DRI show cause notices stayed pending adjudication following FARMICO COMMODITIES precedent interim relief granted

The Bombay HC directed adjudication of show cause notices issued by the Directorate of Revenue Intelligence, following precedent from FARMICO COMMODITIES case. The Court admitted the petition while keeping petitioners' contentions open for consideration before the adjudicating authority. Interim relief was granted by staying SCNs dated 20 June 2007 and 24 May 2010. However, respondents retain liberty to seek vacation of interim stay, particularly after SC's decision on review proceedings in Canon India case and final adjudication on Finance Act 2022 challenge.

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Issues involved: Delayed adjudication of show cause notices, Jurisdiction of Directorate of Revenue Intelligence

For the first issue of delayed adjudication of show cause notices, the petition filed under Article 226 of the Constitution sought to quash and set aside the impugned show cause notices dated 20 June 2007 and 24 May 2010 primarily on the grounds that delayed adjudication is not permissible as per settled legal principles. Reference was made to the case of 'Coventry Estates Pvt. Ltd Vs. The Joint Commissioner CGST and Central Excise and Anr.' (2023 SCC OnLine Bombay 2014) to support this contention. The petitioner emphasized that there cannot be a delayed adjudication of the show cause notice in accordance with established legal principles.

Regarding the jurisdiction of the Directorate of Revenue Intelligence, the second contention was that the show cause notices issued by them are not within their jurisdiction based on the decision of the Supreme Court in the case of 'Canon India Pvt. Ltd Vs. Commissioner of Customs AIR 2021 SC 1699'. It was argued that the adjudicating authority has no jurisdiction to adjudicate the show cause notices issued by the Directorate of Revenue Intelligence. The petitioner referred to a previous order passed by the Court in a similar case involving a show cause notice issued by the Directorate of Revenue Intelligence and highlighted the need for the adjudicating authority to consider the legal position as laid down by the Supreme Court in such matters.

In a separate judgment, the Court noted that the petitioner raised an additional ground that there cannot be delayed adjudication of a show cause notice issued almost 16 years back, followed by another show cause notice which was now about 11 years old. Considering the circumstances and the legal precedent set by the Supreme Court in the case of 'Canon India Pvt. Ltd.', the Court concluded that it cannot deviate from the approach taken in a previous case and admitted the present petition for further consideration.

In conclusion, the Court ordered that the impugned show cause notices dated 20 June 2007 and 24 May 2010 shall remain stayed, allowing the respondents to move the Court for vacating the interim stay based on certain conditions. The Court emphasized the need for expeditious adjudication of the show cause notices within a period of three months, considering the significant delay in the adjudication process.

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