Show cause notices on compounding fee treated as proposals, with fresh decision directed after reply and hearing.

Impugned proceedings proposing compounding under the statutory provision were treated as show cause notices rather than final demands. The Court noted that the petitioner had earlier sought release of the goods on payment of tax while reserving the right to contest the compounding fee before the competent authority, and for that reason could not later challenge the notices as being without jurisdiction or pre-decided. The authority was directed to receive the petitioner's reply, grant a personal hearing, and decide the matter afresh on merits and in accordance with law.

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Issues: Whether the impugned notices could be treated as final demands or were only show cause notices, and whether the petitioner was entitled to have them quashed on the ground of lack of jurisdiction or pre-decision.

Analysis: The petitioner had earlier sought release of the goods on payment of tax, while reserving the right to contest the compounding fee on merits before the competent authority. In that background, the Court held that the petitioner could not later contend in a second writ petition that the notices were without jurisdiction or had already pre-decided the issue. The respondents clarified that the impugned proceedings were only proposals giving an opportunity to compound the offence under the statutory provision and that no final order had yet been passed. The Court therefore treated the notices as show cause notices and directed the petitioner to submit a reply, after which the authority was required to grant personal hearing and decide the matter afresh on merits and in accordance with law.

Conclusion: The challenge to the notices as final or jurisdictionally invalid was rejected, but the petitioner was given an opportunity to reply and have the matter adjudicated on merits.

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