M/S Bokaro Timber Seasoning Plant Represented Through Its Partner Sri Madan Lal Jain vs. The Principal Commissioner Of Central Goods And Services Tax And Central Excise

Facts

The petitioners, M/s. Bokaro Timber Seasoning Plant and its partners, are challenging a show cause notice dated September 22, 2014, issued by the Directorate General of Central Excise Intelligence (DGCEI), and an Order-in-Original dated June 30, 2022, passed by the Principal Commissioner of Central Goods and Services Tax and Central Excise. The proceedings stem from a search and seizure operation on September 5-6, 2012, at the petitioner's premises, during which documents and pen drives were seized for the period April 2012 to August 2012. An amount of Rs. 50.00 Lacs was collected from the petitioners during this operation. The petitioners contend that the adjudication of the show cause notice was unduly delayed for over seven years, rendering the proceedings illegal and violative of constitutional mandates.

Held

The Court held that the inordinate and unreasonable delay of over seven years in adjudicating the show cause notice dated September 22, 2014, renders the proceedings unsustainable. The Court referred to Section 11A(11) of the Central Excise Act, 1944, which provides for time limits for adjudication, and noted that even where no specific period is prescribed, proceedings must be concluded within a reasonable time. The Court considered the maximum period of limitation of five years provided under Section 11A(1)/11A(4) of the Act as a reasonable period for concluding adjudication. Citing Supreme Court judgments in State of Punjab and Others Vs. Bhatinda District Cooperative Milk Producers Union Ltd. and K.B. Nagur, M.D. (Ayurvedic) Vs. Union of India, the Court emphasized that the concept of reasonable time applies where no specific time limit is prescribed. The Court also noted that remitting the matter back would cause serious prejudice to the petitioner at this belated stage, making the alternative remedy unavailable. Consequently, the impugned show cause notice, Order-in-Original, and notices for personal hearing were quashed and set aside.

Key Issues

1. Whether the inordinate and unreasonable delay in adjudicating the show cause notice dated September 22, 2014, vitiates the proceedings and violates the petitioners' constitutional rights under Articles 14, 19(1)(g), and 21 of the Constitution of India, particularly in light of Section 11A(11) of the Central Excise Act, 1944? The petitioner argues that Section 11A(11) mandates adjudication within six months or one year (later two years) where possible, and that the delay of over seven years is contrary to this provision and constitutes unreasonable, arbitrary, and oppressive action. The petitioner relies on the principle that even without a prescribed limitation, proceedings must conclude within a reasonable period. The revenue's contention regarding the alternative remedy is also implicitly addressed by the court's finding on prejudice. 2. Whether the impugned Order-in-Original dated June 30, 2022, passed after a delay of over seven years from the show cause notice, is liable to be quashed? The petitioner argues that the delay itself makes the adjudication unsustainable. The revenue's arguments are not explicitly detailed in the provided text, but their opposition to the writ petition is implicit.