Telangana High Court

M/S Sri Krishna Exim Llp vs Union Of India on 21 June, 2024

Author: P.Sam Koshy

Bench: P.Sam Koshy, N.Tukaramji

          THE HON'BLE SRI JUSTICE P.SAM KOSHY
                          AND
          THE HON'BLE SRI JUSTICE N.TUKARAMJI

     WRIT PETITION Nos.6140 and 6186 of 2023
COMMON ORDER:

(per the Hon'ble Sri Justice P.SAM KOSHY)

Heard Mr. Atul Chitale, learned Senior Counsel appearing on

behalf of Mr. E. Venkatesh Siddhartha, learned counsel for the

petitioner and Mr. Dominic Fernandes, learned Senior Standing

Counsel for CBIC, appearing for the respondent Nos.1 to 3.

2. The present are two writ petitions of identical nature between

the same parties where two different show cause notices issued by

the 3rd respondent dated 31.10.2022 and 29.11.2022 under Section

28(4) of the Customs Act, 1962 (briefly 'the Act' hereinafter) are

under challenge.

3. The parties being the same, the orders under challenge also

being of identical nature and the grounds and contentions on behalf

of the petitioners as well as the respondents also being the same in

both the writ petitions, we proceed to decide the two writ petitions by

this common order.

4. The whole case revolves around the same parties on a show

cause notice issued to them under Section 28(4) of the Act. The

Directorate of Revenue Intelligence (in short, 'DRI') received certain

information in respect of the misappropriation of duty free gold

bullion received by the petitioners under the Special Economic Zone

Scheme for manufacture and export of studded gold jewellery.

5. A search was conducted on the premises of the petitioners

Sri Krishna group of companies and other entities along with the

directors/partners. During the course of search, certain seizures

were made and in respect of the said seizures, show cause notices

dated 26.06.2020 and 27.06.2020 were issued under Section 124 of

the Act. These two show cause notices were subjected to challenge by

way of two different writ petitions i.e. Writ Petition No.29508 of 2021

and Writ Petition No.29531 of 2023. Initially the High Court granted

an interim protection in both these writ petitions restraining

respondents from initiating any consequential steps pursuant to the

aforesaid two show cause notices.

6. In the course of search and seizure proceedings, it was revealed

to the DRI officials that huge quantity of gold bullion imported by the

petitioner was being fraudulently diverted into the local market for

delivery at the shops in Hyderabad and where the petitioners were

required to export gold bullion jewelries prepared by them from the

imported gold bullion. The petitioners were found to be sending fake

gold jewellery showing it to be the export of the gold jewellery

manufactured from the gold bullions imported by them. Similarly, it

was also in the course of enquiry found that these gold bullions were

being diverted into the local market by being given to different

dealers operating in Hyderabad.

7. It was based upon all these fraudulent deeds on the part of the

petitioners which led to the issuance of show cause notices dated

31.10.2022 and 29.11.2022 and which are under challenge in the

two writ petitions.

8. Both these show cause notices have been issued under Section

28(4) of the Act and the challenge in these two writ petitions are also

on the same legal grounds which are:

i. That the impugned show notices are prima facie bad in law for

the reason that the mandatory requirement of pre-notice

consultation has not been applied by the respondent

authorities.

ii. The impugned show cause notices are bad also for the reason

that the same are determinative in nature or the authorities

concerned are pre-meditated about the action to be taken.

iii. The impugned show cause notices are also illegal on the

ground of the same being barred by limitation so far as the

limitation that is provided under Section 28 of the Act.

9. So far as the show cause notices being violative of the circular

issued by the CBEC dated 10.03.2017 is concerned, it was

contended by the learned Senior Counsel for the petitioner that the

said circular in very categorical terms envisages the requirement of a

pre-show cause notice consultation by the Principal Commissioner

before issuance of a show cause notice.

10. Referring to clause 5.0 of the said circular dated 10.03.2017,

the learned Senior Counsel contended that it was mandatory on the

part of the respondent authorities to have resorted to a pre-show

cause notice consultation with the Principal Commissioner before

issuance of a show cause notice. Further, referring to a decision of

the Delhi High Court in the case of Amadeus India Pvt. Ltd. vs.

Principal Commissioner, Central Excise, Service Tax and Central

Tax Commissionerate 1 it was contended that the Delhi High Court

has held that the pre-show cause notice consultation is a mandatory

requirement and it is only after pre-show cause notice consultation

should the authorities decide whether there is a case made out for

issuance of a show cause notice and followed by the proceedings

thereon.

