Adjudicating Authority's Inaction To Dispose Of Proceedings Can't Be Attributed To Taxpayer In Absence Of Any Malice On His Part: Bombay HC

The Bombay High Court ruled that when the Revenue Dept. did not allege any malice on the part of Assessee in the context of disposal of the proceedings, then inaction on the part of Adjudicating Authority to dispose of the proceedings cannot be attributed to Assessees.Finding that the Authority had passed the final order after a lapse of more than 16 years from the date of CESTAT's order, the Division Bench of Justice Ashwin D. Bhobe and Justice M.S Sonak observed that such inordinate delay in the conclusion of show cause notice will surely prejudice the petitioners. The Bench observed that the inordinate delay in disposal of adjudicating proceedings, which was wholly attributable to the revenue, would contravene procedural fairness and violates principles of natural justice.Facts of the case: The Respondent/ Revenue in its investigation alleged undervaluation of import of cloves of foreign origin, declared value of which by the petitioner/ Assessee was lower than prevailing international prices. During investigation, the office & residential premises of one Bhumish Shah working as an Indenting Agent were searched and Indian currency as well as some incriminating documents were seized. In his statement, the agent deposed that he acted on behalf of the petitioners in respect of import of spices and that the consignments of cloves were regularly under-declared and differential amounts were paid by the importers. Refuting the same, the petitioner pleaded that the value declared in import consignment was actually the price at which the Customs had assessed the consignment based on landing cost. Dismissing the same, a SCN was issued proposing to reject the declared value, and confiscation u/s 111(d) and (m) of the Customs Act. Thus, a demand of differential custom duty as well as penalty u/s 112(a) & 114A of the Customs Act was levied. On appeal, the CESTAT set aside the order and remanded the matter to the Respondent, who passed an order after a lapse of more than 16 years from the date of order of the Tribunal and more than 24 years from the date of import. When the petitioner questioned the legality of the personal hearing notice, the Respondent furnished documents most of which were handwritten and illegible.Observations of the High Court The Bench found that the CESTAT has fixed the directions for disposal of adjudicating proceedings with the outer limit of six months, and the petitioners were only granted an opportunity to seek or inspect the documents should they so desire. Thus, if the petitioners allegedly chose not to exercise this option or avail of this opportunity, that did not offer the Respondent any valid excuse to defy the CESTAT's direction to dispose of the SCN within six months, added the Bench. The Bench clarified that CESTAT's order does not indicate that the absence or failure of petitioners to either inspect the records or to file the reply within the time, would absolve the Adjudicating Authority of disposing the matter within the time frame. The Petitioners cannot be made to suffer for lethargy and callousness on the part of the revenue, added the Bench. If the sword of Damocles, in the form of the impugned SCN is kept hanging over the petitioners for over 21 years, the High Court held that it would make it impossible for the petitioners to plan their business or make provisions for any contingent liabilities.Such inordinate delay breaches fair procedures that should always inform the adjudication in fiscal matters, added the Court. Hence, the High Court quashed the final order, as well as the show cause notice, and allowed Assessee's petition. Counsel for Petitioner/ Assessee: Pratyushprava SahaCounsel for Respondent/ Revenue: Niyati Mankad along with Akash SinghCase title: Esjaypee Impex vs. Union of India (Writ Petition No. 3793 of 2024)Citation: 2024 LiveLaw (Bom) 606Click here to read/ download the Judgment

Adjudicating Authority's Inaction To Dispose Of Proceedings Can't Be Attributed To Taxpayer In Absence Of Any Malice On His Part: Bombay HC

Pankaj Bajpai

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