In a significant ruling, Bombay High Court directed the Ministry of Finance to take a serious view against officials who delay decisions related to show cause notices.
Mumbai based UPI Limited moved to the High Court after a show cause notice issued way back in 2010 by Commissioner of Central Excise was not adjudicated. The petitioner prayed the notice be quashed and set aside on the ground that the law would not permit such delayed adjudication of the show cause notice.
Terming the case as ‘another classic case where the lackadaisical approach’ of the officer in not adjudicating a notice issued 13 years back, the Bench first questioned the competency of the official who filed affidavit on behalf of the Department as he was deputy to the Commissioner, responsible for inaction on the notice.
The Bench took note of series of petitions reaching the court on the ground that the concerned jurisdictional officers exercising such enormous powers not only under the Finance Act, 1994, but also under the other Central Acts, for reasons which are totally ill-conceived and contrary to law, have not adjudicated and/or taken forward the show cause notice for unduly long periods and in some cases for about 10 years.
“In our opinion, a serious view in this regard is required to be taken by the Ministry of Finance in regard to the officers who are not diligently discharging such vital duties and who in fact are playing with the public revenue,” the Bench said. Quoting its previous ruling (Coventry Estates Pvt. Ltd. Versus the Joint Commissioner CGST and Central Excise & Anr.), the Bench observed that such lethargic approach of the concerned officer not to adjudicate show cause notice within the time frame as prescribed by law, would be an action contrary to law.
“As such issues vitally affect the public revenue, we also observed that such inaction on the part of such officers would adversely affect the interest of the revenue,” it said.
The Bench directed Joint Secretary in the Ministry of Law to forward a copy of its previous judgment to the Secretary, Ministry of Finance, so as to appraise him of a legal approach to be adopted by the adjudicating officers, so that a robust approach can be adopted in effectively adjudicating the show cause notices, unless such mechanism already exist.
“We will be failing in our duty if we do not request the Finance Secretary to look into such issues,” it said.
It noted that though the law prescribes a show cause notice would be required to be adjudicated within a reasonable time depending on the facts of each case. However, as observed by it in its previous ruling, the Court remarked: “reasonable time would not be an egregious, unjustified and unexplained inordinate delay.” Accordingly, it quashed the show cause notice and allowed the appeal.