Bombay High Court
Cma-Cgm Agencies (India) Pvt Ltd vs The Union Of India, Ministry Of ... on 17 January, 2023
Bench: Nitin Jamdar, Abhay Ahuja
WP-1313-2021.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 1313 OF 2021
CMA-CGM Agencies (India) Pvt. Ltd. )
(Formerly known as APL (India) Pvt. )
Ltd., a company incorporated under )
the Companies Act, 2013, and having )
its Corporate Offce at Indiabulls, )
Finance Centre, Tower -3, 8th Floor, )
Senapati Bapat Marg, Elphinstone )
Road (W), Mumbai - 400 013. )...Petitioner
V/s.
1) The Union of India )
Ministry of Finance, through the )
Secretary, Department of Revenue )
North Block, New Delhi 110 001 )
)
2) Commissioner, CGST & C. Ex., )
Navi Mumbai, having its offce at )
16th Satra Plaza, Palm Beach Road )
Sector 19D, Vashi, Navi Mumbai )
400 075. )...Respondents
Mr. Prasad Paranjape i/b. Lumiere Law Partners,
Advocate for the Petitioner.
Mr. Pradeep S. Jetly, Senior Advocate a/w. Mr. Ram
Ochani, Advocate for the Respondents.
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CORAM : NITIN JAMDAR AND
ABHAY AHUJA, JJ.
DATE : 17 JANUARY 2023
JUDGMENT : (PER ABHAY AHUJA, J.)
The Petitioner, a Company incorporated as APL
(India) Pvt. Ltd. under the Companies Act, 2013 which
entity vide order dated 15 November 2017 of the
National Company Law Tribunal, merged with CMA-
CGM Agencies (India) Pvt. Ltd., is engaged inter alia in
the business of providing services under the category of
Steamer Agent service, Cargo Handling service,
Business Support Service, GTA and Business Auxiliary
service and has offces across India for providing the
said services.
2 It is the case of the Petitioner that during the
relevant period, various offces of the Petitioner were
holding separate service tax registrations with their
respective jurisdictional Commissionerate; accordingly,
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the Delhi offce of the Petitioner was holding Service Tax
Registration No.AABCA2731NST002 under the
jurisdiction of Range-12, Service Tax Division-II, Service
Tax Commissionerate, New Delhi.
3 Pursuant to an audit conducted for the period
2004-05 to 2007-08, the Delhi offce of the Petitioner
was issued a Show Cause cum Demand Notice No.59 of
2009 dated 12 October 2009 (the "show cause cum
demand notice") by the Commissioner of Service Tax,
Delhi, calling upon the Petitioner to show cause as to
why :
"(i) Service tax amounting to Rs.5,07,70,296/-;
Education Cess and Secondary High
Education Cess amounting to
Rs.14,02,755/-, as detailed in para 3 of the
show cause notice, should not be demanded
under Section 66, 67 and 68 of the Act and
Rule 6 of the Service Tax Rules, 1994
(hereinafter referred to as the "Rules") and
recovered by invoking extended period of
limitation as provided under proviso to sub-
section (1) of Section 73 of the Act.
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(ii) Service tax amounting to Rs. 48,22,124/-;
Education Cess and Secondary Higher
Education Cess amounting to Rs. 81,580/-,
as detailed in para 4 of the show cause
notice, should not be demanded under
Section 66, 67 and 68 of the Act and Rule 6
of the Rules and recovered by invoking
extended period of limitation as provided
under proviso to sub-section (1) of Section
73 of the Act.
(iii)Service tax amounting to Rs. 41,83,916/-;
Education Cess and Secondary Higher
Education Cess amounting to Rs. 54,721/-,
as detailed in para 5 of the show cause
notice, should not be demanded under
Section 66, 67 and 68 of the Act and Rule 6
of the Rules read with Rule 2(1)(d)(iv) of
the Rules and recovered from the Petitioner
by invoking extended period of limitation as
provided under proviso to sub-section (1) of
Section 73 of the Act.
(iv)The interest should not be charged and
recovered from the Petitioner under Section
75 of the Act.
(v) Penalty in terms of Section 76 of the Act
should not be imposed upon the Petitioner
for failure to pay Service tax as and when
this payment became due.
(vi)Penalty in terms of Section 77(2) of the Act
should not be imposed upon the Petitioner
for not fling proper return read with Section
70 of the Act; and
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(vii) Penalty in terms of Section 78 of the Act
should not be imposed upon the Petitioner
for suppressing/concealing the value of
taxable service with the intent of evading
payment of service tax."
4 Vide letter dated 30 December 2009, the Petitioner
fled its reply to the said show cause cum demand notice
denying the allegations made therein.
