The Joint Commissioner Of vs. M/S.Cheran Cements Limited

Facts

The appellants, GST and Central Excise authorities, filed a writ appeal against an interim order of stay granted by the writ court. The writ petitioner, M/s Cheran Cements Limited, challenged an Order-in-Original No.14/2011-ST dated 27.04.2011, which confirmed a demand of service tax, interest, and imposed penalties. The writ petition was filed seven years after the Order-in-Original, only when the petitioner's properties were put up for public auction. The authorities argued that the writ petition was filed with inordinate delay and suppressed material facts, as the properties were attached in 2011, an e-auction was conducted on 16.03.2018, and a delivery order was issued on 20.03.2018. The writ petitioner claimed they were unaware of the order due to the company being defunct since 2008 and that proper notice should have been issued before auction.

Held

The Court allowed the writ appeal and set aside the interim order of stay granted by the writ court. The Court found that the writ petition was filed after an inordinate delay of seven years, and the explanation provided by the petitioner regarding financial crunch and management rejigs was insufficient justification for such a delay, especially when a statutory appeal remedy was available. The Court also noted that the writ petitioner had not adequately explained why they approached the High Court after seven years without filing a statutory appeal. Furthermore, the Court held that the writ court had entertained the writ petition and granted an interim stay without assigning any reasons, which is erroneous, particularly in fiscal matters where effective alternative remedies exist. The Court emphasized the Apex Court's caution in granting ex-parte interim orders in financial matters, citing State Bank of Travancore vs. Mathew K.C. (2018) 3 SCC 85 and United Bank of India vs. Satyawati Tondon. The fact that the properties were already under attachment since 2011, brought for public auction in February 2018, purchased by a successful bidder in March 2018, and a delivery order issued in March 2018, further strengthened the case for interference. The Court found no reason or justification to sustain the interim order of stay.

Key Issues

1. Whether the writ petition challenging the Order-in-Original No.14/2011-ST dated 27.04.2011, filed after a delay of seven years, is maintainable, particularly when a statutory appeal remedy under the relevant Act is available? (Section 128 of the Finance Act, 1994, implicitly relevant for statutory appeal). 2. Whether the writ court erred in granting an interim stay at the admission stage without assigning reasons and without allowing the respondents to present their case, especially in fiscal matters involving recovery of dues? Arguments for the Appellants (Revenue/State): The writ petition ought not to have been entertained due to the inordinate delay of seven years and the availability of an effective alternative statutory remedy. The writ petitioner suppressed material facts regarding the attachment and auction of their properties. Granting interim stay at the admission stage without reasons and without hearing the respondents is erroneous, citing State Bank of Travancore vs. Mathew K.C. (2018) 3 SCC 85. Arguments for the Respondent (Writ Petitioner): The company was defunct since 2008, prior to the Order-in-Original, leading to their unawareness of the order and subsequent developments. Proper notice should have been issued before auctioning the property.