M/S Siemens LTD A Registered Company Having Its Authorised Mr Babasaheb Salunke vs. The Union Of INDIA And Another

Held

The Court held that the impugned actions of reviving inquiries after a lapse of more than a decade were clearly iniquitous and arbitrary, and contrary to law. The Court found no dispute regarding the issuance of show cause notices and the petitioner's replies. It noted that Section 11A of the Central Excise Act, 1944, provides for a period of limitation for raising demands and recoveries, and that the action of recovery must be initiated within specified time limits. The Court found that the respondents revived inquiries after more than a decade, which was apparently illegal. The Court also observed that the explanation provided by the respondents regarding the 'Call Book' and the pending Supreme Court appeal appeared to be an afterthought, especially given the conspicuous absence of any information provided to the petitioner about keeping the show cause notices in abeyance. The Court emphasized that it was imperative for the respondents to inform the petitioner if they intended to keep the notices pending, a point highlighted in previous judgments like Raymond Ltd. and Parle International Ltd. The Court also referred to similar actions being struck down in service tax matters under Section 73 of the Finance Act in cases like Reliance Transport and Travel Pvt. Ltd. Therefore, the Court concluded that the impugned actions were clearly contrary to law and liable to be struck down. The writ petitions were allowed, and the Rule was made absolute in terms of prayer clause 'B'.

Facts

The petitioner, M/s. Siemens Ltd., filed multiple writ petitions challenging the respondent Assistant Commissioner of Goods and Service Tax's decision to resume inquiries into show cause notices issued for the proposed reversal of Cenvat Credit. These notices were initially issued between December 2008 and July 2011, and the petitioner had responded promptly. However, the respondent issued second notices for personal hearings between January and February 2022, resuming inquiries after a delay of 10 to 13 years. The petitioner argued that this inordinate and unexplained delay rendered the resumption of inquiries illegal, citing Section 11A(11) of the Central Excise Act, 1944, which mandates timely decisions. The respondent contended that the delay was due to the cases being kept in a 'Call Book' pending a Supreme Court appeal, which was later withdrawn. They argued that the delay should only be counted from the withdrawal of the appeal in February 2019, and subsequent pandemic-related delays were also a factor.

Key Issues

1. Whether the respondent authority can resume inquiries into show cause notices issued under Rule 14 of the Cenvat Credit Rules, 2004, read with Section 11A of the Central Excise Act, 1944, after a lapse of 10 to 13 years from the initial show cause notices and the petitioner's replies. The petitioner argued that the prolonged and unexplained delay in adjudicating the matters after the issuance of show cause notices and their prompt replies violates the principle of reasonable time as stipulated in Section 11A(11) of the Central Excise Act, 1944. They contended that such inordinate delay prejudices the petitioner, who cannot be kept under uncertainty for years, and therefore, the proceedings should be dropped. They relied on several High Court judgments, including Raymond Ltd. vs. The Union of India and Parle International Ltd. vs. Union of India. The respondent argued that the delay was justified as the cases were kept in a 'Call Book' due to a pending Supreme Court appeal concerning the availment of inadmissible credit. They asserted that the appeal was withdrawn on 06.02.2019 due to low tax effect, and the period for delay should be counted from this date. They also cited the COVID-19 pandemic as a reason for further delay, claiming there was no intentional protraction of inquiries and that the petitioner, being a public limited company, should not raise technical defenses. They referred to the provisions of Section 11A(8) to 11A(11) of the Central Excise Act.