Kishor Kumar Rachh vs. Union Of INDIA

Held

The Court held that in the interest of justice, it would grant the petitioners an opportunity to file their reply to the show-cause notices and contest the proceedings on merits. The Court acknowledged that the petitioners could have participated without prejudice to their contentions on the vires of Rule 26(2) but chose to follow different advice. The Court set aside the impugned orders, directing the petitioners to file their responses within four weeks. The issue of the vires of Rule 26(2) of the Central Excise Rules, 2002, was expressly kept open, as were all parties' contentions on the merits. The petitioners were required to pay costs of Rs. 50,000/- each to the Armed Forces Flag Day Fund to avail this opportunity. Failure to pay costs would result in the petitions being deemed dismissed. The petitioners were also directed to appear before the Adjudicating Authorities on March 18, 2026, and would not be entitled to raise limitation issues.

Facts

Multiple petitioners, including M/s Shree Balaji Enterprises, M/s Quality Steels, M/s Renu Raj Enterprises, M/s Jharkhand Steel Manufacturer Pvt Ltd., M/s Durga Steel, M/s Shree Krishna Traders, filed writ petitions challenging orders passed by various GST and Central Excise authorities. The core issue revolved around the petitioners' failure to respond to show-cause notices, leading to adverse orders. The petitioners argued this non-participation was based on advice to challenge the vires of Rule 26(2) of the Central Excise Rules, 2002, believing participation would imply acquiescence. They sought an opportunity to file their replies and participate in proceedings, without prejudice to their challenge to the rule's validity.

Key Issues

1. Whether the Court should set aside the impugned orders and grant the petitioners an opportunity to file their reply to the show-cause notices and contest the proceedings on merits, despite their prior non-participation, considering their challenge to the vires of Rule 26(2) of the Central Excise Rules, 2002? Petitioner's argument: The petitioners contended that their non-participation was due to advice that challenging the vires of Rule 26(2) would be jeopardized by filing a reply or participating. They sought an opportunity to participate, with the issue of vires being left open. They proposed to pay costs to mitigate the respondents' inconvenience. Revenue's argument: The judgment does not explicitly record arguments from the revenue or state side regarding the specific procedural issue of granting an opportunity to file a reply after non-participation. However, the court's decision implies a consideration of the respondents' position.