2021 (9) TMI 824 - HC - Customs

High Court Upholds Fairness in Notice Quashing Decision, Emphasizing Natural Justice Principles

M/s. Aggarwal Laminates Pvt. Ltd. Versus Deputy Commissioner Of Customs (Import), Inland Container Depot, Tughlakabad, New Delhi

The High Court quashed the show cause notice due to inadequate time for the petitioner to respond, emphasizing natural justice principles. The rushed ... Principles of natural justice - seeking to grant personal hearing to the petitioner in pre- show cause consultation - seeking restraint on respondent from proceeding with the impugned SCN, during the pendency of the present writ petition - HELD THAT:- A perusal of the Pre-Notice Consultation letter dated 01.06.2021 reveals that vide the said notice, Respondent had called upon the Petitioner to appear before the concerned authority on 02.06.2021 at 15:00 hours for a personal hearing. Petitioner has made a categorical averment in the writ petition that the notice was served on him through a registered post on 10.06.2021. It is understandable that if the notice was served on the Petitioner on 10.06.2021, there could be no representation on behalf of the Petitioner on 02.06.2021. In fact, the action of the Respondent in issuing a notice on 01.06.2021 for a hearing on 02.06.2021 is completely arbitrary as it would have been well-known to anyone with a prudent mind that a notice sent by registered post on 01.06.2021 may not reach the addressee for appearance on 02.06.2021 at 15:00 hours. Principles of natural justice require and mandate that reasonable and sufficient opportunity of being heard ought to have been given by the Respondent to the Petitioner and, therefore, while issuing notice, it ought to have been kept in mind that sufficient time was given before fixing the personal hearing so that the notice could be served on the Petitioner for appearance of its representative for personal hearing to put-forth the case on behalf of the Petitioner. One wonders if a similar treatment were being meted out to the Respondent, i.e. notice is issued by the Court returnable on the next day, whether the officials of Department would be in a position to appear and defend the case, assuming that the notice is served. On the last date of hearing, learned Additional Solicitor General had sought time to take instructions in the matter considering the above facts. Mr. Chetan Sharma, learned Additional Solicitor General, on instructions, submits that the Respondent shall grant personal hearing to the Petitioner pursuant to the pre-notice consultation letter dated 01.06.2021, to enable the Petitioner to defend the allegations levelled against him - It is directed that the Petitioner shall appear before the Respondent for a Pre-Notice Consultation personal hearing on 16.09.2021 at 11 a.m.. Petition allowed. Issues:1. Quashing of show cause notice dated 02.06.20212. Granting personal hearing to the petitioner in pre-show cause consultation dated 02.06.20213. Restraining the respondent from proceeding with the impugned show cause notice dated 02.06.20214. Stay of the operation of the impugned show cause noticeAnalysis:Issue 1: Quashing of show cause notice dated 02.06.2021The petitioner imported goods classified under Customs Tariff Item 74102100 and paid duties. The respondent alleged misclassification, leading to a short payment of customs duty. The petitioner challenged the show cause notice, claiming inadequate time to respond due to delayed receipt of the pre-notice consultation letter. The High Court found the notice issuance arbitrary, lacking sufficient time for the petitioner to prepare a response. The court emphasized the importance of natural justice, quashing the show cause notice.Issue 2: Granting personal hearing in pre-show cause consultationThe respondent had issued a pre-notice consultation letter requiring the petitioner's appearance for a personal hearing on 02.06.2021. However, the petitioner received the notice late, impeding their ability to participate. The court criticized the rushed scheduling of the hearing, highlighting the need for reasonable time for parties to prepare. The respondent agreed to grant a personal hearing to the petitioner, leading to the court setting aside the show cause notice and reviving the pre-notice consultation letter for a fair hearing on 16.09.2021.Issue 3: Restraining the respondent from proceeding with the impugned show cause noticeThe petitioner sought to restrain the respondent from proceeding with the show cause notice during the pendency of the writ petition. The court, after finding flaws in the notice issuance process, quashed the notice and directed a fresh personal hearing. By doing so, the court effectively restrained the respondent from acting on the impugned notice until a fair hearing was conducted.Issue 4: Stay of the operation of the impugned show cause noticeIn line with the quashing of the show cause notice and the revival of the pre-notice consultation letter for a personal hearing, the court implicitly granted a stay on the operation of the impugned notice. The petitioner's plea for a stay during the writ petition's pendency was addressed through the court's decision to set aside the original notice and provide an opportunity for a proper hearing before any further action is taken.In conclusion, the High Court's judgment focused on upholding principles of natural justice by ensuring adequate time for parties to prepare and participate in proceedings. The decision to quash the show cause notice, grant a fresh personal hearing, and revive the pre-notice consultation letter demonstrates the court's commitment to fairness and due process in legal proceedings.