Bombay High Court
Prakash Raghunath Autade Prop Of Ideal ... vs Union Of India Throu. Its Revenue Sec. ... on 14 October, 2024
Author: M. S. Sonak
Bench: M. S. Sonak
2024:BHC-AS:41043-DB
ppn 1 14.wp-14128.24.docx
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
Digitally signed
by PRACHI
PRACHI PRANESH
PRANESH
NANDIWADEKAR
NANDIWADEKAR
Date: 2024.10.16
WRIT PETITION NO.14128 OF 2024
16:56:46 +0530
Prakash Raghunath Autade .. Petitioner
Versus
Union of India & Ors. .. Respondents
---
Mr. Hidayatullah, Senior Advocate (through VC) a/w Ms. Shailaja Kher
Hidayatullah, Mr. Makarand Joshi, Mr. Anupam Dighe, Ms. Chandni
Tanna and Mr. Prathamesh Chavan i/by India Law Alliance for the
petitioner.
Mr. J. B. Mishra a/w Ms. Sangeeta Yadav, Mr. Ashutosh Mishra and Mr.
Rupesh Dubey for respondent nos.1 to 4.
---
CORAM : M. S. Sonak &
Jitendra Jain, JJ.
DATE: 14 October 2024
P.C.:-
1. Heard learned counsel for the parties.
2. The challenge in this petition is to the show cause notice dated
5 April 2024 (Exhibit 'A') issued by the 4th respondent to the petitioner.
3. Mr. Hidayatullah, learned Senior Advocate for the petitioner,
submitted that the show cause notice is based mainly on the statements
referred to at Serial Nos.2, 3, 4, 5, 6, 13, 14 and 15 of paragraphs 12 of
the impugned Show Cause Notice-cum-Demand Notice. He submitted
that the above statements were mainly recorded in 2018-19 in the
context of the Pre-GST regime. He submitted that, in any event, all the
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statements were not recorded during an enquiry or proceeding, either in
the Central Goods and Service Tax Act or the Pre-CGST regime. He
referred to the decision of the Co-ordinate Bench of this Court in the
petitioner's case decided on 3 December 2021 in Prakash Raghunath
Autade Vs. Union of India1 to submit that any statements recorded
before the issue of any show cause notice cannot be regarded as those
recorded during an enquiry or proceedings. Based on this decision and
certain observations therein, Mr Hidayatullah contended that the
statements which have been relied upon in the show cause notice
constitute no evidence whatsoever; in fact, such statements are non-est.
He submitted that no show-cause notice could have been issued based
on such statements. He further submitted that apart from these
statements, no other significant material is relied upon in the impugned
show cause notice to sustain the same.
4. Accordingly, Mr. Hidayatullah submitted that the impugned
show cause notice should be interfered with, and the respondents should
be prohibited from proceeding further based on it.
5. Mr. Mishra, learned counsel for the respondents, pointed out
that the review petition has already been filed against the decision relied
upon. However, without prejudice, he submitted that the impugned
show cause notice is not based only on the statements referred to by Mr
Hidayatullah. Still, other materials on record were revealed during the
investigation, based upon which the impugned show cause notice came
to be issued.
6. Mr Mishra submitted that in any event, the issue of whether
1 2022 (380) E.L.T. 264 (Bom.)
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the above statements can be looked into or not and, further, the issue of
the burden being on the revenue are matters which can always be
decided in the adjudication of the show cause notice once a reply is filed
by the petitioner raising all these and other permissible objections.
7. Mr Mishra accordingly submitted that this petition might not
be entertained, leaving it open to the petitioner to raise all permissible
defences in response to the impugned show-cause notice.
8. The rival contentions now fall for our determination.
9. At the outset, unless a case of the impugned show cause notice
being ex-facie without jurisdiction is made out, we are usually not
inclined or required to interfere at the stage of issue of the show cause
notice. In this case, the impugned show cause notice does not attract the
vices indicated in Whirlpool Corporation Vs. Registrar of Trade Marks,
Mumbai and others 2.
10. In Whirlpool (Supra), the Hon'ble Supreme Court has
explained that writ petitions may be entertained against show cause
notices where the Petitioner seeks enforcement of any of the
fundamental rights, where there is a violation of the principles of natural
justice, or where the order or proceedings are wholly without
jurisdiction or vires of the Act, is challenged.
11. In Special Director and Another Vs. Mohd. Ghulam Ghouse
and another 3 the Hon'ble Supreme Court has held that unless the High
Court is satisfied that the show-cause notice was totally non-est in the
2 (1998) 8 SCC 1
3 (2004) 3 SCC 440
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eyes of the law for absolute want of jurisdiction of the authority to even
investigate into facts, writ petitions should not be entertained for the
mere asking and as a matter of routine. The writ petitioner should
invariably be directed to respond to the show cause notice and raise all
defences and contentions highlighted in the writ petition. Whether the
show cause notice was founded on any legal premises is a jurisdictional
issue the recipient can even urge before the authority issuing the notice.
