The Commissioner(Principal Com)Of Cst And Cx.Kolkata South Commissionerate. vs. M/S. Sudera Realty PVT. LTD. And Ors

Facts

M/s. Sudera Realty Private Limited (the assessee) filed a writ petition challenging a show cause notice dated December 23, 2020, issued under Section 73 of the Finance Act, 1994, read with Section 174 of the CGST Act, 2017. The assessee had questioned the jurisdiction of the issuing authority. The writ petition was dismissed by the learned Writ Court on the grounds of delay, as it was filed approximately two years and four months after the show cause notice. The assessee appealed this dismissal. Separately, the Revenue appealed observations made by the Writ Court against the Commissioner of CGST & CX, Kolkata South Commissionerate, and a direction to fix responsibility for the delay in concluding proceedings.

Held

The Court held that the writ petition should be heard and decided on merits, setting aside the dismissal by the Writ Court. The Court reasoned that while disputed questions of fact cannot be adjudicated in writ proceedings, the challenge to the jurisdiction of the authority is a valid ground for entertaining a writ petition, as established by Supreme Court precedents. The Court clarified that the bar of entertaining a writ petition when a statutory remedy is available is not absolute and has exceptions, including jurisdictional challenges. Regarding the Revenue's appeal, the Court agreed that adverse observations against the Commissioner were not warranted at that juncture, as the interpretation of 'where it is possible to do so' as mandatory or directory is an arguable issue. Therefore, that portion of the Writ Court's order was set aside. The writ petition was restored to the file of the Writ Court for adjudication on merits, with directions for the parties to file their respective affidavits.

Key Issues

1. Whether the writ petition filed by the assessee challenging the show cause notice was maintainable despite the delay, given that the jurisdiction of the authority was questioned (turning on the principles governing writ petitions when statutory remedies are available, as discussed in Supreme Court decisions like Magadh Sugar & Energy Ltd. v. State of Bihar and Godrej Sara Lee Ltd. v. Excise & Taxation Officer)? 2. Whether the words 'where it is possible to do so' in Section 11A(11) of the Central Excise Act, 1944, and Section 73(4B) of the Finance Act, 1994, are directory or mandatory, concerning the time limit for adjudication of show cause notices? Contentions: Petitioner/Assessee: The writ petition was maintainable because the jurisdiction of the authority was questioned, which is a recognized exception to the rule barring writ petitions when statutory remedies exist. Reliance was placed on Supreme Court decisions. The assessee also argued that the delay in adjudication by the authority, despite the preliminary objection regarding jurisdiction, warranted writ intervention. Revenue: The Revenue argued that the observations made by the Writ Court against the Commissioner were unwarranted. They contended that the time limit for adjudication under Section 73(4B) of the Finance Act, 1994, with the phrase 'where it is possible to do so,' should be construed as directory, not mandatory. They also argued that the High Court of Delhi had interpreted similar phrases as mandatory, making it an arguable issue.