Raymond LTD. vs. The Union Of INDIA, Through The Ministry Of Finance And Anr.

Held

The Court held that commencing adjudication proceedings after a long delay of 14 to 17 years, without informing the petitioner that the notices were kept in abeyance, is not justified and violates the principles of natural justice. The Court relied on its previous judgments in Bhagwandas S. Tolani, Cambata Industries Pvt. Ltd., and Hindustan Liver Limited, which established that proceedings should not be initiated after undue delay, especially when it causes prejudice to the party. The Court specifically noted that in Sanghvi Reconditioners Pvt. Ltd., a similar argument by the Revenue regarding pending appeals was rejected. The Court found that the Revenue's failure to inform the petitioner about the notices being kept in the call book, as also mandated by CBEC Circular No.1053 of 2017, led the petitioner to reasonably believe the notices were abandoned. This delay, coupled with the unavailability of documents, prejudiced the petitioner's ability to defend themselves. Consequently, the impugned show cause notices and the subsequent hearing notices were quashed and set aside.

Facts

The petitioner, Raymond Limited, challenged the action of the Commissioner CGST and Central Excise Thane in reviving six show cause notices issued between April 4, 2001, and January 12, 2004, under the Central Excise Act, 1944. The revival was attempted by issuing notices for personal hearing on June 26, 2018, and July 11, 2018, approximately 14 to 17 years after the original notices. The petitioner argued that this delay prejudiced them as relevant documents were unavailable, rendering it difficult to defend against the charges. The Revenue contended that the notices were kept in a 'call book' due to CERA audit objections and pending appeals before the Supreme Court, citing CBEC Circular No.162/73/95-CX. The Revenue admitted that no intimation was given to the petitioner about the notices being kept in the call book.

Key Issues

1. Whether the commencement of adjudication proceedings after a delay of 14 to 17 years, without putting the party on notice that the proceedings were kept in abeyance, is justified, considering the potential prejudice to the petitioner due to unavailability of records and personnel? (Question of law and mixed fact and law, concerning principles of natural justice and reasonable time for adjudication). Petitioner's arguments: The revival of abandoned show cause notices after such a long delay is bad in law and causes prejudice. Even without a statutory time limit, show cause notices must be disposed of within a reasonable time, as held in Bhagwandas S. Tolani, Premier Limited, and Sanghvi Reconditioners Pvt. Ltd. The delay makes it impossible to trace records and contact officials, hindering a fair defense. Revenue's arguments: The notices were kept in a call book in terms of CBEC Circular No.162/73/95-CX due to CERA audit objections and pending Supreme Court appeals. This was a valid reason, distinguishing the present case from precedents relied upon by the petitioner. The petitioner was not informed of the delay because no fault was attributed to them, and it was their obligation to preserve records. The petition should be dismissed, and the petitioner directed to attend the hearing.