Bombay High Court
Cma-Cgm Agencies (India) Pvt. Ltd. ... vs The Union Of India, Ministry Of Finance ... on 6 February, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2024:BHC-AS:10107-DB 4-WP-10348-2023.DOC
S.R.JOSHI
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
APPELLATE SIDE CIVIL JURISDICTION
WRIT PETITION NO.10348 OF 2023
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 Office at
Indiabulls, Finance Centre, Tower-3, 8th Floor,
Senapati Bapat Marg, Elphinstone Road (East),
Mumbai 400 013. ... Petitioner
Versus
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 office at
16th Floor, Satra Plaza, Palm Beach
Road, Sector 19D, Vashi,
Navi Mumbai 400 075. ...Respondents
Mr. Prasad Paranjape with Mr. Kumar Harshvardhan, Ms. Dhruvi
Shah i/b. Lumiere Law Partners, for the Petitioner.
Mr. Ram Ochani, for the Respondents.
_______________________
CORAM: G. S. KULKARNI &
FIRDOSH P. POONIWALLA, JJ.
DATED: 6th FEBRUARY, 2024
ORAL JUDGEMENT (Per FIRDOSH P. POONIWALLA,J.)
RULE. Rule made returnable forthwith and heard finally by
consent of the parties.
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2 This Writ Petition has been filed under Article 226 of the
Constitution of India seeking the following final 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 Notice No. (i) 408/2009
dated 18.09.2009; (ii) Show Cause Notice No.153/2010 and
12.04.2010; (iii) Show Cause Notice No.91/2011 dated
01.04.2011; and (iv) Show Cause Notice No.466 of 2011
dated 14.10.2011, pending for adjudication before the
Respondent No.2, due to inordinate delay of almost 11 years
in its adjudication."
3 The Petitioner which was formerly known as APL (India) Pvt.
Ltd., acts as a "steamer agent" for APL Co. PTE Limited, Singapore. The
Petitioner provides various services to APL Co. PTE Limited, Singapore for
which the Petitioner receives commission computed on the basis of net ocean
freight earned by APL Co. PTE Limited, Singapore on import and export of
cargo. The Petitioner provides these services from its offices across India,
including Chennai and Mumbai.
4 During the relevant period various offices of the Petitioner were
holding separate service tax registrations with their respective jurisdictional
Commissionerate. Accordingly, the Chennai office of the Petitioner was
holding Service Tax Registration No.AABCA273INST003 under the
jurisdiction of the Commissioner of Service Tax, Chennai.
5 An Internal Audit was conducted of the records of the Petitioner
by the Internal Audit Group of the Service Tax Commissionerate, Chennai.
During the course of the Internal Audit, the Audit Team took the view that
the Ocean Freight and other allied charges were liable to service tax. It was
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alleged that the Petitioner had short-paid service tax by not including the
Ocean Freight and other allied charges in the value of taxable service.
6 Pursuant to the said audit, the Petitioner was issued four show
cause notices by the Commissioner of Service Tax, Chennai. The details
whereof are as under:-
S.No. Show Cause Notice No. Period Service Tax
(Rs.)
1 Show Cause Notice No. May 2006 to October 23,69,43,418
408/2009 dated 18.09.2009 2008
2 Show Cause Notice No.153/2010 November 2009 to 4,94,55,365
dated 12.04.2010 September 2009
3 Show Cause Notice No.91/2011 October 2009 to 3,14,51,000
dated 01.04.2011 March 2010
4 Show Cause Notice No.466/2011 April 2010 to March 7,87,55,455
dated 14.10.2011 2011
The aforesaid show cause notices further demanded penalty and
interest from the Petitioner.
7 By its letters dated 15 th September, 2010, 4th June, 2011 and 30th
November, 2011, the Petitioner filed its reply to show cause notices dated 28 th
September, 2009, 1st April, 2011 and 14th October, 2011 respectively, denying
each and every allegation made therein. Further, it is the case of the Petitioner
that, from its records, it is not able to trace the copy of the show cause notice
dated 12th April, 2010 or any reply filed in response thereto.
