M/S Barmer Lignite Mining Company LTD. vs. The Principal Commissioner, CGST And Central Excise Commissionerate

Held

The Court held that the issuance of the show cause notice was not an act without jurisdiction. It reasoned that the petitioner had suffered an adjudication order, appealed it, and the appeal was pending. The show cause notice was likely issued because there was no existing stay of demand from the Appellate Authority. Therefore, the Court found no reason to interfere in its discretionary writ jurisdiction under Article 226 of the Constitution. The petitioner's remedy was to either reply to the show cause notice to have the demand restored to the 'callbook' or to approach the Appellate Authority to seek a stay of the demand on legally available grounds. The Court did not decide on the merits of the petitioner's claim regarding the illegality of the recovery proceedings.

Facts

M/s Barmer Lignite Mining Company Ltd. (the petitioner) filed a writ petition challenging a show cause notice. The petitioner had previously appealed an adjudication order that imposed a tax liability. During the pendency of this appeal, recovery proceedings were initially stayed and the matter was placed in 'callbook'. However, these proceedings were later resumed, leading to the issuance of the impugned show cause notice for the recovery of the same amount. The petitioner argued that initiating fresh recovery proceedings while an appeal is pending is illegal. The respondents are the Principal Commissioner and the Superintendent of CGST and Central Excise, Jaipur.

Key Issues

1. Whether the issuance of a show cause notice for recovery of tax liability is legally permissible when an appeal against the underlying adjudication order is pending before the Appellate Authority, and recovery proceedings were previously stayed and placed in 'callbook'? (Question of law) Petitioner's Contention: The petitioner argued that once an adjudication order has been passed and an appeal is pending, initiating another round of recovery proceedings is illegal. They relied on the Supreme Court's decision in Commissioner of Central Excise Vs. Morarjee Gokuldas Spg. and Wvg. Co. Ltd. (2023 SCC Online SC 328) to support this argument. Revenue's Contention: The judgment does not record any specific arguments made by the revenue or state in response to the petitioner's contentions. However, it notes that the show cause notice was issued presumably because there was no stay of demand.