7 Years Time For Adjudication Proceedings u/s 73(1) of Finance Act Not a Reasonable Period: Jharkhand HC [Read Order]

The Jharkhand High Court has held that 7 Years for adjudication proceedings under section 73(1) of the Finance Act, 1994 is not a reasonable period.

The petitioner, M/S Kamaladitya Construction (P) Ltd challenged the legality and validity of the impugned show cause notice issued by the Respondent No.2 in purported exercise of powers under proviso to Section 73(1) of the erstwhile Chapter V of the Finance Act, 1994.

The petitioner has challenged the legality and validity of the impugned Show Cause Notice mainly on grounds of delayed adjudication after the lapse of more than 7 years which is contrary to provisions of Sub-section (4B) of Section 73 of erstwhile Chapter V of the Finance Act, 1994 and also beyond the reasonable period of limitation and which offends Article 14 of the Constitution of India being arbitrary and unreasonable.

The adjudication of the impugned Show Cause Notice was kept in suspended animation sine die for more than seven years. The petitioner now received an impugned notice dated 06.06.2022 issued by Respondent No.3 intimating the fixation of a personal hearing on 21.06.2022 in the office of Respondent No.1 for adjudication of the impugned Show Cause Notice dated 24.12.2014.

It appeared that the entire proceeding was kept under suspended animation till a fresh date for a personal hearing was fixed. Learned counsel contended that the same issue has been under consideration concerning the Central Excise Act, 1944 and Customs Act, 1962 before different jurisdictional High Courts and it has been held that the time limit has to be strictly adhered to if the Revenue does not an explanation for the delay in completing adjudication proceedings.

Mr. P.A.S.Pati, counsel for the revenue submitted that the adjudication of a case is a quasi-judicial function of the officers of the Central Excise and Service Tax Department. Under many corporate laws and also erstwhile Central Excise Act and Service Tax law, there was no time limit prescribed under the law by which the Adjudication Order shall have to be passed. On many occasions, the OIO is passed after many years after the issue of show cause notice.

A division bench comprising Justice Rongon Mukhopadhyay and Justice Deepak Roshan observed that a period of more than 7 years from the issuance of the impugned Show Cause Notice on 24-12-2014 cannot be said to be a reasonable period for taking up/concluding adjudication proceedings. Section 73(1)/ 73(4) of Chapter V of the Finance Act, 1994 provides 5 years as a maximum period which in any case should be taken as a reasonable period within which the adjudication should be completed.

The Court quashed the impugned notice and allowed the appeal.

To Read the full text of the Order CLICK HERE

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