Such issues can also be adjudicated by the authority initially issuing the
notice before the aggrieved party could approach the Court.
12. In Union of India and others Vs. Coastal Container
Transporters Association and others4 the Hon'ble Supreme Court held
that where the case was neither of lack of jurisdiction nor any violation
of principles of natural justice, the High Court ought not to have
entertained the writ petition at the stage of notice, more so, when
against the final orders, appeal lies to the Supreme Court. Further, the
Court held that when there is a serious dispute concerning the
classification of service, the respondents ought to have responded to the
show cause notices by placing material in support of their stand.
Accordingly, the appeals against the quashing of the show cause notices
were allowed.
13. In Mahanagar Telephone Nigam Ltd. Vs. Chairman Central
Board, Direct Taxes and another5, the Hon'ble Supreme Court held that it
was settled law that the litigation against show cause notices should not
be encouraged. The Court approved the decision of the High Powered
Committee, which was eminently fair and aimed at preventing frivolous
litigation. The Court held that the appellant's right was not affected. It
4 (2019) 20 SCC 446
5 (2004) 6 SCC 431
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was clarified that the appellant could move a court of law against an
appealable order. By not maintaining discipline and abiding by the
decision, the appellant had wasted the public money and time of the
courts.
14. In Malladi Drugs and Pharma Limited Vs. Union of India and
another6 the Hon'ble Supreme Court held that the High Court was
absolutely correct in dismissing the writ petition against the mere show
cause notice. The High Court, by the impugned judgment, held that the
appellant should first raise all the objections before the authority that
has issued the show cause notice. If any adverse order was passed
against the appellant, liberty was granted to approach the High Court.
15. Prakash Raghunath Autade (Supra), relied upon by Mr
Hidayatullah, was in the context of the petitioner's insistence to cross-
examine the person who had made the statements before issuing the
show cause notice, which was impugned in the said petition. In that
context, the Co-ordinate Bench of this Court observed that the
statements recorded before the issuance of such show cause notice are
not the statements recorded in the course of an enquiry or proceedings
and, therefore, no right accrues in favour of a noticee to insist on the
cross-examination of the witnesses, whose statements have been
recorded and are referred to in the show cause notice, even before reply
to it being submitted. The Court held that once the show cause notice is
issued, it is for the petitioner to deny and dispute the allegations levelled
therein and, if he so chooses, to raise such defence as he may be advised.
16. Accordingly, the directions were issued in paragraph 13 to the
6 (2020) 12 SCC 808
ppn 6 14.wp-14128.24.docx
effect that if, in the course of adjudication proceedings before the
relevant authority under the Show Cause Notice-cum-Demand Notice,
any witness is summoned in terms of the power conferred by Section 14
of the Act and his statement is recorded and found relevant, such
statement shall not be relied upon against the petitioner unless he has
been given a suitable and reasonable opportunity to cross-examine such
witness. The evidence of such witness was directed to be recorded in the
petitioner's presence. Significantly, neither was the show-cause notice
interfered with, nor was any immediate opportunity granted to
cross-examine those who had made the statements.
17. Therefore, even going by the decision relied upon by Mr.
Hidayatullah, we do not think that any case is made out to interfere with
the impugned show cause notice in this case. It will, of course, be open
to the petitioner to raise all permissible defences in the context of the
statements relied on or the contention about the burden always being
upon the revenue. However, based on the objections now raised, we
cannot hold the impugned show cause notice ex-facie without
jurisdiction and warranting interference at this threshold stage. The
petitioner has not made out any case to sidestep the alternate remedy of
responding to the show cause notice, and if aggrieved with the
adjudication order, appealing the same following the usual channel and
the law.
18. The observations made in this order are not intended to affect
the review petition instituted by the respondents.
19. At this stage, Mr Hidayatullah requests the petitioner be
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granted eight weeks to reply to the impugned show cause notice.
Accordingly, we grant the time as prayed for. Further, we also clarify that
the time spent from the date of institution of this petition, i.e., 27 June
2024, till the filing of the reply to the show cause notice, i.e., eight
weeks from today, will not be counted for limitation to dispose of the
show cause notice.
20. Accordingly, we decline to interfere in this matter but clarify
that all the petitioner's defences are kept open. If such defences are
raised in response to show cause notice, we have no doubt they will be
considered and disposed of following the law.
21. With the above liberty, we dismiss this petition without any
order as to costs.
22. All concerned must act on an authenticated copy of this order.
(Jitendra Jain, J.) (M. S. Sonak, J.)
