Ata Freight Line(I) Pvt. Ltd vs Union Of India And 3 Ors
2022 Latest Caselaw 2889 Bom

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       IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                ORDINARY ORIGINAL CIVIL JURISDICTION
                       WRIT PETITION NO.3671 OF 2021
ATA Freight Line (I) Pvt. Ltd.             )
having office at                           )
707/708, B-Wing                            )
Everest Chambers                           )
Andheri-Kurla Link Road,                   )
Andheri (East), Mumbai - 400 059.          )
Marol Naka,                                )
Through its Authorised Representative      )
Mr.Pradeep P. Oak                          )    ..        Petitioner


                Versus
1. Union of India                          )
represented by the Secretary               )
Department of Revenue                      )
Ministry of Finance                        )
North Block,                               )
New Delhi - 110 001.                       )


2. Commissioner of CGST & Central Excise)
Mumbai East Commissionerate                )
9th Floor, Lotus Info Centre               )
J.B. Marg, Near Parel Station,             )
Mumbai - 400 012.                          )


3. Commissioner of Service Tax-I           )
4th Floor, Kendriya Utpad Shukla           )
Bhavan, Bandra Kurla Complex,              )




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Bandra (East), Mumbai 400 054.                     )


4. Additional Commissioner                         )
Service Tax- Mumbai - I,                           )
5th Floor, New Central Excise Building             )
Maharshi Karve Road, Churchgate                    )
Mumbai - 400 020.                                  )    ..    Respondents
            ---
Mr.Bharat Raichandani a/w Mr.Mahesh Raichandani, Mr.Rishabh Jain i/
by M/s.UBR Legal for the petitioner.
Mr.Jitendra B. Mishra a/w Mr.Ram Ochani for the respondents.
            ---
                  CORAM         : R.D. DHANUKA &
                                  S.M. MODAK, JJ.

RESERVED ON : 28th February 2022 PRONOUNCED ON : 24th March 2022

Judgment :-(per R.D.Dhanuka, J.)

. Rule. Rule made returnable forthwith. Learned counsel for

the respondents waives service. By consent of parties, petition is heard

finally

2. By this petition filed under article 226 of the Constitution of

India, the petitioner prays for quashing the impugned Show Cause

Notices i.e. Show Cause Notice No.197/Commr/2011-12 dated 21 st

October 2011, Centralised Show Cause Notice No.541/Commr/2012-13

dated 8th October 2012, Centralised Show Cause Notice

No.69/ADC/2013-14 dated 30th September 2013, Centralised Show

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Cause Notice No.1446/Commr/2014-15 dated 14th October 2014 and

Show Cause Notice No.Commr/ST-V/68/2016 dated 16th March 2016

issued by the respondent nos.2, 3 & 4 (Exhibit "A1(Colly)" and

impugned letter dated 12th April 2021 & 3rd July 2021 (Exhibit

"A2(Colly)").

3. The petitioner has prayed for a declaration that the impugned

show cause notices are void and bad-in-law in view of non-adjudication

after a lapse of nearly 10 years from the date of issuance of first show

cause notice. Some of the relevant facts for deciding this petition are as

under:-

4. It is the case of the petitioner that during the period between

2006 and 2015, the petitioner was engaged in the activity of buying and

selling space in vessel. The petitioner recovered the expenses from its

clients to facilitate export/import of goods for providing cargo handling/

freight service incurred expenses. During the period between 21st October

2011 and 16th March 2016, the respondent no.2 issued the following

show cause notices :-

(i) Show Cause Notice dated 21st October 2011 (for the period 2006-

07 to 2010-11);

(ii) Centralised Show Cause Notice dated 8th October 2012 (for the

period 2011-12);

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(iii)    Centralised Show Cause Notice No.69/ADC/2013-14 dated 30th

September 2013 (for the period 2012-13);

(iv)     Centralised Show Cause Notice No.1446/Commr/2014-15 dated

14th October 2014 (for the period 2013-14); &

(v)      Show Cause Notice No.Commr/ST-V/68/2016 dated 16th March

2016 (for the period 2014-15).

5. The petitioner filed a detailed reply to those show cause

notices inter alia refuting all the allegations levelled therein. It is the case

of the petitioner that no further communication was received from the

end of the department in response to the reply filed by the petitioner on

9th November 2012, 12th July 2013, 5th October 2016 and 5th October

2016 respectively to those five show cause notices for various purposes.