8 Thereafter, the Petitioner, in exercise of the option provided under
Rule 4(2) of the Service Tax Rules, 1994, in respect of all its offices across
India, obtained Centralized Service Tax Registration No. AABCA273
INST001 under the jurisdiction of Respondent No.2. In view of the
Petitioner having obtained centralized service tax registration, vide
Corrigendum dated 16th November, 2011, inter alia, the show cause notices
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were made answerable to the Commissioner, Service Tax-II, Mumbai
Commissionerate.
9 Pursuant to the transfer of the file from Chennai to Mumbai, vide
letter dated 24th December, 2012, the Petitioner was granted a personal
hearing on 11th January, 2013 in respect of the show cause notices by the
Commissioner, Service Tax (Adj.) Mumbai, which got adjourned.
10 In the meanwhile, in terms of the Order dated 15 th November,
2017 passed by the National Company Law Tribunal, APL (India) Pvt. Ltd.,
merged with the Petitioner.
11 It is the case of the Petitioner that, from 2013 to 2020,
Respondent No.2 did not take any steps for adjudication of the show cause
notices.
12 Subsequently, by letters dated 4th December, 2020 and 31st
December, 2020, the Petitioner was granted personal hearing in respect of the
show cause notices issued by the Respondent No.2 on the dates mentioned
therein. By e-mails dated 15th December, 2020 and 11th January, 2021, the
Petitioner informed Respondent No.2 that, due to substantial lapse of time
from issuance of the show cause notices, and change in management as well as
office of the Petitioner, the Petitioner was facing significant challenges in
collating the relevant documents required by it in support of its contention.
13 Thereafter, by a letter dated 14 th January, 2021, the show cause
notices were again scheduled for hearing on 27th January, 2021.
14 It is the submission of the Petitioner that the inordinate delay of
almost 11 years in adjudication of the show cause notices renders the entire
proceedings initiated thereunder ex-facie invalid, illegal, in violation of the
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principles of natural justice, without the authority of law and/or otherwise
untenable and unsustainable in law.
15 In response to the Petition, Respondent Nos. 1 & 2 have filed an
Affidavit-in-Reply in September, 2021. In the said Affidavit-in-Reply, it is
contended that, in addition to what was stated by the Petitioner, a personal
hearing was once again fixed on 7 th February, 2013, which was not attended
by the Petitioner. Thereafter, by a letter dated 5 th February, 2013, another
personal hearing was fixed on 6th March, 2013. The same was attended by the
Petitioner, who once again sought adjournment and requested for more time.
Further, by a letter dated 23rd July, 2015, another personal hearing was fixed
on 4th August, 2015, and, on this occasion also, the Petitioner did not attend
the personal hearing. Moreover, another personal hearing was fixed on 18 th
September, 2017 by a letter dated 1st September, 2017 issued by the
adjudication Section of CGST & Central Excise, Navi Mumbai
Commissionerate but the same was returned with the postal remark "left".
Therefore, it is the case of the Respondent that further attempts were made for
adjudicating the show cause notices.
16 In response to the said Affidavit-in-Reply filed on behalf of
Respondent Nos. 1 & 2, the Petitioner has filed an Affidavit-in-Rejoinder
dated 27th October, 2023. In the said Affidavit-in-Rejoinder, the Petitioner
has contended that the letters dated 23 rd July, 2015 and 1st September, 2017
had not been enclosed with the Affidavit-in-Reply and have put the
Respondents to the strict proof to produce both these letters. The Petitioner
has, thus, not accepted receipt of these two letters calling for a personal
hearing.
17 We have heard the learned Counsel for the parties and perused the
documents on record. In our view, the Respondents have not explained as to
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why, after issuing the show cause notices in 2009, 2010 and 2011, they could
not complete the adjudication for a period of more than 12 years. It is the case
of the Petitioner that, from 2013 to 2020, Respondent No.2 did not take any
steps for adjudication of the show cause notices. In response thereto, the
Respondents have referred to letters being issued in 2015 and in 2017.
Despite the Petitioner putting the Respondents to the strict proof of proving
that these letters had been issued to the Petitioner, the Respondents have not
produced the said letters nor proved that the Petitioner had received those
letters. In the absence of any such proof having been furnished by the
Respondents, we would have to accept the statement in the Petition that, from
2013 to 2020, Respondent No.2 did not take any steps for adjudication of the
said show cause notices.