11. According to the learned Senior Counsel for the petitioner, the

said circular dated 10.03.2017 does not show any exemption to any

of the provisions of the Act so far as the instructions given in the

circular being made applicable. Further, the provisions of Section

151A of the Act itself provides or empowers the Board to issue

orders, instructions and directions to the officers of the Customs

Department as a whole so far as assessment or disposal of a

particular case in a particular manner is concerned and such

instructions under the normal circumstances is mandatory in

nature.

12. It was further contended by the learned Senior Counsel for the

petitioner that the fact that they have included pre-show cause

notice consultation in Section 28(1) of the Act goes to show the

1 2019 SCC OnLine Del 8437

relevance of the said procedure in the statute itself. Therefore, it is

not to be taken lightly, nor can it be avoided or waived by the

authorities. It was also the contention of the learned Senior Counsel

for the petitioner that the so-called circulatory circular

No.1070/03/2021 dated 11.11.2021 cannot be confined so far as the

provisions of the Central Excise Act or the Finance Act itself and that

there cannot be a situation where there will be a ipso facto express

exclusion of the Customs Act so far as the previous circular dated

10.03.2017 is concerned.

13. It was contended by the learned Senior Counsel for the

petitioner that two show cause notices have been issued with a

predetermined mind and the authorities concerned have already

made up their mind so far as the action to be taken on the

petitioners is concerned. Learned Senior Counsel for the petitioner

contends that the fact that it is predeterminative also stands

established from the fact that the authorities have quantified the

demand to be raised and for which reason also the impugned show

cause notices deserves to be interfered with. According to the learned

Senior Counsel, the same has been issued with a predetermined

mindset where the liability of the noticee is already determined.

14. Referring to the contents of the show cause notices, it was

contended by the learned Senior Counsel for the petitioners that the

contents would by itself clearly reflect that the respondent

authorities have already determined the liability of the petitioners

and also arrived at the conclusion that the petitioners have in fact

committed violations of Special Economic Zone Act, 2005. That since

the show cause notices were determinative in nature, issuance of the

same is just an empty formality and would not render any fruitful

purpose in conclusion of the further proceedings are concerned.

15. Referring to the various contents of the show cause notices, the

learned Senior Counsel contended that it would reflect nothing but

the fact that the respondent authorities have already concluded the

petitioners as defaulters and violators of the principles of the Special

Economic Zone Act, 2005 and the Customs Act.

16. According to the learned Senior Counsel for the petitioners, a

show cause notice only ought to have the allegations which are there

and without subject to a thorough enquiry in accordance with the

provisions of law, the respondent authorities could not have jumped

into the conclusion at the time of issuance of show cause notice

itself. For the said reason also, the impugned show causes notices

are vitiated as regards the fairness of procedure that it is

contemplated under the Act.

17. Referring to the landmark decision of the Hon'ble Supreme

Court in the case of Seimens Ltd. vs. State of Maharashtra and

Others 2, the learned Senior Counsel prayed for quashment of the

show cause notices on the ground of it being determinative in

nature. Learned Senior Counsel also relied upon the decision of the

Hon'ble Supreme Court in ORYX Fisheries Private Limited vs.

Union of India and Others 3 and contended that the Hon'ble

Supreme Court in the said judgment has in very categorical terms

reached to the conclusion that the show cause notice should be of a

nature where the noticee is confronted with definite conclusion of the

alleged guilt. According to the learned Senior Counsel, the Hon'ble

Supreme Court in the said judgment has in very categorical terms

held that the authority concerned cannot issue notices with a totally

closed mind at the show cause stage itself. Thus, the closed mind is

inconsistent with the concept of reasonable and fare opportunity

available to a noticee.

2 (2006) 12 Supreme Court Cases 33

3 (2010) 13 Supreme Court Cases 427

18. Learned Senior Counsel for the petitioner further relied upon a

decision of the High Court of Andhra Pradesh in the case of SBQ

Steels Ltd. vs. Commissioner of Customs, Central Excise and

Service Tax, Guntur Commissionerate, Guntur 4 wherein the High

Court of Andhra Pradesh had concluded that even the words "prima

facie" and also the word "appears" to be would not save a show cause

notice if the overall impression that one gets from plain reading of

the show cause notice.

