedings after issuing the show cause notices in 2010/2011. The Court noted that the Respondents had not furnished any proof of the notices for personal hearings allegedly granted in 2015 and 2017, nor had they provided such proof pursuant to an RTI application. The Court found that the Respondents could have proceeded ex-parte if the Petitioner had indeed failed to attend the hearings, but their inaction for such a prolonged period was unexplained. The Court emphasized that an inordinate delay in adjudication is prejudicial to the assessee and that the law abhors delay ('lex dilationes abhorret'). Referring to Section 73(4B) of the CGST Act and various precedents, including Coventry Estate Pvt. Ltd. Vs. The Joint Commissioner CGST and Central Excise & Anr., the Court concluded that the impugned notices ought to be quashed due to the unexplained delay. The Court allowed the petition in terms of prayer clause (a), quashing the three show cause notices.

Facts

The Petitioner, CMA - CGM Agencies (India) Pvt. Ltd., filed a writ petition challenging three show cause notices (SCNs) issued in 2010 and 2011 concerning service tax demands on container detention charges, repair and maintenance, and incentives. The Petitioner had replied to these SCNs between May 2010 and November 2011. Subsequently, the case records were transferred from Chennai to Mumbai in November 2011. The Respondents issued notices for personal hearing for adjudication of these SCNs almost 10 years later, on December 23, 2020, and January 8, 2021. The Petitioner argued that this inordinate delay of approximately 10 years in adjudicating the SCNs prejudiced them and was contrary to the scheme of the Service Tax Act. The Respondents contended that the Petitioner failed to attend previously scheduled personal hearings and that some identical issues were kept in call book pending CESTAT orders.

Key Issues

1. Whether the inordinate delay of approximately 10 years in adjudicating the show cause notices issued in 2010/2011 is a valid ground to quash the said notices, considering the Petitioner's contention of prejudice and violation of the scheme of the Service Tax Act? 2. Whether the Respondents have adequately explained the delay in adjudicating the show cause notices and provided proof of service for alleged personal hearing notices in 2015 and 2017? Petitioner's arguments: The Petitioner argued that the revenue's inaction since 2010 for adjudication was contrary to the Service Tax Act's scheme, causing serious prejudice. They relied on a previous judgment of this Court in their own case (Writ Petition no.1313 of 2021) and the case of Coventry Estate Pvt. Ltd. Vs. The Joint Commissioner CGST and Central Excise & Anr., where similar SCNs pending for 10 years were quashed. Respondents' arguments: The Respondents contended that personal hearings were granted in 2015 and 2017, which the Petitioner did not attend. They also stated that one SCN was transferred to the call book pending a CESTAT order. They argued that the petition should be dismissed as the Petitioner did not attend hearings and the revenue should be permitted to proceed.