18 Further, even if it is accepted that the Respondents had issued the
said letters in 2015 and 2017, even then, the Respondents have failed to give
any explanation as to why they cannot complete the adjudication in respect of
the said show cause notices which had been issued in the year 2009, 2010 and
2011 till the filing of the Petition.
19 Further, the Respondents were not prevented from completing the
adjudication proceedings ex-parte if the Petitioner, as alleged by the
Respondents, did not attend the so called personal hearing granted by the
Petitioner in 2015 and 2017. No explanation has been given by the
Respondents for the inordinate delay in adjudication of the show cause
notices.
20 In our view, the delay in completion of the adjudication of the
show cause notices for a period of almost 12 years cannot be attributed to the
Petitioner. Further, in the absence of any explanation from the Respondents
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for the said delay, the impugned show cause notices are required to be
quashed and set aside.
21 In this context, we may usefully refer to the decision of this Court
in Coventry Estate Pvt. Ltd. Vs. The Joint Commissioner CGST and Central
Excise & Anr. in Writ Petition No.4082 of 2022. In such decision,
considering the relevant provisions of the Finance Act 1994, and the
principles of law as laid down in several decisions in regard to the delayed
adjudication of the show cause notice namely in the decisions in Sushitex
Exports (India) Ltd. Vs. Union of India & Ors. 1, Bombay Dyeing and
Manufacturing Company Limited vs. Deputy Commissioner of CGST and
CX, DIV-IX, Mumbai Central GST Commissionerate2 and ATA Freight Line
(I) Pvt. Ltd. Vs. Union of India & Ors. 3 the Court made the following
observations :-
14. Insofar as the first issue is concerned, we are required to note
the provisions of Section 73(1) and Section 73(4B), which reads
thus:
"73. Recovery of service tax not levied or paid or short-
levied or short-paid or erroneously refunded
(4B) The Central Excise Officer shall determine the amount of
service tax due under sub-section (2)-
(a) within six months from the date of notice where it is
possible to do so, in respect of cases whose limitation is
specified as eighteen months in sub-section (1);
(b) within one year from the date of notice, where it is
possible to do so, in respect of cases falling under the proviso
to sub-section (1) or the proviso to sub-section (4A).
15. Considering the plain consequences, Section 73(4B)(a) and (b)
12022 SCC Online Bom. 191
22022 (382) E.L.T. 206 (Bom.)
3Writ Petition No.3671 of 2022
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would bring about, it would be an obligation on the Central Excise
Officer to determine the amount of service tax due under sub-
section (2), within six months from the date of notice or within a
period of one year from the date of notice, where it is possible to do
so, in respect of cases falling under the proviso to sub-section (1) or
the proviso to sub-section (4A). Thus, the statute itself prescribes
for such period within which the service tax would be required to
be determined. Sub-section (1) of Section 73 would also be
relevant when it restricts the liability to service tax, to the period of
five years under the situations falling below the proviso to sub-
section (4) in cases of fraud, collusion, willful mis-statement,
suppression of facts, contravention of any of the provisions of
Chapter V of the Finance Act, 1994.
16. We are thus of the opinion that there has to be a holistic
approach and reading of the provisions of Section 73, when it
concerns the obligation and repository of the power to be exercised
by the concerned officer to recover service tax, in adjudicating any
show cause notice, issued against an assessee considering the raison
d'etre of the provision. It is hence expected that the approach and
expectation from the officer adjudicating the show cause notice
would be to strictly adhere to the timelines prescribed by provisions
of the Act, as there is a definite purpose and intention of the
legislature to prescribe such time limits, either under Section
73(4B) of six months and one year respectively or of five years
under Section 73(1).
17. In our opinion, in the facts of the present case, such
requirement and obligation the law would mandate is completely
overlooked by the officer responsible for adjudicating the show
cause notice. We are not shown any provision, which in any
manner would permit any authority to condone such inordinate
delay on the part of the adjudicating officer to adjudicate show
cause notice. There can be none, as the legislature has clearly
intended to avoid uncertainty, which otherwise can emerge. Thus,
what would become applicable are the settled principles of law as
laid down in catena of judgments, that the period within which
such adjudication should happen is as mandated by law and in any
case it needs to be done within a reasonable period from the issance
of the show cause notice. Further, whether such period is a
reasonable period would depend upon the facts and circumstances
of each case.