19. Lastly, it was the contention of the learned Senior Counsel for

the petitioner that even if otherwise the impugned show cause

notices are not sustainable for the reason that the same is barred by

limitation and if the show cause notices have been issued under

Section 28(4) of the Act, the period of limitation prescribed under the

said provision is five (05) years from the relevant date, however, the

relevant date is not reflected in the show cause notices and the same

are completely silent on this ground. Further, the show cause notices

seem to have been issued invoking the extended period clause as

contemplated under Section 28(4). However, in the absence of

reference of relevant date so as to bring it within the extended period

4 2012 SCC OnLine AP 857

of limitation, the show cause notice is liable to be held to be barred

by limitation and in the entire show cause notices, there is no

averment of relevant date from which the period of limitation of five

(05) years would begin as is otherwise contemplated under Section

28(4) of the Act.

20. Per contra, the learned Senior Standing Counsel for CBIC

opposing the writ petitions, contended that the writ petitions at the

threshold should be rejected for more than one reasons. Firstly,

there being no strong case made out by the petitioners calling for an

interdiction of the show cause notices at the stage of issuance itself.

Secondly, plain reading of the contents of the show cause notices

itself would show that the nature of allegations leveled against the

petitioners is quite serious in nature. Thirdly, at this juncture, it

would not be proper, legal and justifiable for the writ Court to

exercise its extraordinary writ jurisdiction to throttle the proceedings

at the stage of issuance of the show cause notices itself.

21. According to the learned Senior Standing Counsel for CBIC,

nothing prevents the petitioners to enter appearance before the

respondent authorities and submit their detailed reply and based

upon their replies, the authorities should be left to take an

appropriate call considering the contents that the petitioner shall

raise to the allegations and contents of the show cause notices.

22. It was the contention of the learned Senior Standing Counsel

for CBIC that, if at all, on perusal of the explanation and reply that

the petitioners would give to the show cause notices, the respondent

authorities after due deliberation on the same would take a decision

to either drop the proceedings or to further proceed with the show

cause notices and to take to its logical conclusion. Thus, for the

aforesaid reasons also, according to the learned Senior Standing

Counsel for CBIC, it was not justifiable to exercise the writ

jurisdiction empowered upon this Court under Article 226 of the

Constitution of India.

23. It was further contended by the learned Senior Standing

Counsel for CBIC that the show cause notices on its reading would

show that they are self-explanatory in itself highlighting defaults and

violations on the part of the petitioners and the consequences

contemplated under the Act and it was in this context that their

explanation was called for. Therefore, it was neither illegal nor

arbitrary, rather is well within the four corners of law which does not

warrant interference at this stage.

24. Highlighting the conduct of the petitioners, it was contended by

the learned Senior Standing Counsel for CBIC that it is a case where

the DRI officials received information about importing of huge

quantities of duty free gold bullion under the Special Economic Zone

Scheme for manufacture and thereafter exports of the studded gold

bullion. However, the petitioners fraudulently diverted the duty free

imported gold into the domestic market and exported fake ornaments

made up with very little gold by mis-declaring the same as gold

studded jewelleries. According to the learned Senior Standing

Counsel for CBIC, it is a case where the DRI officials found huge

quantity of foreign gold bars which were not accounted in the stock

statement. Similarly, only a small quantity of 22 carat gold jewellery

was actually found in the stock statement mismatching the total

stock as is reflected in the stock statement. Similarly, a large

quantity of crudely made jewellery of semi-precious stones was found

unaccounted in the statement. Likewise, there were many other

violations and defaults at the hands of the petitioners detected in the

course of search and seizure proceedings.

25. It was in this factual backdrop that the show cause notices

under challenge were issued.

26. So far as the ground of the show cause notices being issued

without pre show-cause notice consultation, it was the contention of

the learned Senior Standing Counsel for CBIC that the said circular

dated 10.03.2017 would not be attracted in the present cases as

clause 5.0 of the said circular itself says that the said pre-show

cause notice consultation would not be required in cases of

preventive/offence related. According to the learned Senior standing

Counsel, the instant are cases which was initiated at the behest of

DRI, that too, upon conducting a search and seizure at the premises

and proceedings drawn are one which could safely be brought within

the purview of preventive/offence related case. It was in this context

that the show cause notices were issued and therefore, pre show-

cause notice consultation clause as per the circular dated

10.03.2017 would not be attracted in this case.

27. As regards the contention of the learned Senior Counsel for the

petitioner that the show cause notices are determinative in nature,

the learned Senior Standing Counsel for CBIC took the Court

through the contents of the show cause notices wherein the show

cause notices at more than one places have reiterated that all the

allegations have been referred to in the show cause notices, as it

appears to be, which by now itself clearly indicates that it is neither

conclusive in nature; nor is it determinative in nature. What is

otherwise meant by the contents of the show cause notices is that,

these being the factual findings derived in the course of search,

prima facie, there appears to be the following violations and defaults

for which the persons concerned are liable to be prosecuted and if

found true, can also be penalized for the offences under the Act.

