2024-VIL-1328-DEL-CU
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CUSTOMS High Court Cases

Customs/Service Tax/GST - Delay in Adjudication, Reasonable Time, Call Book Procedure - Batch of writ petitions challenged Show Cause Notices and pending adjudication proceedings under the Customs Act, Finance Act, and CGST Act, 2017 on the ground of inordinate delay in finalisation of the adjudication proceedings - Whether the delay in finalisation of the adjudication proceedings is sufficient ground to annul the proceedings - HELD - The respondents failed to establish the existence of any insurmountable constraint that impeded their power to conclude the pending adjudications in a reasonable time. The frequent placement of matters in the "call book", retrieval, and re-transfer without any plausible explanation demonstrated lack of application of mind and defiance of the procedure contemplated under Section 28 of the Customs Act - The respondents failed to comply with the directives of the Board itself, which had contemplated affected parties being placed on notice, a periodic review being undertaken, and the proceedings not being lingered unnecessarily without any plausible explanation - The respondents also failed to act in accordance with the legislative interventions, such as the insertion of Section 28(11) and Explanations 2 and 4, which were intended to empower them to pursue further proceedings and take the adjudicatory process to its logical conclusion - Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together. A statute enabling an authority to conclude proceedings within a stipulated period of time “where it is possible to do so” cannot be countenanced as a license to keep matters unresolved for years. The flexibility which the statute confers is not liable to be construed as sanctioning lethargy or indolence - This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act - the respondents' inaction and state of inertia led to the inevitable conclusion that they failed to discharge their statutory obligation within a reasonable time - the show cause notices as well as any final orders that may have been passed, are quashed – the Writ Petitions are allowed - State of ‘Flux’ - Contention of the respondents that it was the unsettled position in law which led to a delay in adjudication - as per the respondents it was the decisions in Sayed Ali, Mangali Impex and Canon I which had cast a cloud on their right to pursue adjudication proceedings and impeded their right to conclude proceedings with expedition – HELD – Firstly, the record would reflect that not all of the SCN proceedings issued pan-India had come to be penned by officers of the DRI - Even in cases where the proceedings may have been commenced by an officer of the DRI and if we were to assume that the respondents were compelled to stay their hands in light of the judgment in Sayed Ali, nothing prevented or restrained the respondents from initiating proceedings by placing pending matters in the hands of the Customs officers - Regard must also be had to the fundamental basis underlying the passing of the Amendment and Validation Act in 2011 - the intent of Section 28(11) was to save and validate all proceedings initiated prior to 06 July 2011. It was in furtherance of the aforesaid legislative objective that the provision incorporated a legal fiction by deployment of the phrase “shall be deemed to have and always had”. This deeming fiction stood extended not only with respect to the power to assess under Section 17 but also bid us to acknowledge that all persons appointed as officers of customs under Section 4(1) of the Customs Act would be deemed to have been proper officers for the purposes of reassessment and reopening under Section 28. It thus becomes manifest that despite the statute having duly empowered the respondents to continue proceedings and specifically validating all action initiated prior to 06 July 2011, the respondents failed to act in terms of that legislative command.
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