Rapid Enterprises PVT. LTD. And Anr. vs. Union Of INDIA Through Its Joint Secretary Ministry Of Law And Justice And Anr.

Held

The Court held that the inordinate delay of over 20 years in adjudicating the show cause notices rendered them stale and unenforceable. The Court reasoned that such a delay defeats the very purpose of issuing a show cause notice, as an assessee must know where they stand. When there is no response from departmental authorities for over a decade, the assessee cannot be faulted for assuming the matter was settled. The Court found that the delay was attributable to the respondents and not the petitioner. Furthermore, the Court noted that Respondent No.2 failed to deal with the petitioner's submissions regarding the contrary views of superior officers and the staleness of the notices, which indicated a failure to adhere to procedural fairness and principles of natural justice. The Court cited judgments like Parle International Ltd. vs. Union of India and Bhagwan S. Tolani Vs. B. C. Agrawal to support its reasoning. The Court decided not to direct the petitioner to pursue the appeal, deeming it pointless to make a party pursue an appeal against notices issued 20 years ago. The impugned order was quashed.

Facts

The petitioner, Rapid Enterprises Pvt. Ltd., challenged an order dated 11th November 2020 passed by Respondent No.2 (Assistant Commissioner of CGST & Central Excise). The petitioner argued that the adjudication was made over 20 years after the show cause notices were issued, rendering them stale. The petitioner also contended that Respondent No.2 failed to consider contrary orders passed by superior officers (Additional Commissioner and Commissioner of Central Excise) and ignored submissions regarding the staleness of the notices due to inordinate delay. The show cause notices were issued on 4th May 2000, 13th March 2000, and 4th May 2001, proposing recovery of Central Excise duty. Despite the petitioner filing replies and receiving orders from superior authorities discharging earlier notices, a personal hearing notice was received after approximately 20 years. The petitioner had also filed an appeal against the impugned order.

Key Issues

1. Whether the adjudication order passed by Respondent No.2, dated 11th November 2020, is legally tenable given the inordinate delay of over 20 years since the issuance of the show cause notices dated 4th May 2000, 13th March 2000, and 4th May 2001? (Question of law, concerning principles of natural justice and procedural fairness). 2. Whether Respondent No.2 erred by failing to consider the contrary views taken by the Additional Commissioner and Commissioner (Appeal) in previous orders concerning similar matters? (Question of mixed law and fact, concerning the duty of an adjudicating authority to consider relevant prior decisions). Petitioner's arguments: The petitioner argued that the show cause notices had become stale due to the inordinate delay in adjudication, citing various judgments that held delayed adjudication defeats the purpose of issuing such notices. They contended that after such a long period, the petitioner could reasonably assume the matter was settled. The petitioner also highlighted that the delay was not attributable to them and that Respondent No.2 failed to address the contrary views of superior officers and the staleness argument. Revenue's arguments: The revenue argued that since an adjudication order had been passed, the question of show cause notices becoming stale would not arise. They also submitted that the petitioner had filed an appeal against the impugned order and therefore, the High Court should not entertain the writ petition but direct the petitioner to pursue the appeal.