28. As regards the notices being barred by limitation, it was the

contention of the learned Senior Standing Counsel for CBIC that

since the show cause notices are one which has been issued under

Section 28(4) of the Act; it is the extended period which shall be

attracted in the instant cases. Therefore, the objections raised by the

learned Senior Counsel for the petitioner of the show-cause notices

being time barred is not sustainable.

29. Having heard the contentions put forth on either side and on

perusal of records, as regards the first contention of the learned

Senior Counsel for the petitioner of the show cause notices not being

sustainable for non-compliance of pre show-cause notice

consultation, it would be relevant to take note of the contents of the

circular dated 10.03.2017. The plain reading of the entire circular

would clearly and unambiguously reflect that the said master

circular predominantly was for matters connected to the Central

Excise Act. Nonetheless, it also applies to all other departments

under the Central Board of Excise and Customs i.e. the Customs

Department which is the relevant department in the present two

cases even if we accept the circular is also applicable to the

respondent/Customs Department in the present cases.

30. It is necessary to refer to clause 5.0 of the said circular which

for ready reference is being reproduced herein under:

"5.0 Consultation with the noticee before issuance of Show Cause Notice: Board has made pre show cause notice consultation by the Principal Commissioner/ Commissioner prior issue of show cause notice in cases involving demands of duty above Rs. 50 lakhs (except for preventive/ offence related SCN's) mandatory vide instruction issued from F No.1080/09/DLA/MISC/15 dated 21st December 2015. Such consultation shall be done by the adjudicating authority with the assessee concerned. This is an important step towards trade facilitation and promoting voluntary compliance and to reduce the necessity of issuing show cause notice."

31. A plain reading of the aforesaid clause 5.0 of the circular dated

10.03.2017 clearly envisages that the conditions stipulated in the

said master circular would be an exemption to a proceeding drawn

by way of preventive or in matters related to an offence under the

Customs Act. The said clause clearly says that pre show cause notice

consultation is mandatory except for preventive/offence related show

cause notices. This, in other words also means that where the

proceeding is preventive and offence related, pre show cause notice

consultation would not be mandatorily required to be followed,

rather it would stand excluded.

32. So far as the judgment of the Delhi High Court relied upon by

the learned Senior Counsel for the petitioner in Amadeus India Pvt.

Ltd. (supra), upon perusal of the said judgment and the facts under

which the said judgment was decided shows that the show cause

notice under challenge in that case was one which was issued under

the provisions of the Finance Act, 1994. It is also reflected that the

show cause notice issued therein was not a preventive or offence

related show cause notice, and therefore, the said judgment could

not have been brought within the purview of the explanation that is

carved out under clause 5.0 of the said circular dated 10.03.2017.

33. The High Court of Jharkhand recently in the case of

Himanchal Construction Company Pvt. Ltd. vs. Union of India 5

dealing with whether pre-show cause notice consultation is

mandatory or not in paragraph No.11 held as under:

5 2021 (377) E.L.T. 545 (Jhar)

"11. The SCN also indicates that had the third party information not been received by the department and investigation initiated, the case could not have come to light. As such, it appeared that it is a case of wilful suppression of material facts from the department. Para- 21 of the SCN indicates that the Managing Director of the assessee and noticee No. 2 was also asked to explain as to why he be not held liable for penalty under Section 78A of the Finance Act, 1994 for his complicity in the aforesaid evasion of service tax since he had not given satisfactory answers to the queries made.

Proceedings for adjudication in such matters are initiated by the office of the Commissioner of GST and Central Service Tax as has been informed by the Learned Counsel for the respondents, though notices are issued to the assessees preventive branch upon third party information and investigation asking them to explain the discrepancy in the taxable value received by them for the relevant period upon comparison of other materials available with the department. In this case, the investigation was initiated upon inputs received from the Income Tax Department regarding discrepancy in the taxable value received by the petitioner as per TDS and Income Tax Return and that shown in ST-3 Return filed by them for the period 2012-13. Petitioner were asked to submit the complete documents for the last five years. The proceedings had ended up in confirmation of demand and imposition of penalty upon the petitioner along with interest. Upon consideration of the facts and circumstances discussed, it prima facie appears that the SCN fell into the category of preventive show cause notice falling under the exception under para-5.0 of the master circular dated 10th March, 2017. Had the proceedings not been initiated, the liability of paying service tax might have been evaded."

