The Delhi High Court in the case of M/S Vos Technologies India Pvt. Ltd. Versus The Principal Additional Director General & Anr. has slammed the department on failure to undertake a periodic review of pending proceedings or make even a feeble attempt to accord closure to proceedings that had been pending for decades.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that while quashing the show cause notices issued by the department observed that the department is bound and obliged in law to endeavour to conclude adjudication with due expedition. Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together.
The bench stated that 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 batch of writ petitions were filed seeking the quashing of the Show Cause Notices and pending adjudication proceedings arising out of the Customs Act, 1962, the Finance Act, 1994 and the Central Goods and Services Tax, 2017.
The principal ground of attack is the inordinate delay in the finalisation of the adjudication proceedings with the writ petitioners contending that the failure on the part of the respondents to conclude adjudication within a reasonable period of time and inordinately delaying the same for decades together would constitute a sufficient ground to annul those proceedings.
The petitioner contended that the principles of a ‘reasonable period’ which courts have propounded in connection with an adjudicatory function conferred upon an authority would apply and the impugned SCNs’ and orders are liable to be quashed on this short score alone.
The department contended that that delay cannot and by itself constitute a sufficient ground to interdict a pending adjudication. The principle of adjudication being concluded within a reasonable period is a question which must necessarily be answered in the backdrop of individual facts which are obtained. The submission essentially was that mere delay cannot constitute a basis which can be universally applied de hors the facts of a particular case.
The court stated that ultimately it is incumbent upon the authority to establish that it was genuinely hindered and impeded in resolving the dispute with reasonable speed and dispatch. A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition. This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act.
The court held that the issuance of innumerable notices would also not absolve the respondents of their statutory obligation to proceed with promptitude bearing in mind the overarching obligation of ensuring that disputes are resolved in a timely manner and not permitted to fester. Insofar as the assertion of the assessees’ seeking repeated adjournments or failing to cooperate in the proceedings, it may only be noted that nothing prevented the respondents from proceeding ex parte or refusing to reject such requests if considered lacking in bona fides.
The court held that the department failed to act in accord with the legislative interventions which were intended to empower them to pursue proceedings and take the adjudicatory process to its logical conclusion.
Read More: Exporter Files Petition Challenging Rule 96(10) of CGST Rules: Allahabad High Court Stays Recovery
Case Details
Case Title: M/S Vos Technologies India Pvt. Ltd. Versus The Principal Additional Director General & Anr.
Case No.: W.P.(C) 4831/2021
Date: 10 December 2024
Counsel For Petitioner: Prem Ranjan Kumar
Counsel For Respondent: Harpreet Singh