6. It is the case of the petitioner that since no further

communication was received from the respondents, the petitioner was

under bonafide belief that the submissions made by them had been

accepted. On 23rd February 2021, the petitioner addressed a letter to the

respondent no.2 inter alia seeking a copy of closure report, if any.

7. On 12th April 2021, the respondent no.2 informed the petitioner

that the impugned show cause notices had been put in call book. The

petitioner was not informed about any such decision taken by the

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respondent no.2 thereby putting the show cause notice in call book till

23rd February 2021. On 29th April 2021, the petitioner sought

clarifications from the respondent no.2 in response to the said letter dated

12th April 2021. There was no response to the said letter from the

respondents. On 22nd May 2021, the petitioner sent a reminder to the

respondents.

8. On 3rd/ 7th June 2021, the respondent no.2 informed the

petitioner that files were transferred to call book as per Circular issued

by the Central Board of Excise and Customs which had been revised

from time to time. The petitioner therefore, filed this petition impugning

the said show cause notice on various grounds.

9. Mr.Raichandani, learned counsel for the petitioner invited

our attention to the copies of the show cause notices issued by the

respondent no.2 and also the correspondence exchanged between the

parties. It is submitted that before 12 th April 2021, the respondent no.2

never informed to the petitioner that those 5 show cause notices which

were pending since 2011, 2012, 2013, 2014 and 2016 were transferred

to call book. The petitioner had not received any other communication

from the respondents at any point of time.

10. Learned counsel for the petitioner invited our attention to the

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affidavit-in-reply filed by the respondents and more particularly

paragraphs 6.1 and 6.1.4 of the said affidavit dated 21 st February 2022

and submits that the so called decision of the respondent no.2 to transfer

the show cause notices to call book was never communicated to the

petitioner earlier. He submits that the terms and conditions of the Circular

dated 10th March 2017 relied upon by the respondents in the affidavit

were also not satisfied.

11. Learned counsel placed reliance on the following

judgments:-

(i) Parle International Ltd. Vs. Union of India, 2021 (375) E.L.T.

633 (Bom.);

(ii) Sanghvi Reconditioners Pvt. Ltd. Vs. Union of India, 2018 (12)

G.S.T.L. 290 (Bom.);

(iii) Sushitex Exports India Ltd. & Ors. Vs. The Union of India & Anr.

2022-TIOL-123-HC-MUM-CUS;

(iv) Reliance Industries Ltd. Vs. Union of India, 2019 (368) E.L.T. 854

(Bom.);

(v) Bhagwandas S. Tolani Vs.B.C. Aggarwal & Ors., 1983 (12) E.L.T.

44 (Bom.);

(vi) Lanvin Synthetics Private Ltd. Vs.Union of India, 2015 (322)

E.L.T. 429 (Bom.);

(vii) The Bombay Dyeing and Manufacturing Company Limited Vs.

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Deputy Commissioner of CGST & CX, delivered on 14 th February 2022

in Writ Petition No.2874 of 2021.

12. It is submitted that the respondent no.2 ought to have

adjudicated upon those 5 show cause notices within a reasonable period

of time and could not have transferred to call book. He submits that in

any event, the petitioner is not responsible for any delay in adjudication

of those show cause notices for last several years. The petitioner thus

cannot be made to suffer on the ground that the respondent has

transferred the show cause notices to call book contrary to law. He

submits that the entire action on the part of the respondent is contrary to

the principles of law laid down in the above referred judgments.

13. Mr.Mishra, learned counsel for the respondents, on the other

hand, submits that the show cause notices could not be adjudicated upon

due to the reason that the said show cause notices had been transferred to

call book. A case is transferred to call book if such case cannot be

adjudicated immediately due to certain specified reasons and adjudication

is to be kept in abeyance. The transfer of show cause notice to call book

is governed by circulars issued by the Central Board of Excise &

Customs i.e. Circular No.162/73/95-CX dated 14th December 1995,

Circular No.719/35/2003-CX dated 28th May 2003 and Circular

No.992/16/2014-CX dated 26th April 2016, Circular No.1053/2/2017-

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CX dated 10th March 2017 where the Board had specified the following

categories of cases (i) Cases in which the Department has gone in appeal

to the appropriate authority, (ii) Cases where injunction has been issued

by the Supreme Court/High Court/CEGAT, etc. (iii) Cases where the

Board has specifically ordered the same to be kept pending and to be

entered into the call book and (iv) Cases are admitted by the Settlement

Commission, which are transferred to call book.