34. Another aspect which needs consideration is that the proviso to

clause (a) to sub-section 1 of Section 28 of the Act by way of an

amendment was inserted making pre notice consultation statutory in

nature, hence, becoming mandatory. The fact that it has been

inserted only for clause 28(1)(a) further gives a clear indication that

there is deliberate omission or exclusion of the said pre-notice

consultation so far as the other provisions under the Act are

concerned, particularly, other provisions under Section 28 of the Act.

35. So far as the challenge to the show cause notices on the

ground of it being determinative in nature, if we look into the

contents of the show cause notices where after the lapses, defaults

and violations committed by the petitioners so also the unauthorized

operation done by the petitioners after having received duty free gold

bullions for manufacturing and export of jewellery, a tentative

demand was assessed and the petitioners were called upon to

explain in respect of the omissions and commissions failing which

the demand would have to be finalized. So also, as would be evident

from paragraph No.29 of the show cause notice and paragraph

No.30, it would reflect that the Department has called upon the

explanation of the petitioners to the show cause notices as to why

the amount specified in the various subparagraphs of paragraph

No.30 should not be appropriated and charged from the petitioners

for alleged violation, misappropriation and illegalities committed

under the provisions of the Act by the petitioners.

36. Likewise, the reading of the paragraph No.31 would also show

that the petitioners and various persons who have been charged for

alleged misconduct, misappropriation and violations of the Act

calling upon their explanation as to why they should not be

penalized under Section 112(A) and 112(B) and Section 114AA of the

Act.

37. The very plain reading of the aforesaid paragraphs would

clearly indicate that the contents of the show cause notices by no

stretch of imagination can be termed to conclusive or determinative

in nature. On the contrary, if the petitioners are able to give a

plausible and satisfactory explanation with cogent proof in support

of their explanation and reasoning, there is no reason to believe that

the authorities concerned would not appreciate the same and take

appropriate steps and measures based upon the response so to be

given by the petitioners.

38. The Division Bench of Madras High Court recently in the case

of Additional Director, Directorate of Revenue Intelligence,

Chennai vs. M. Rathakrishnan 6 in paragraph Nos.13 to 15 has held

as under:

"13. After going through impugned notice and the order of the writ court, and after considering the rival submissions, the contention of the appellants that the first appellant is only an investigating authority whose role ends upon issuing a show cause notice on conclusion of investigation and he is not the adjudicating authority and therefore, the words used in the show notices such as "concluded", "revealed", etc., would not prejudice the case of the respondents, has to be countenanced and such words should be read in entirety. In the instant case, the investigating authority/first appellant is confined to investigating the case and submitting a report to the adjudicating authority and the first appellant cannot adjudicate the case as contemplated under the Act. As such, the investigating authority and the adjudicating authority are two different persons. Therefore, the decision relied on by the writ court in the case of Oryx Fisheries Private Limited v. Union of India reported in (2011) 266 ELT 422 (S.C.), wherein the investigating authority and the adjudicating authority was one and the same person, is not applicable to the facts of the present case. Therefore, the contention of the respondents herein that the investigating authority has predetermined and prejudged cannot be accepted. Hence, the grounds raised by the writ petitioners/respondents are liable to be rejected. Further, the respondents have challenged the show cause notice and whether the same can be examined in the Writ Petitions has to be considered by this Court in the light of the following decisions. Moreover, a writ against a show cause notice is not maintainable.

(i) In Union of India v. Kunisetty Satyanarayana, reported in (2006) 12 SCC 28 : AIR 2007 SC 906, the Hon'ble Apex Court, at paragraphs 13, 14 and 16, held as follows:

6 2017 SCC OnLine Mad 37834

"13. It is well settled by a series of decisions of this Court that ordinarily no writ lies against a charge sheet or show cause notice vide Executive Engineer, Bihar State Housing Board v. Ramdesh Kumar Singh, [JT (1995) 8 SC 33], Special Director v. Mohd. Ghulam Ghouse, [(2004) 3 SCC 440 : AIR 2004 SC 1467], Ulagappa v. Divisional Commissioner, Mysore, [(2001) 10 SCC 639], State of UP. v. Brahm Datt Sharma, [(1987) 2 SCC 179 : AIR 1987 SC 943] etc.

14. The reason why ordinarily a writ petition should not be entertained against a mere show cause notice or charge-sheet is that, at that stage, the writ petition may be held to be premature. A mere charge-sheet or show cause notice does not give rise to any cause of action, because it does not amount to an adverse order which affects the rights of any party unless the same has been issued by a person having no jurisdiction to do so.

