Shivek Sharma Legal Heir And Son Of Late Shri Pawan Kumar Sharma vs. Union Of INDIA

Held

The Court held that the impugned Order-in-Original and the show cause notice are liable to be quashed due to inordinate delay in adjudication. The Court found that the 14-year delay in adjudicating the show cause notice, issued on March 31, 2008, was an "antithesis to the norms of a lawful, fair and effective quasi judicial adjudication." The Court noted that the respondent failed to provide any "cogent explanation" for this delay and that the petitioner was not informed about the matter being transferred to the call book or any communication regarding the proceedings for 13 years. The Court also observed that the respondent "brazenly glossed over and ignored" the petitioner's submissions and case law regarding stale show cause notices, acting in a "pre-determined manner." The Court rejected the respondent's argument regarding the applicability of Section 28(9) and the alternative remedy, stating that the writ petition was maintainable due to the "contravention of the rules of procedural fairness" and the "violation of the principles of natural justice." The Court concluded that the adjudication was "clearly bad in law" and the Order-in-Original was "void." The Court made the rule absolute and allowed the petition, quashing the show cause notice and the Order-in-Original qua the petitioner.

Facts

The petitioner, Shivek Sharma, is the legal heir of the late Pawan Kumar Sharma, proprietor of M/s J. Minakshi International. The Directorate of Revenue Intelligence (DRI) investigated M/s J. Minakshi International for alleged misuse of export promotion schemes (drawback and DEPB) for the period 2001-05. On March 31, 2008, a show cause notice was issued to M/s J. Minakshi International and others. Pawan Kumar Sharma passed away on April 22, 2021. The petitioner, who was a minor when the show cause notice was issued, was unaware of the proceedings. After a delay of over 13 years from the show cause notice, the respondent initiated adjudication. The petitioner informed the respondent of his father's death and his lack of knowledge of the proceedings, arguing that liabilities do not transfer to legal heirs and requesting the dropping of proceedings. The respondent issued an Order-in-Original on October 18, 2022, demanding duty drawback and interest from the petitioner as the legal heir.

Key Issues

1. Whether the impugned Order-in-Original dated October 18, 2022, and the show cause notice dated March 31, 2008, are liable to be quashed on grounds of inordinate delay in adjudication, contrary to the principles of natural justice and Section 28(9) of the Customs Act, 1962? Petitioner's arguments: The petitioner contended that the adjudication after more than 14 years from the show cause notice is unsustainable. They argued that even without a prescribed limitation period, power must be exercised within a reasonable time. Reliance was placed on Section 28(9) of the Customs Act, 1962, which prescribes time limits for adjudication (six months in normal cases, one year in cases of collusion/suppression). The petitioner cited several High Court judgments where show cause notices and orders were quashed due to delay. Respondent's arguments: The respondent argued that the petitioner's relied-upon cases were distinguishable as they dealt with duty demands, whereas the present case falls under Rule 16 & 16A of the Customs Excise and Service Tax Drawback Rules, 1995. They also contended that the amount of drawback and DEPB scrips fraudulently availed became part of the deceased's estate and are recoverable from legal representatives. Furthermore, the respondent argued that Section 28(9) was inserted in 2018 and was not applicable as the show cause notice was issued before its implementation. They also raised the issue of an alternative remedy.