14. Learned counsel for the respondents placed reliance on the

judgments of this Court in case of Commissioner of S.T., Mumbai-VII

Vs. M/s.Greenwich Meridian Logistics (I) Pvt. Ltd., 2019 (28) G.S.T.L.

591 (Bom.) and in case of Sona Processors Vs. Commissioner of

Central Excise Thane & Ors., delivered on 21st February 2022 in Writ

Petition No.2404 of 2021.

15. It is submitted by the learned counsel that the Board is

empowered to issue such Circulars under Section 37B of the Central

Excise Act, 1944 to bring uniformity in the classification of excisable

goods or with respect to levy duties of excise on such goods.

16. It is submitted by the learned counsel that issue involved in

the subject show cause notices in the writ petition are regarding non-

payment of service tax on freight difference. The said show cause notices

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had been initially transferred to call book in the light of appeal filed by

department in this Court against the order of CESTAT dated 30 th

September 2015 in case of M/s.Greenwich Meridian Logistics (I) Pvt.

Ltd. The appeal filed by the department was dismissed by this Court.

The department filed appeal before the Supreme Court which was

dismissed on the grounds of delay vide order dated 1 st April 2019. The

show cause notices however, were kept in call book in the light of similar

issue where department had filed appeal in this Court against the order

of CESTAT dated 27th July 2016 in respect of M/s.Phoenix International

Freight Services Pvt. Ltd. The said departmental appeal is still pending

before this Court.

17. Mr.Raichandani, learned counsel for the petitioner in his

rejoinder arguments submits that each and every stand taken by the

respondents in the affidavit-in-reply is contrary to the principles of law

laid down by this Court in catena of decisions which are relied upon by

the petitioner.

REASONS AND CONCLUSION :-

18. It is not in dispute that the respondent no.2 had issued 5

show cause notices referred in paragraph 4 of this judgment. The

petitioner had filed replies to all 5 show cause notices vide letter dated 9 th

November 2012, 12th July 2013, 5th October 2016 and 5th October 2016

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respectively denying all the allegations levelled therein.

19. It is an admitted position that the respondent no.2 did not fix

any date of hearing of those show cause notices or did not send any other

communication to the petitioner informing as to why the said show

cause notices were not being heard. The respondent no.2 informed the

petitioner for the first time on 12th April, 2021 that the show cause notices

were transferred to call book by invoking the circulars referred to and

relied upon in the earlier paragraphs of the judgment.

20. The first letter was addressed by the respondent no.2 on 5 th /

7th June 2021 in response to the letter dated 23 rd February 2021

addressed by the petitioner seeking a copy of closure report, if any.

21. A perusal of the said reply from the respondent no.2

indicates that the only information provided to the petitioner was that

files were transferred to call book as per the circulars issued by the

Central Board of Excise and Customs which has been revised from time

to time. A copy of the Circular dated 26 th April 2016 was enclosed by the

respondent no.2 along with the said letter for reference of the petitioner.

22. A perusal of the said Circular dated 26 th April 2016 relied

upon by the respondent no.2 indicates that by the said circular, the

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respondent no.1 clarified that the cases where (i) the issue involved has

either been decided by the Supreme Court or the High Court and such

order has attained finality or, (ii) Board has issued new instruction or

circular clarifying the issue involved, subsequent to issue of the order to

transfer the case to the call book would be taken out of call book and

adjudicated. The said circular also provides for various eventualities

where file can be transferred to call book already referred to in the earlier

paragraph of this judgment.

23. Neither the affidavit-in-reply nor the arguments advanced

by the learned counsel for the respondents indicated that the petitioner

was at any point of time informed about the transfer of file relating to the

show cause notices in question to call book prior to the date of the

petitioner's letter asking for closure report.

24. This Court in case of Parle International Ltd. (supra) after

considering the identical facts and after adverting to the judgment in

cases of Bhagwandas S. Tolani (supra), Sanghvi Reconditioners Pvt.

