In a landmark ruling, the Bombay High Court has quashed a show cause notice ( SCN ) issued by the Customs Department against the assessee citing a significant delay in adjudicating the case.
The SCN, dated March 28, 2002, remained unresolved for over 20 years, prompting the petitioner to seek judicial intervention.
The Bombay High Court Bench of Justices M.S. Sonak and Jitendra Jain, addressed the petitioner’s concerns regarding the prolonged delay in the adjudication of the SCN. Counsel for the petitioner argued that the extraordinary delay violates principles of natural justice and cited previous rulings, including Sanghvi Reconditioners Pvt. Ltd. vs. Union of India and Reliance Industries Ltd. vs. Union of India, where similar delays had resulted in the quashing of SCNs.
In defence, the respondents claimed that the case was transferred to the “call book” pending further investigation, linked to an ongoing Supreme Court matter involving A. S. Moolbhoy & Sons.
However, the court found that there was no adequate communication to the petitioner regarding this transfer, deeming it essential for the respondents to notify the petitioner of such developments, regardless of the circumstances.
It was observed that, “There is no material on record to show that the petitioner was informed about its case being transferred to the call book because the matter was pending before the Hon’ble Supreme Court in the case of A. S. Moolbhoy & Sons. In our view, it was incumbent upon the respondents to have informed the petitioner about its case being transferred to the call book, even without reference to the provisions of Section 28(9) of the Customs Act. In the absence of the same, the defence raised by the respondents (revenue) on this count is also rejected.”
The gross delay in adjudication was also taken note of, “There is no dispute that the common show cause notice was issued to Sanghvi Reconditioners Pvt. Ltd., Reliance Industries Ltd., and the petitioner. The issue of delay in adjudication of the show cause notice came up for consideration in the cases of Sanghvi Reconditioners Pvt. Ltd. (supra) and Reliance Industries Ltd. (supra), and this Court quashed the show cause notice on the ground of delay in adjudication of the said notice.”
The bench noted that the petitioner’s case had a stronger foundation than the cited cases, as the delay exceeded 20 years—far longer than in previous cases where the court had intervened.
The court stressed that the lack of timely communication and action on the part of the Customs Department led to the quashing of the SCN.
Ultimately, the Bombay High Court ruled in favour of the assessee, The Great Eastern Shipping Company, quashing the impugned show cause notice and reaffirming the need for timely adjudication of cases to uphold justice and procedural fairness in Customs matters.
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