Vos Technologies Judgment On Time Bound Adjudication Of SCNs Applicable To Recovery Proceedings U/S 11A Of Central Excise Act: Delhi High Court

The Delhi High Court has held that Section 11A of the Central Excise Act 1944, which empowers taxing authorities to recover duties not levied/ short-levied or short-paid, is pari materia to corresponding provisions of the Customs Act, the Finance Act and the CGST Act.A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar thus held that the High Court's judgment in M/S VOS Technologies India Pvt. Ltd. v. The Principal Additional Director General & Anr. (2024) is applicable to the said provision.In Vos technologies, the High Court had ruled that Show Cause Notices and adjudication proceedings under the Customs Act, 1962 , the Finance Act, 1994 or the Central Goods and Services Tax, 2017 cannot be kept pending for years.The Court had held that statutory proceedings enabling authorities to conclude the proceedings within a stipulated period of time “where it is possible to do so” cannot be countenanced as a license to keep matters unresolved for years.Section 11A(11) of the Central Excise Act also casts a duty upon the authorities to determine the due amount of duty of excise within six months/ two years, where it is possible to do so, from the date of notice.Thus, the High Court said,“The relevant portion of Section 11A of the Act is pari materia to the corresponding provisions of the Customs Act, the Finance Act and the CGST Act, and thus, the mandate of the said judgement is applicable to the present cases. The Respondents in the impugned OsIO (Orders in Original) have not given any explanation as to why the SCN could not be decided finally for over 11 years.”The Court was dealing with a batch of petitions whereby the Petitioners' goods were confiscated under Rule 25 of the Central Excise Rules, 2002 in the year 2011 but the same was finally adjudicated and penalty came to be imposed only after 11 years, in 2023.The Respondent-authorities contended that with the advent of the CGST Act in July 2017, it became difficult for them to make prompt adjudication, as the department was restructured. Secondly, COVID-19 also adversely affected the smooth functioning of the department. And thirdly, the Department blamed the Petitioners for filing belated replies thus delaying the adjudication of SCNs.The High Court rejected these “feeble justifications” given by the Department, stating that they pertain to events subsequent to July-2017. It said,“There is no plausible reason as to why the adjudication could not be done between 2011-17 and the inaction for the said period remains unexplained.”With respect to the allegation of giving late replies, seeking repeated adjournments or failing to cooperate in the proceedings by the assessees, the Court said it has already been held in Vos Technologies that in any such situation, nothing prevents the Respondent authorities from proceeding ex-parte or refusing to reject such requests if considered lacking in bona fides.As such, the impugned orders imposing penalty on the Petitioners were quashed and the Respondent authorities were directed to release the Bank Guarantee furnished by them within 6 weeks.Case title: Paras Products v. Commissioner Central Gst, Delhi North (and batch)Citation: 2025 LiveLaw (Del) 363Case no.: W.P.(C) 6235/2023 and batchClick here to read order

Vos Technologies Judgment On Time Bound Adjudication Of SCNs Applicable To Recovery Proceedings U/S 11A Of Central Excise Act: Delhi High Court

Kapil Dhyani

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