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One Should Not Suffer Because Of Lack Of Information About The Show Cause Notice: In Bombay High Court

One should not suffer due to a lack of knowledge regarding the Show Cause Notice. The Show Cause Notice must be notified to the parties, and the parties should not be kept in ignorance about the same. The High Court Of Bombay upheld this through a Learned Bench R. D. DHANUKA & S. M. MODAK, JJ in THE BOMBAY DYEING AND MANUFACTURING COMPANY LIMITED V. DEPUTY COMMISSIONER OF CGST (Writ Petition No.2874 Of 2021).

Facts of the case – The Petitioner filed a response to the Show Cause Notification within four weeks of receiving the notice. The Respondent has not spoken with the Petitioner for a hearing or judgment on the said Show Cause Notice until now. As a result, the Petitioner has filed the Petition.

Mr. Patkar, learned Counsel for the Petitioner, drew the Judge’s attention to the Show Cause Notice as well as the Respondents’ averments, specifically paragraph-5 of the Affidavit-in-Reply dated August 27, 2021. He claims that the Petitioner was never told that the Show Cause Notice was ever stored in the callbook. He argues that after more than 16 years, the Respondent cannot continue with the Show Cause Notice. In support of this argument, experienced Counsel cited the unreported decision in Parle International Ltd. v. Union of India in Writ Petition No.12904 of 2019 dated November 26, 2020.

Mr. Kantharia, learned Counsel for the Revenue, claims that the Respondent’s position is already stated in the affidavit-in-reply submitted by the Respondent. The Petitioner is not entitled to any relief based on those grounds.

In Parle International Ltd (supra), this Court dealt with a similar circumstance in which the Show Cause Notice was decided 13 years after it was issued. After considering the judgments in the cases of Saghavi Reconditioners Private Limited V. Union of India and Raymond Limited V. Union of India, in which there was a delay of 14 to 17 years in adjudicating the proceedings, this Court held that if the Revenue keeps the show-cause notice in the callbook, it must notify the parties. It serves two purposes – (1) It informs the party that the show-cause notice is still active and is only being held in abeyance, and it reports to the party that the show-cause notice is still active and is only being held in abeyance. This allows the party to safeguard the evidence until the show-cause notice is taken up for adjudication. (2) If the statements are kept in the call book, the parties have the opportunity to point out to the Revenue that the reasons for keeping them in the call book are incorrect and that the notices should be adjudicated as soon as possible. As a result, educating the parties about the need to maintain the show-cause notice in the callbook will help to advance the cause of tax administration integrity.

In the abovementioned decision, the Court stated that when a show-cause notice is served on a party, it is expected that the statement would be followed through to its logical conclusion within a reasonable time frame, resulting in a finality. The show-cause notice has been pending for over 16 years in this instance. We’ve looked at the Respondent’s affidavit-in-reply. The Respondent does not indicate in the affidavit-in-reply that the Petitioner was told of the show-cause notice being stored in the callbook, as claimed in the Respondent’s affidavit-in-reply. The Petitioner cannot be compelled to suffer because of the Respondent’s egregious tardiness. The law established by this Court’s Division Bench in Parle International Limited (supra) applies to the facts of this case. The Court has no intention of taking a different stance on the subject. Hence, the Show-cause notice is quashed.

Click here to view the Judgement

Reviewed by Rangasree.

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