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Writ against a show cause notice to be entertained only under exceptional circumstances: Madras High Court

A show cause notice issued by a competent authority may be challenged by a writ only if the authority is incompetent to issue such a notice as per the statutes governing it or if the issue of such notice is mala fide. This was held by the Hon’ble Justice S.M. Subramaniam in the case of M/s.Kavee Marketing Vs. The Assistant Commissioner and Anr. [WP No.12026 of 2012 And MP No.1 of 2012] on the 27th of July before the Hon’ble high court of Judicature at Madras.

The brief facts of the case are, respondent 2 (BSNL) is a telecom service. The petitioner is a dealer in SIM Card and Recharge Coupon of BSNL. The price of the SIM Card as well as the Recharge Coupon are fixed by the second respondent. The petitioner and persons similarly placed like that of the petitioner purchased the same at a discount and sell it to the end users. The selling price of SIM Card and Recharge Coupon are fixed and controlled by BSNL and sellers like the petitioner have no control over the same. The petitioner states that the business is limited to the extent of purchasing and selling the SIM Cards and Recharge Coupons in the hands of subscribers of BSNL. The said BSNL is liable to discharge the service tax as prescribed under the Service Tax Law and are discharging the service tax liability to the Department of Service Tax as required under the Law. Under these circumstances, the petitioner claims no liability. A show cause notice was issued to the petitioner since he did not pay the service tax. Aggrieved by such a notice, the petitioner has filed the present writ petition.

The counsel for the petitioner submits that, the issue was considered by this Court in number of writ petitions and decisions are rendered in favour of the persons, who all are similarly placed like that of the petitioner. While-so, there is no reason to issue further show cause notice to the writ petitioner. However, the court is of the opinion that that even in such cases, there are some judgments, which all are applicable with reference to the facts and circumstances of the case. It is left open to the writ petitioner to adjudicate the factual aspects before the authorities, enabling them to consider the same and pass order on merits and in accordance with law. The court also observed that, “The writ against a show cause notice may entertain only on exceptional circumstances where the authority without issuing such notice is incompetent under the provisions of the Statutes or the Rules. If there is an allegation of mala fide, then also writ can be entertained. In such circumstances, the authorities against whom such allegations on mala fide are raised is to be impleaded as a party respondent in his personal capacity in the writ proceedings.

In light of the above observation, the court held that the he petitioner has to submit the defence statement along with the judgments relied on as well as the documents and the evidences, if any, for the purpose of considering the same by the authorities. The petition was disposed off by, “the petitioner is at liberty to submit his defence statement/explanation along with the documents as well as the judgments passed by the High Court in the subject, within a period of four weeks from the date of receipt of a copy of this order. On receipt of any such explanations/documents etc., from the petitioner, the respondent is directed to consider the same on merits and in accordance with law, within a period of twelve weeks from the date of receipt of the defence statement from the petitioner.”

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