Ltd. (supra) and Reliance Industries Ltd. (supra) held that that a show-

cause notice issued a decade back should not be allowed to be

adjudicated upon by the revenue merely because there is no period of

limitation prescribed in the statute to complete such proceedings. Larger

public interest requires that revenue should adjudicate the show-cause

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notice expeditiously and within a reasonable period. It is held that

keeping the show-cause notice in the dormant list or the call book, such a

plea cannot be allowed or condoned by the writ court to justify inordinate

delay at the hands of the revenue. This Court was accordingly pleased to

quash and set aside the show cause notices which were pending quite

some time.

25. In case of Sushitex Exports India Ltd. (supra), Division

Bench of this Court was pleased to quash and set aside the show cause

notices which remained pending for adjudication from 1997. This Court

considered the fact that though the petitioner therein was called for

hearing in the year 2006, no final order was passed immediately after

hearing was granted to the petitioner. It is held that the respondents seem

to have slipped into deep slumber thereafter. This Court while quashing

and setting aside the show cause notices which were not decided after

long delay was pleased to grant consequential relief to the petitioner

therein by directing the respondents to return the amounts paid by the

petitioner under protest during the course of investigation with interest

@ 12% p.a.

26. This Court in case of The Bombay Dyeing and

Manufacturing Company Limited Vs. Deputy Commissioner of CGST

& CX (supra) after adverting to the judgment in cases of Parle

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International Ltd. Vs. Union of India (supra) and Reliance

Industries Ltd. Vs. Union of India (supra) has held that when a show-

cause notice is issued to a party, it is expected that the same would be

taken to its logical conclusion within a reasonable period so that a finality

is reached. If the respondent would have informed the petitioner about

the said Show-Cause Notice having been kept in call book in the year

2005 itself, the Petitioner would have immediately applied for

appropriate reliefs by filing the appropriate proceedings. It is held that it

is not expected from the assessee to preserve the evidence/record intact

for such a long period to be produced at the time of hearing of the Show-

Cause Notice.

27. It is held that the respondent having issued the Show-Cause

notice, it is their duty to take the the said Show-Cause notice to its logical

conclusion by adjudicating upon the said Show-Cause Notice within a

reasonable period of time. In view of gross delay on the part of the

respondent, the petitioner cannot be made to suffer. This Court

accordingly was pleased to quash and set aside dated 16th September

2005 in that matter. The principles of law laid down by this Court in the

above referred judgment would apply to the facts of this case. We are

respectfully bound by the principles of law laid down by this Court in the

said judgment. We do not propose to take a different view in the matter.

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28. In case of Commissioner of S.T., Mumbai-VII Vs.

M/s.Greenwich Meridian Logistics (I) Pvt. Ltd. (supra) relied upon by

the learned counsel for the respondents in support of the submission that

writ petition filed by the petitioner is not maintainable in view of the

remedy in terms of Section 83 of the Finance Act, 1944 is concerned, in

our view, the said judgment wold not advance the case of the respondents.

29. In our view, since the respondents were totally responsible

for gross delay in adjudicating the show cause notices issued by the

respondents causing prejudice and hardship to the petitioner and have

transferred the show cause notices to call book and kept in abeyance

without communication to the petitioner for more than 7 to 11 years, the

respondents cannot be allowed to raise alternate remedy at this stage. Be

that as it may, no order has been passed by the respondents on the said

show cause notices. The question of filing any appeal by the petitioner

therefore did not arise.

30. In so far as the judgment of this Court in case of Sona

Processors (supra) relied upon by the learned counsel for the

respondents is concerned, in our view, the said judgment would not

advance the case of the respondents and is clearly distinguishable. In

the said judgment, this Court had considered the facts where the

Customs, Excise and Service Tax Tribunal had remanded the matter back

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to the Commissioner in the year 2011 with a request to decide all the

issues afresh in accordance with law. The respondents had not furnished

any documents or relevant records till date. The respondents belatedly

furnished the records to the petitioner.

31. In that case this Court had granted an opportunity to the

petitioner to file reply to the said show cause notice with a direction to

dispose of the said proceedings remanded back to the Tribunal. The

facts before this Court in case of Sona Processors (supra) are totally

distinguishable in the facts of this case and would not advance the case

of the respondents. For the reasons recorded aforesaid, the respondents

cannot be now allowed to proceed with the show cause notice at such

belated stage.

32. We accordingly pass the following order :-

(i) Writ petition is allowed in terms of prayer clauses (a) and (b).

(ii) Rule is made absolute accordingly. No order as to costs.

(iii) Parties to act on the authenticated copy of this order.

         S.M. MODAK, J.                     R.D. DHANUKA, J.