Court quashes 25 Notices challenging Govt levies on Net Dealer Price as arbitrary and violating natural justice.

The court quashed and set aside the 25 Show Cause Notices challenged by a Public Limited Company regarding the deduction of Government levies from the Net Dealer Price. The court found that the notices, resurrected after a long delay, were arbitrary and violated natural justice principles. Relying on previous decisions in favor of the petitioner by the Customs, Excise & Service Tax Appellate Tribunal, the court held that the impugned notices could not proceed further. The rule was made absolute, and each party was left to bear their own costs.

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Issues:
Challenge to show cause notices under Article 226 of the Constitution of India.

Analysis:
The petitioner, a Public Limited Company engaged in manufacturing pneumatic tyres, filed a petition under Article 226 challenging 25 Show Cause Notices issued between 28.08.2002 and 26.05.2017 regarding the deduction of Government levies from the Net Dealer Price. The petitioner contended that the averaging of Government levies for deduction was permissible based on costing done by its Chartered Accountants. The issue had been previously resolved in favor of the petitioner by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in Kerala. The petitioner argued that the impugned notices were in breach of the statutory mandate of Section 11A(11) of the Customs Act and should be quashed.

The petitioner's counsel argued that the impugned show cause notices were not maintainable as they were taken out of the call book after the petition was filed. The respondents had not followed up on the notices for an unduly long period until the petition was filed, which was considered arbitrary and a violation of Section 11A of the Customs Act. Citing previous judgments, the counsel emphasized that inordinate delays in adjudication could result in a denial of natural justice. The court found that the issue had been previously resolved in favor of the petitioner by CESTAT and that resurrecting the notices after a long delay was arbitrary and violated natural justice principles.

The court held that the impugned show cause notices could not be permitted to proceed further based on the previous decisions of the court. Consequently, the court quashed and set aside the notices at Annexure B/1 to B/25, making the rule absolute and leaving the parties to bear their own costs.

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