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18. An inordinate delay is seriously prejudical to the assessee and
the law itself would manifest to weed out any uncertainty on
adjudication of a show cause notice, and that too keeping the same
pending for such a long period itself is not what is conducive.
19. It is well said that time and tide wait for none. It cannot be
overlooked that the pendency of show cause notice not only weighs
against the legal rights and interest of the assessee, but also, in a
given situation, it may adversely affect the interest of the revenue, if
prompt adjudication of the show cause notice is not undertaken,
the reason being a lapse of time and certainly a long lapse of time is
likely to cause irreversible changes frustrating the whole
adjudication.
20. We are also of the clear opinion that a substantial delay and
inaction on the part of the department to adjudicate the show cause
notice would seriously nullify the noticee's rights causing
irreparable harm and prejudice to the noticee. A protracted
administrative delay would not only prejudically affect but also
defeat substantive rights of the noticee. In certain circumstances,
even a short delay can be intolerable not only to the department
but also to the noticee. In such cases, the measure and test of delay
would be required to be considered in the facts of the case. This
would however not mean that an egregions delay can at all be
justified. This apart, delay would also have a cascading effect on the
effectiveness and/or may cause an abridgment of a right of appeal,
which the assessee may have. Thus, for all these reasons, delay in
adjudication of show cause notice would amount to denying
fairness, judiciousness, non-arbitrariness and fulfillment of an
expectation of meaningfully applying the principles of natural
justice. We are also of the clear opinon that arbitrary and capricious
administrative behaviour in adjducation of show cause notice
would be an antithesis to the norms of a lawful, fair and effective
quasi judicial adjudication. In our opinion, these are also the
princples which are implicit in the latin maxim " lex dilationes
abhorret", i.e., law abhors delay.
21. .....
25. ........
26. We are also not inclined to accept the contention of Mr. Adik
that the department be permitted to adjudicate the show cause
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notice, by referring to the order dated 10 July, 2023 passed by the
Supreme Court in the case of Commissioner, GST and Central
Excise, Commissionerate II (supra). In our opinion, the directions
as made in such order are required to be read in the facts and
circumstances of the case before the Court. It also cannot be said
that any concrete proposition of law has been laid down in the said
order to the effect that even if there exists a gross, unjustifiable and
inordinate delay in adjudication of the show cause notice, the
Revenue could nonetheless proceed to adjudicate the same. Mr.
Adik would also fairly submit that such position in law cannot be
derived from such decision. Also the judgment of a co-ordinate
Bench of this Court in case of Oil and Natural Gas Corporation
Limited (supra) would not assist the revenue, inasmuch as the said
decision has not considered the views expressed in the different
decisions, which we have noted hereinabove, as the same is
rendered purely in the facts and circumstances as set out in
paragraphs 8 and 9 of the said judgment.
27. In the light of the above discussion, we are inclined to allow this
petition and the same is allowed in terms of prayer clause (a)."
22 Further, the above observations are applicable to the facts of the
present case as it cannot be expected that, oblivious to the above position in
law, as also the mandate of Section 73 (4B)of the Finance Act, 1994, the
adjudicating officer would nonetheless proceed to adjudicate the show cause
notices.
23 The Petitioner is also justified in relying upon the decision of the
Coordinate Bench of this Court in Writ Petition No.468 of 2021 dated 21 st
August, 2023, (of which, one of us, G.S. Kulkarni,J, was a member) in its own
case, where on similar facts, the show cause notices were quashed on the
ground of delay in adjudication of the show cause notices.
24 For the aforesaid reasons, we are inclined to allow this Petition.
Accordingly, the Petition is allowed in terms of prayer clause (a) thereof.
25 Rule is made absolute in the aforesaid terms.
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26 Writ Petition is disposed of.
27 In the facts and circumstances of the case, there will be no order as
to costs.
(FIRDOSH P. POONIWALLA, J.) (G. S. KULKARNI , J.)
6 February, 2024
