Jurisdiction of DRI Challenged: HC Stays 2012 Show Cause Notice Citing SC Decision; Respondents to File Reply in Two Weeks.

The HC admitted the petition challenging the jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue a show cause notice, referencing the SC decision in Canon India Pvt. Ltd. The HC acknowledged the 11-year delay in adjudicating the notice and ruled that the notice dated 13 July 2012 would remain stayed pending the final hearing. Respondents were ordered to waive service, file a reply affidavit within two weeks, and were granted the liberty to seek vacation of the interim relief based on the SC's review proceedings and the final adjudication on the Finance Act, 2022.

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Issues involved: Jurisdiction of Directorate of Revenue Intelligence to issue a show cause notice and delay in adjudication of the notice.

The petitioner argued that the issue in the present proceedings is covered by a Supreme Court decision in Canon India Pvt. Ltd. Vs. Commissioner of Customs, where it was held that the Directorate of Revenue Intelligence (DRI) does not have jurisdiction to issue a show cause notice. The petitioner referred to a previous order of the Court in Idea Cellular Ltd. Vs. The Union of India & Anr., where similar petitions were admitted and interim orders were passed pending review proceedings filed before the Supreme Court.

The High Court noted that the show cause notice dated 13 July, 2012, has remained unadjudicated for over 11 years. Citing a previous decision in Coventry Estates Pvt. Ltd. Vs. The Joint Commissioner CGST and Central Excise, the Court expressed reluctance to follow the course of action taken in another case, Laxmi Organic Industries Ltd. Vs. Union of India & Ors.

The Court observed that the show cause notice being issued by the Directorate of Revenue raises a jurisdictional issue, as highlighted in the Supreme Court decision in Canon India Pvt. Ltd. Therefore, the Court opined that the present petition should be admitted and heard along with a batch of other petitions involving similar issues.

Order: The Court ruled that the respondents waive service and the impugned show cause notice dated 13 July, 2012, shall remain stayed pending the hearing and final disposal of the present petition. The respondents were given two weeks to file a reply affidavit. Additionally, the respondents were granted liberty to seek vacation of the interim relief granted by the Court, based on the decision of the Supreme Court on the review proceedings and final adjudication on the challenge to the Finance Act, 2022.

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