5 Thereafter, pending adjudication of the said show
cause cum demand notice, the Petitioner, in respect of
its offces across India, obtained Centralized Service Tax
Registration No.AABCA2731NST001 under the
jurisdiction of the Respondent No.2, Commissioner,
CGST and Central Excise, Navi Mumbai, with effect from
9 September 2010.
6 We have heard Mr. Paranjape, learned Counsel for
the Petitioner and Mr. Jetly, learned Senior Counsel for
the Respondents and with their able assistance we have
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perused the papers and proceedings in the matter and
considered the rival contentions.
7 Mr. Paranjape, learned Counsel for the Petitioner,
submits that upon grant of centralized service tax
registration, the Divisional Offcer was obliged to send
intimation to the respective jurisdictional Service Tax
offce-in-charge of the erstwhile branch to transfer the
relevant records to its offce for taking further action
and to update the records, but despite the same, the fles
pertaining to the said show cause cum demand notice
were not transferred to the Respondent No.2, and
instead, the Petitioner was issued personal hearing
notice dated 17 April 2013 by the Commissioner, Central
Excise, Delhi-III.
8 Thereafter, vide letter dated 8 May 2013, the
Petitioner informed the Commissioner of Central Excise,
Delhi-III that the Petitioner had obtained centralized
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registration under the jurisdiction of Respondent No.2
and requested to transfer the fles to Respondent No.2.
Mr. Paranjape submits that despite the same,
Respondent No.2 neither took any steps to transfer the
fles nor to adjudicate the show cause cum demand
notice.
9 Mr. Paranjape would submit that it is only in the
year 2020 i.e. after a period of seven years from the date
of communication of centralized registration, vide letter
bearing No. F.No.V-Adj/CGST-NM/APL/ST/15-93/2017-18
dated 3 August 2020, 10 August 2020 and 24 August
2020, that the Petitioner was called for personal hearing
in respect of the subject show cause cum demand notice,
which were replied to vide emails dated 6 August 2020,
23 August 2020 and 8 September 2020 wherein
Respondent No.2 was informed that due to substantial
lapse of time from the issuance of the show cause cum
demand notice and change in management as well as
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offce, there were signifcant challenges faced by the
Petitioner in collating the relevant documents in
support of its contention, and therefore, the Petitioner
was in the process of seeking legal advice. Further, on
account of the Covid-19 pandemic, most of its employees
and staff were working from home and therefore
adjournment was requested for by the Petitioner vide
the said reply emails.
10 Thereafter, once again, vide letter bearing
No.F.No.V-Adj/CGST-NM/APL/ST/15-93/2017-18 dated 9
September 2020, the hearing of the subject show cause
cum demand notice was scheduled before the
Respondent No.2 on 24 September 2020.
11 Mr. Paranjape would submit that the above notice of
hearing was issued around eleven years after the date of
the said show cause cum demand notice and failure to
adjudicate despite the inordinate delay has rendered the
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entire proceedings ex-facie invalid, illegal, untenable
and unsustainable in law.
12 The learned Counsel refers to Section 73(4B) of the
Finance Act, 1994 and submits that the said provision at
the most prescribes a period of one year where it is
possible to do so to complete the adjudication
proceedings, but despite almost eleven years, the same
has not been done, although it was possible to do so.
Adjudication of the said show cause cum demand notice
after an inordinate and unreasonable lapse of almost
eleven years would severely prejudice the interest of the
Petitioner, especially when the matter was not in the call
book. He would submit that Petitioner could have,
during this period, availed of amnesty schemes, which it
has lost out on owing to the wait. Learned Counsel
would submit that the adjudication proceedings should
have culminated within a reasonable time and if it is not
done, such proceedings being detrimental and
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prejudicial to the interest of the Petitioner, stand
vitiated. Learned Counsel draws the attention of this
Court to the following decisions, where in similar cases,
due to an inordinate delay in adjudication of a show
cause notices, this Court holding the delay to be
unreasonable, set aside the proceedings and has allowed
the Petitions.
i) Parle International Ltd. vs. Union of India1
ii) Sushitex Exports (India) Ltd. vs. Union of India2
13 Mr. Paranjape submits that, therefore, the
Petitioner has approached this Court seeking the
following relief :
"(a) that this Hon'ble Court be pleased to issue
a Writ of Certiorari or a writ in the nature of
Certiorari or any other writ, order or direction
under Article 226 of the Constitution of India
calling for the records pertaining to the
Petitioner's case and after going into the validity
and legality thereof to quash and set aside the
Show Cause Cum Demand Notice No. 59/09
dated 12.10.2009 [Exhibit "A"], pending for
adjudication before the Respondent No.2."
1 2021 (375) E.L.T. 633 (Bom.)