It is quite possible that after considering the reply to the show cause notice or after holding an enquiry the authority concerned may drop the proceedings and/or hold that the charges are not established. It is well settled that a writ lies when some right of any party is infringed. A mere show cause notice or charge-sheet does not infringe the right of any one. It is only when a final order imposing some punishment or otherwise adversely affecting a party is passed, that the said party can be said to have any grievance.

16. No doubt, in some very rare and exceptional cases the High Court can quash a charge-sheet or show cause notice if it is found to be wholly without jurisdiction or for some other reason if it is wholly illegal. However, ordinarily the High Court should not interfere in such a matter."

(ii) In Ministry of Defence v. Prabhash Chandra Mirdha, reported in (2012) 11 SCC 565, the Hon'ble Apex Court has held as follows:--

"Ordinarily a writ application does not lie against a charge sheet or show cause notice

for the reason that it does not give rise to any cause of action. It does not amount to an adverse order which affects the right of any party unless the same has been issued by a person having no jurisdiction/competence to do so. A writ lies when some right of a party is infringed. In fact, charge sheet does not infringe the right of a party. It is only when a final order imposing the punishment or otherwise adversely affecting a party is passed, it may have a grievance and cause of action. Thus, a charge sheet or show cause notice in disciplinary proceedings should not ordinarily be quashed by the Court."

14. The aforesaid decisions were followed by a Division Bench of Madurai Bench of this High Court in writ appeal No. 342 of 2016, dated 8-3-2016 in M. Sankara Subramanian v. The Director General of Police, wherein one of us was a party to the decision (viz., S. MANIKUMAR, J.).

15. In the light of the above discussions and decisions, we set aside the order passed by the writ court and the impugned show cause notice issued by the first appellant is sustained with liberty to the respondents to submit their reply to the show cause notice dated 8-5-2015 within a period of six weeks from the date of receipt of a copy of this order and on receipt of the said reply, the first appellant is directed to consider the same on merits and in accordance with law. Accordingly, the writ appeals are allowed. No order as to costs. Connected miscellaneous petitions are closed."

39. A similar view was yet again taken by the Madras High Court in

the case of Bharath Marine Co. vs. Commissioner of Customs;

Assistant Commissioner of Customs 7 wherein in paragraph Nos.22

to 28, it has been held as under:

"22. In Abhishek Mudhra, the Court considered the validity of a show cause notice and identical contention was raised stating that the show cause notice was pre- judged and pre-decided the issue and it was pointed out that even though in the impugned show cause notice, the expression "admittedly" has been issued in more than one place, those words alone cannot be read to interpret the impugned show cause notice as being pre-conceived or pre-meditated and the allegations in the show cause notice have to be read in its entirety.

23. In KVS Cargo Vs. Commissioner of Customs (General) 2016 (343) E.L.T. 24 (Del.), a show cause notice was impugned before the High Court of Delhi on the ground that it was pre-meditated. The matter arose under CBLR and the show cause notice was issued under Regulation 20 of the CBLR. The Court pointed out that paragraph 26 in the said notice is only putting the petitioner to notice in terms of Regulation 20(1) of the CBLR and the notice further shows that complete opportunity is being granted to the petitioner to furnish evidence and an opportunity of personal hearing is also being granted. The Court distinguished the decisions in Oryx Fisheries Pvt. Ltd., and Siemens Ltd. Vs. State of Maharashtra 2007 (207) E.L.T. 168 (SC) as done in Abhishek Mudhra and refused to entertain the challenge to a show cause notice.

24. In Additional Director General and another Vs. M.Rathakrishnan and another in W.A.Nos.702 and 703 of 2016 dated 18.04.2017, the Hon'ble Division Bench of this Court after noting several decisions of the Hon'ble Supreme Court, rejected the challenge made by the respondents/writ petitioners to the show cause notice and held that, writ is not maintainable against the show cause notice.

7 2018 LawSuit(Mad) 1813

25. Bearing the above legal principle in mind, if the impugned show cause notice is perused, I find that the words used therein "from the forgoing, it appears", "hence it appears" and "in view of the above" are clear indications that, what has been mentioned in the show cause notice is a proposal, whereby, the respondent proposed to take action in accordance with Regulation 20(1) of the CBLR. Thus, the petitioner has adequate opportunity to put forth all their contentions by answering to the show cause notice and on the grounds raised by the petitioner, the impugned show cause notice cannot be interfered with. Consequently, the writ petition is liable to be dismissed.

