Shri Balaji Enterprises vs. Additional Director General New Delhi & Ors.

Held

The Court held that the impugned show-cause notice dated April 17, 2015, is liable to be quashed due to the excessive and unjustified delay in its adjudication. The Court reasoned that the phrase "where it is possible to do so" in Section 28(9) of the Customs Act, 1962, did not permit the department to defer determination for an indeterminate period. The legislature's intent was to ensure timely discharge of functions by the authorities. The Court found no material to demonstrate that it was genuinely impossible for the proper officer to determine the duty amount within the prescribed period. The reasons cited by the revenue, such as the "callbook" entry and inter-departmental issues, were not considered sufficient to justify the delay of approximately eight years. The Court emphasized that such indifference to timely adjudication is detrimental to both the taxpayer and the exchequer. Following established precedents from coordinate benches, the Court concluded that placing a matter in the callbook and taking it up after several years is not permissible. Therefore, the SCN was deemed to have lapsed. The Court directed that the impugned show-cause notice be quashed and set aside.

Facts

Shri Balaji Enterprises, the petitioner, was engaged in the import and trade of car accessories between 2010 and 2013. The Directorate of Revenue Intelligence (DRI) initiated investigations, leading to the issuance of a show-cause notice (SCN) on April 17, 2015. The SCN demanded duty, interest, and penalty, totaling Rs. 1,33,73,392, based on a re-determined assessable value of Rs. 4,07,08,928, significantly higher than the declared value of Rs. 63,32,323. The adjudication of the SCN faced considerable delays, with the notice being placed in the "callbook" multiple times between 2016 and 2023. The petitioner filed the present writ petition challenging the SCN due to this prolonged delay.

Key Issues

1. Whether the impugned show-cause notice dated April 17, 2015, issued under Section 28 of the Customs Act, 1962, is liable to be quashed on grounds of excessive delay in adjudication, considering the provisions of Section 28(9) of the Act? Petitioner's arguments: The petitioner contended that Section 28(9) of the Customs Act, 1962, mandates adjudication within specified timeframes (six months or one year from the date of notice). They argued that the phrase "where it is possible to do so" did not grant the department an indefinite period to delay adjudication. The petitioner relied on decisions like Swatch Group India Pvt. Ltd. v. Union of India & Ors. and Gala International Pvt. Ltd. v. Additional Director General, Directorate of Revenue Intelligence, Delhi and Ors., which interpreted this provision strictly. They further argued that the omission of this phrase in subsequent amendments further restricted any window for delay. Revenue's arguments: The revenue contended that the delay was justified due to genuine difficulties, including a Coordinate Bench decision in Mangli Impex Ltd. v. Union of India & Ors. which led to the SCN being placed in the "callbook." They also cited inter-departmental issues between the DRI and Customs regarding the proper officer for adjudication. The revenue relied on the Supreme Court decision in Commissioner, GST and Central Excise, Commissionerate, IT and Ors. v. M/s Swati Menthol and Allied Chemicals Ltd. and Anr. to support their claim of impossibility in adjudicating the matter promptly.