2 2022 (380) E.L.T. 244 (Bom.)
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14 On 8 October 2020, this Court had directed that no
fnal order be passed by the Respondents pursuant to
the show cause notice dated 12 October 2009 which
order has been continued till date.
15 Mr. Jetly, learned Senior Counsel for the
Respondents, would submit that the show cause cum
demand notice dated 12 October 2009 came to be issued
to the Petitioner pursuant to an audit conducted for the
period 2004-05 to 2007-08 which was addressed to the
Delhi Offce of the Petitioner and which was
acknowledged by the Petitioner. The learned Senior
Counsel would also submit that, not only that, the
Petitioner has, admittedly, fled a reply dated 30
December 2009 to the said show cause cum demand
notice. He submits that it is only vide letter dated 8 May
2013 that the Petitioner informed the Commissioner of
Central Excise, Delhi, that it had obtained centralized
registration under the jurisdiction of the Respondent
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No.2 and requested for transfer of the case fles to the
Respondent No.2.
16 Learned Senior Counsel, submits that the
adjudication fles relating to the Petitioner were received
on 24 January 2019 after which the personal hearing
letters dated 3 August 2020, 10 August 2020, 24 August
2020 and 9 September 2020 were issued to the
Petitioner. However, Petitioner did not attend any
personal hearings and sought adjournments vide emails
dated 6 August 2020, 23 August 2020 and 8 September
2020 of the hearings which were scheduled on 7 August
2020, 8 September 2020 and 24 September 2020 at the
offce of the CGST, Navi Mumbai.
17 Learned Senior Counsel submits that previously
after the issuance of the subject show cause cum
demand notice by the erstwhile Service Tax
Commissionerate, Delhi, the personal hearings were
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fxed in Petitioner's case during the period from 12
September 2009 to 24 January 2019 vide letter
C.No.IV(16)Hqrs./Adj./501/APL/ST/09 dated 15 August
2012, 17 April 2013, 29 July 2012, 24 February 2014, 8
April 2014 issued by the Delhi Commissionerate.
He submits that Petitioner did not attend any personal
hearings scheduled on 17 September 2012 to 21
August 2013 to 14 August 2013, 17 March 2014 to 21
March 2014 and on 15 May 2015 which were fxed vide
above said letters. He submits that although the CGST
department had tried many times for conducting
personal hearing, but the Petitioner had not attended
any personal hearing and therefore the adjudication of
the order is pending till date.
18 Mr. Jetly would submit that the decisions cited by
the learned Counsel for the Petitioner are not on similar
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facts. He submits that there is no inordinate delay in the
present case and therefore the facts of this case do not
fall within the four corners of the case law cited. He
submits that, in any event, the argument that the
Petitioner did not receive the notices for hearing or that
the said letters are not annexed to the reply can always
be considered by the Adjudicating Authority, and
therefore, this Petition deserves to be dismissed.
19 It is not in dispute that pursuant to Trade Notice
No.3/2011-S.T. issued by the Commissioner of Service
Tax-I, Mumbai, upon grant of Centralized Service Tax
Registration to the assessee, it was the duty of the
Divisional Offcer to send intimation to the respective
jurisdictional Service Tax Offce-in-charge of erstwhile
branch offce and to transfer the relevant records to its
offce for taking further action and to update the
records.
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20 The show cause cum demand notice in the instant
case has been issued on 12 October 2009 and although
the Petitioner had obtained Centralized Service Tax
Registration under the jurisdiction of Respondent No.2
with effect from 9 September 2010, even though as per
the Trade Notice, referred to above, after centralized
registration, it was the duty of the Divisional Offcer to
send intimation and to transfer the relevant records for
taking further action, the records, admittedly, came to
be transferred only on 24 January 2019.
21 Not only that, even the Petitioner had, vide letter
dated 8 May 2013, informed the Commissioner of
Central Excise, Delhi-III that it had obtained Centralized
registration under the jurisdiction of Respondent No.2
and requested to transfer the case fles to Respondent
No.2. But, despite all this, no steps were taken to
transfer the fles or to adjudicate the subject show cause
cum demand notice for several years.
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22 Further, although notices of hearing were issued to
the Petitioner before its merger with CMA-CGM Agencies
(India) Pvt. Ltd. on 15 November 2017 but no
adjudication order was passed. It was only after the fles
relating to the Petitioner were received by the
Respondent No.2 on 24 January 2019, that the
Respondents woke up from their deep slumber to issue
notices of personal hearing to the Petitioner dated 3
August 2020, 10 August 2020, 24 August 2020 and 9
September 2020.