26. The other writ petition filed by the petitioner, viz., W.P.No.17196 of 2015 is challenging the order rejecting the petitioner's application for renewal of his custom brokers licence. Admittedly, the petitioner applied for renewal of licence on 10.02.2015, much prior to the date of expiry of the licence viz., 27.05.2015. The impugned order dated 02.06.2015 was passed without affording an opportunity to the petitioner. That would be sufficient to hold that the impugned order is in violation of the principles of natural justice.

27. On a cursory perusal of the impugned order, one gets an impression that it is a detailed and speaking order. However, on a closure scrutiny, it is seen that all the respondent has done, is to extract the factual position referred to the relevant Regulation and in fact, extract them and in the last paragraph held that the antecedents of the Custom Broker is not found to be satisfactory with reference to the obligations mentioned in the CBLR.

28. Admittedly, as on the date, when the petitioner's application for renewal of the custom broker licence was rejected, there was no conclusive finding rendered against the petitioner holding that their conduct was not satisfactory with relevant to the obligation mentioned in the CBLR. I said so, because the petitioner's custom brokers licence was suspended by an order of interim suspension dated 25.06.2014 in terms of Regulation 19(1) of the CBLR. The allegations were identical to that of the allegations contained in the show cause notice dated 31.10.2014. The petitioner filed their written

submissions and requested for revocation of the order of interim suspension. The respondent by Order-in-Original dated 06.08.2014, revoked the order of interim suspension. The authority has recorded certain reasons of which one of the reasons being, the offence was detected on 02.09.2013 and the licence was suspended on 25.06.2014, which is almost nine months after detection of the offence and the show cause notice has already been issued under Regulation 20(1) and inquiry proceedings have been initiated by appointing an Inquiry Officer to inquire the professional mis-conduct of the petitioner and accordingly, the order of suspension was revoked. Therefore, whether the petitioner had fulfilled his obligations under the Regulation will be tested while show cause notice dated 31.10.2014 is being adjudicated. Thus, as on date, the allegations against the petitioner remain as allegations and as not culminated in a conclusive findings. In such circumstances, the respondent ought to have renewed the petitioner's licence subject to the outcome of the show cause notice dated 31.10.2014. Therefore, I am unable to agree with the conclusion recorded by the respondent while rejecting the application for renewal stating that the conduct of the custom Broker is not found to be satisfactory, with reference to the obligations mentioned in the CBLR. Thus, the petitioner's application for renewal is to be rejected on the ground that it would amount to pre- deciding the issue, which is subject matter of show cause notice dated 31.10.2014. Therefore, the order rejecting the petitioner's application for renewal of custom brokers licence has to be set aside."

40. Given the aforesaid legal principles laid down by the Madras

High Court on the basis of judicial precedents of recent past, when

we look into the judgments relief upon by the learned Senior Counsel

for the petitioner in the case of ORYX Fisheries Private

Limited(supra), SBQ Steels Ltd. (supra) and Seimens Ltd. (supra),

the plain reading of the contents of the factual backdrop in those

cases would reveal that the show cause notices issued therein were

determinative in nature and there was no scope left for the

authorities to take a different view even upon submission of the

explanation called upon by the persons. Hence, the principles laid

down by the Hon'ble Supreme Court in those judgments are

distinguishable in the facts of the present cases. Therefore, it cannot

be applied in the given factual backdrop.

41. As regards the next contention of the learned Senior for the

petitioner that the show cause notices being barred by limitation, it

would be relevant at this juncture to take note of the provisions of

sub-section 4 of Section 28 of the Act, which for ready reference is

again reproduced herein under:

"(4) Where any duty has not been [levied or not paid or has been short-levied or short-paid] or erroneously refunded, or interest payable has not been paid, part-

paid or erroneously refunded, by reason of,---

(a) collusion; or

(b) any wilful misstatement; or

By the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been [so levied or not paid] or which has been so short-levied or short-paid or two whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice."

42. Further, if we look into the contents of the show cause notices,

the authority concerned have specifically mentioned that the show

cause notices are being issued invoking the extended period of

limitation, as would be evident from one of the clauses of the show

cause notice, which for ready reference is reproduced herein under:

"It appears from the facts mentioned hereinabove that SKELLP and its representatives have resorted to willful misstatement and suppressed various facts in diverting/smuggling duty-free imported gold and other goods from SEZ unit and grossly mis-declaring their exports by exporting crude jewellery made up of semi- precious stones instead of studded gold jewellery for which permission was granted by SEZ authorities. Therefore, for such suppression of facts, willful misstatement and collusion, the duty leviable on above mentioned items, which have been diverted/smuggled out of SKELLP (SEZ), is liable to be recovered under the provisions of section 28(4) of Customs Act, 1962, by invoking the extended period read with Section 21, 22 and 25 of the SEZ Act, 2005."

