Bombay High Court Quashes 25 Year Old Show Cause Notice Citing Inordinate Delay in Adjudicating Notice & Inability to Locate Case Records; Allows Refund with Interest for Amount Paid Under Protest [Read Order]

The High Court of Bombay has quashed a 25 year old Show Cause Notice (SCN) issued by the Commissioner, Central Excise, Mumbai-III, and ordered the refund of Rs.10,69,666/- along with 12% interest, which was deposited by the petitioner under protest during the course of the investigation citing the inordinate delay in adjudicating the notice and the inability to locate the relevant case records.

The petitioner, EPL Ltd., formerly known as Essel Packaging Ltd., had filed a writ petition under Article 226 of the Constitution of India praying that the SCN issued by the Commissioner, Central Excise, Mumbai-III, about 25 years back, be quashed and set aside.

The petitioner was represented by Mr.  Prakash Shah, Mr. Jas Sanghavi and Mr. Yash Prakash while the respondents, the Union of India and the Commissioner, Central Goods and Services Tax (CGST) & Central Excise, were represented by Mr. J. B. Mishra with Mr. Ram Ochani.

The SCN in question had been issued on 14 February 1997, and the petitioner had sought its quashing primarily on the grounds of inordinate delay in adjudicating the notice and the inability of the authorities to locate the case records.

The petitioner argued that the extended delay of more than 25 years in adjudicating the SCN warranted its quashing, citing settled legal principles. The petitioner emphasised that such a delay was unacceptable and violated the principles of natural justice.

The respondent revenue expressed their inability to locate the case records and informed the court about a letter dated 28 March 2023, which detailed the efforts made to find the relevant documents. This revelation further compounded the petitioner’s claim of negligence and administrative ineptitude on the part of the revenue.

The Additional Commissioner had written to various Commissionerates on this matter, seeking information about the SCN. The response indicated that no such notice had been received after the formation of GST Commissionerates.

The High Court, going through the facts and circumstances of the case, found that it had become impossible for the respondents to proceed with the adjudication of the SCN.

The bench cited relevant decisions including ATA Freight Line (I) Pvt. Ltd. vs. Union of India & Ors. where the courts had ruled against belated adjudication of show cause notices. They also highlighted the Division Bench’s ruling in Premier Ltd. Vs. Union of India, which had condemned the failure of the authorities to adjudicate a notice for such an extended period stating “Failure of the adjudicating authority to adjudicate upon the same, for about 25 years, itself would be illegal, and the authorities could not have been liberal in granting adjournment and not adjudicating the show cause notice for such a long lapse of time”.

The division bench of Justices G. S. Kulkarni and Justice Jitendra Jain allowed the writ petition of the petitioner and the SCN dated 14 February 1997 was quashed and set aside emphasising the importance of timely adjudication in legal proceedings.

Additionally, the respondents were directed to refund Rs.10,69,666/- deposited by the petitioner under protest, along with 12% interest from the date of deposit until the date of actual refund.

To Read the full text of the Order CLICK HERE

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