23 It is also pertinent to note that when, vide order
dated 15 November 2017 of the National Company Law
Tribunal, APL (India) Pvt. Ltd. merged with CMA-CGM
Agencies (India) Pvt. Ltd., there was a change in the
management, staff and offce of the Petitioner company,
which is not disputed by the Respondents that the
Respondents-authorities could have transferred the fles
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and issued the hearing notices to the Petitioner, which
they failed to do until 2020.
24 This Court in the case of Parle International Ltd. vs.
Union of India (supra) has observed that proceedings
should be concluded within a reasonable period and
proceedings that are not concluded within a reasonable
period, which the Court on the facts of each case has to
consider, may not be allowed to be proceeded further.
25 In Sushitex Exports (India) Ltd. vs. Union of India
(supra) this Court while dealing with show cause notice
which had not been adjudicated for a period of twenty-
three years, fnding absolutely no justifcation in the
manner in which the Respondent-authorities had acted,
observed in paragraph 14 as under :
"14 It is not in dispute that after the show-
cause notice was issued on 30th April 1997, the
petitioners were called upon for a hearing in the
year 2006. At least, till 2006, it can be inferred
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that the issue was live. However, why no fnal
order was passed immediately after the hearing
was granted to the petitioners is not disclosed in
the affdavit-in-reply. The respondents seem to
have slipped into deep slumber thereafter. While
the respondents' right in law to initiate
proceedings for violation of the provisions of the
Act can never be disputed, at the same time they
do not have the unfettered right to choose a time
for its termination and conclude proceedings as
per their convenience. Indeed, the words
'reasonable period' call for a fexible rather than
a rigid construction having regard to the facts of
each case, but the period in excess of two
decades without the respondents suffciently
explaining as to what prevented them to
conclude the proceedings has to be seen as
unreasonable and the reasons assigned in the
affdavit-in-reply as mere excuses for not
adjudicating the show-cause notice according to
law. Law is well-settled that when a power is
conferred to achieve a particular object, such
power has to be exercised reasonably, rationally
and with objectivity with the object in view. It
would amount to an arbitrary exercise of power
if proceedings initiated in 1997 are not taken to
their logical conclusion for over two decades and
then a prayer is made for its early conclusion, no
sooner than the matter enters the portals of this
Court. We agree with the decision in Parle
International Limited (supra) to the extent it
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lays down the law that the proceedings should
be concluded within a reasonable period and
that proceedings that are not concluded within a
reasonable period, which the Court on the facts
of each case has to consider, may not be allowed
to be proceeded with further. On facts and in the
circumstances, we are satisfed that the
proceedings arising out of the impugned show-
cause notice having remained dormant for about
fourteen years since hearing was given to the
petitioners, it should not be allowed to be carried
forward further in the absence of a satisfactory
explanation."
26 In the facts of this case as well, the Respondents
have not acted in the manner as required by law. True
that, while the Respondents' right in law to initiate
proceedings for violation of the provisions of the Act can
never by disputed, at the same time, they do not have
the unfettered right to choose a time to conclude the said
proceedings as per their own whims and fancies. Action
on the part of a constituent of State has to be with
responsibility and not caprice. The words "reasonable
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period" call for a fexible rather than a rigid construction
having regard to the facts of each case, but the period in
excess of eleven years as claimed by the Petitioner or
even seven years, if we were to consider the period from
8 May 2013, when the Petitioner informed the
Respondent Authority that it had obtained Centralized
Registration, without the Respondents suffciently
explaining as to what prevented them from concluding
the proceedings except their own delay, in our view is
nothing but unreasonable and the reasons stated in the
affdavit-in-reply cannot be accepted.
27 In our view, Respondents having delayed the
transfer of proceedings from Delhi to Mumbai and not
even having bothered to themselves do the same upon
the Centralized Registration by the Petitioner on 9
September 2010 and even after the Petitioner informed
of the same on 8 May 2013, without any satisfactory
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explanation for this delay, adjudication of the Show
October 2009, which ought to have been culminated
within a reasonable time has not been done and
adjudicating the same now after an inordinate and
unreasonable lapse of time would be detrimental and
cause severe prejudice to the Petitioner.
28 In the circumstances, we are of the opinion that the
impugned show cause cum demand notice dated 12
October 2009 cannot be carried forward after such an
inordinate delay.
29 In view of the above discussion, we quash and set
aside the Show Cause cum Demand Notice No.59 of 2009
dated 12 October 2009 at Exhibit A pending
adjudication before the Respondent No.2.
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30 The Petition stands allowed in the above terms.
Parties to bear their own costs.
(ABHAY AHUJA, J.) (NITIN JAMDAR, J.)
ARTI
VILAS
KHATATE
Digitally signed by
ARTI VILAS
KHATATE
Date: 2023.01.18
16:55:09 +0530
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