43. Explanation 1 to Section 28 of the Act deals with the "relevant

date" in connection with the said Section. In the instant case, the

relevant date as per the documents enclosed along with the show

cause notices i.e. the worksheet, shows the date to be 24.11.2017 i.e.

the date of the bill of entry. Therefore, for all practical purposes, the

limitation would be five (05) years from the relevant date, and hence,

the show cause notices in the two writ petitions are within the

extended period of limitation as envisaged under Section 28(4) of the

Act. Moreover, even the aspect of limitation is one which could be

factual as also legal which can also be looked into by appropriate

authority basing upon the objections and reply that the petitioner

would be raising to the show cause notices. The said cannot be

determined in exercise of the writ jurisdiction of this Court even

before the petitioners responding to the show cause notices.

44. The Hon'ble Supreme Court in Uniworth Textiles Limited vs.

Commissioner of Central Excise, Raipur 8 has categorically laid

down that the extended period of limitation can be availed only

when: (i) if there is deliberate default by the assessee, and (ii) where

specific and explicit averments are made in the show cause notice

pointing out the conduct of the assessee as regards their deliberate

default. In the event if both these conditions are met in the show

cause notice, the case would be one which would squarely fall within

the extended period of limitation.

45. Thus, by now, it is settled position of law that the question of

limitation is one which is factual as well as legal and the same

cannot be decided in a straight jacket manner holding a notice or an

order to be barred by limitation unless factual matrix are thrashed

8 (2013) 9 Supreme Court Cases 753

out to ascertain the same. The Division Bench of this very High

Court in one of its recent order dated 15.12.2022 in Writ Petition

No.26086 of 2022 in paragraph No.3 has held as under:

"3. Though learned counsel for the petitioner submits that the impugned order is beyond limitation, on going through the provisions of Section 73 of the Finance Act, 1994, we are of the view that this is a case, which may require adjudication as to whether the impugned order is, as a matter of fact, beyond limitation."

46. Endorsing the same view which has also been reiterated by

practically all the High Courts and the Supreme Court time and

again, we are of the considered opinion that the aspect of limitation,

particularly, in the factual matrix of the present case is not one

which could be determined by the writ Court. Therefore, we are

unable to sustainthe said objection raised by the learned Senior

Counsel for the petitioners.

47. For the aforesaid reasons, we do not find any of the three

grounds raised by the petitioners to be strong enough for interdicting

the show cause notices dated 31.10.2022 and 29.11.2022 under

challenge in the present writ petitions.

48. Another reason why we are reluctant to entertain a writ

petition at the stage of show cause notice is the judicial precedents

in this regard which has been reiterated on many occasions by the

Hon'ble Supreme Court as also by the High Courts. Recently, the

Hon'ble Supreme Court in the case of Union of India & Ors. vs.

Coastal Container Transporters Association & Ors. 9 in paragraph

No.19 held as under:

"19. On the other hand, we find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices. Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of jurisdiction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice. High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to this Court. The judgment of this Court in the case of Union of India & Anr. v. Guwahati Carbon Ltd. (supra) relied on by the learned senior counsel for the appellants also supports their case. In the aforesaid judgment, arising out of Central Excise Act, 1944, this Court has held that excise law is a complete code in order to seek redress in excise matters and held that entertaining writ petition is not proper where alternative remedy under statute is available. When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices. Further, as held by the High Court, it cannot be said that even from the contents of show cause

Civil Appeal No.2276 of 2019 dated 26.02.2019 of the Hon'ble Supreme Court of India

notices there are no factual disputes. Further, the judgment of this Court in the case of Malladi Drugs & Pharma Ltd. v. Union of India 10, relied on by the learned senior counsel for the appellants also supports their case where this Court has upheld the judgment of the High Court which refused to interfere at show cause notice stage."

49. It has been repeatedly reiterated by the Hon'ble Supreme Court

that ordinarily a writ Court may not exercise its discretionary

jurisdiction in entertaining writ petitions questioning a show cause

notice unlessinter alia the show cause notice being without

jurisdiction or in excess of jurisdiction. A law which stands settled

from the case of State of Uttar Pradesh vs. Brahm Datt Sharma

and Another 11, again in the case of Special Director and Another

vs. Mohd. Ghulam Ghouse and Another 12 and later in the case of

Union of India and Another vs. Kunisetty Satyanarayana 13. In the

instant writ petitions also, it is not the case of the petitioners that

the authority who has issues the show cause notices lacks

jurisdiction, neither is the show cause notices under challenge on