Challenge of Rejected Show Cause Notices: Court Quashes Orders, Refunds Deposited Amount

The petitioners challenged the rejection of their request to drop show cause notices for confirmation of demand and refund of a deposited amount. The court found that the conditions imposed could not override relevant policy provisions. Consequently, all impugned orders were quashed, the demand was not enforced, and the deposited amount was ordered to be refunded by a specified date to avoid interest liability.

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Issues:
Challenge to rejection of request for dropping show cause notices for confirmation of demand and refund of deposited amount.

Analysis:
The petitioners challenged three orders rejecting their request to drop show cause notices for confirmation of demand, seeking a refund of Rs. 45,74,285. The petitioners, engaged in manufacturing dyes, had an Export Oriented Unit (EOU) in Bharuch. They received benefits including reimbursement of central sales tax (CST) on goods purchased and used for manufacturing. The department issued show cause notices for recovery of part of the reimbursement related to purchases from other EOUs. The petitioners wanted to exit the EOU but were not allowed until all dues were cleared. They deposited the amount under protest while contesting the notices. The authority rejected the petitioners' request based on audit findings and EOU regulations.

The Development Commissioner's order was questioned for two reasons. Firstly, dropping the show cause notices due to payment contradicted the ongoing contestation by the petitioners. Secondly, the authority's observation on the inadmissible portion of reimbursement was deemed questionable based on a previous court judgment. The respondents did not contest that the deposit was a condition for debonding, but the act of depositing under protest did not resolve the legal issues. The authority should have provided a legal opinion on the matters raised.

Although the matter could have been remanded for further consideration, the issues raised in the show cause notices were found to be covered by a previous court judgment. This judgment established that the conditions imposed by the Hand Book of Procedures could not override the Foreign Trade Policy provisions. As the facts in this case were similar, the impugned orders were quashed, and the demand raised in the show cause notices was not enforced. The deposited amount was ordered to be refunded by a specified date to avoid interest liability.

In conclusion, all three impugned orders were quashed, and the demand was not enforced against the petitioners. The deposited amount was to be refunded by a set date to prevent interest liability. The petition was disposed of accordingly.

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