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of <h1>Writ Petition Challenging Show Cause Notice Not Maintainable Due to Estoppel and Jurisdictional Participation</h1> The HC held that the writ petition challenging the show cause notice dated 30-6-2014 is not maintainable as the petitioners participated in the ... Maintainability of writ petition as framed and filed against the show cause notice dated 30-6-2014 - Jurisdiction to issue SCN - invocation of extended period of limitation. Whether the writ petition as framed and filed against the show cause notice dated 30-6-2014 is maintainable in law? - HELD THAT:- In Calcutta Discount Co. Ltd. [1960 (11) TMI 8 - SUPREME COURT (LB)], Their Lordships of the Supreme Court have clearly and unmistakably held that the High Court in appropriate cases has power and jurisdiction to issue an order prohibiting the Income Tax Officer from proceeding to reassess the income when the conditions precedent do not exist. In the matter of M/s. East India Commercial Co. Ltd. Calcutta and another v. Collector of Customs, Calcutta [1962 (5) TMI 23 - SUPREME COURT], the question for consideration before the Supreme Court was, whether the petition filed under Article 226 of the Constitution for the issue of a writ in the nature of prohibition is maintainable and while examining the issue to initiate proceeding under Section 167(8) of the Sea Customs Act read with Section 3(2) of the Act, Their Lordships held that 'If on a reading of the said notice, it is manifest that on the assumption that the facts alleged or allegations made therein were true, none of the conditions laid down in the specified sections was contravened, the respondent would have no jurisdiction to initiate proceedings pursuant to that notice. To state it differently, if on a true construction of the provisions of the said two sections the respondent has no jurisdiction to initiate proceedings or make an inquiry under the said sections in respect of certain acts alleged to have been done by the appellants, the respondent can certainly be prohibited from proceeding with the same.' Thus, on the conspectus of the above-stated decisions irresistible inference that follows is that writ court may not exercise its discretionary jurisdiction in entertaining the writ petition questioning the show cause notice unless it is apparently without jurisdiction and without authority of law. Whether the show cause notice, in the instant case, is without jurisdiction and without authority of law? - whether the Commissioner, Central Excise was competent to apply extended period of limitation under Section 11(5) of the Act of 1944? - HELD THAT:- It is well settled principle of law that a person, who submits to the jurisdiction of an inferior tribunal / authority and takes part in the proceeding without any kind of protest or demur on the ground that tribunal / authority has no jurisdiction, cannot after having participated in those proceedings, turn around and question the jurisdiction of that tribunal / authority in petition under Article 226 of the Constitution of India. The application of extended period of limitation under Section 11(5) of the Act of 1944 has been questioned by the petitioners holding that Section 11(5) of the Act would not apply, whereas it is the stand of the respondent that it has rightly been applied and invoked. The adjudication in that behalf necessarily involves disputed questions of fact which require investigation, which cannot be gone into competently in extraordinary jurisdiction under Article 226 of the Constitution of India - The petitioners having received the show cause notice as early as on 8-7-2014, the said ground of prejudging the issue, if any, was available on that date. The petitioners sat on fence and did not question the show cause notice on first available opportunity, rather submitted to the jurisdiction of that authority by asking for documents and cross-examining the Department witnesses and thereby allowed the subsequent proceeding to move on further; they are now estopped from raising the ground of prejudging the issue after lapse of four years from the date of issuance of show cause notice and that would be putting a premium on dilatory tactics of the petitioners. It can safely be held that this ground is nothing but an act of afterthought by the petitioners to wriggle-out with a valid show cause notice. This Court is not inclined to interfere with the show cause notice, as it cannot be held that the show cause notice is without jurisdiction and without authority of law, at this stage. However, the petitioners' case with regard to non-availability of the extended period of limitation under Section 11A(4) of the Act of 1944 and applicability of Section 11A(7) of the Act of 1944 would be considered by the respondent authority strictly in accordance with law, without there being any prejudice with anything mentioned in the show cause notice or this order. The petitioners are allowed four weeks' time from today to file reply and thereafter, the respondent would consider and proceed in accordance with law. Petition disposed off. ISSUES: Whether a writ petition challenging a show cause notice issued under the Central Excise Act, 1944 is maintainable before the High Court at the stage of issuance of such notice.Whether the extended period of limitation under the proviso to Section 11A / sub-section (4) of Section 11A of the Central Excise Act, 1944 can be invoked without establishing fraud, collusion, willful misstatement, suppression of facts, or intent to evade duty.Whether the show cause notice issued beyond one year but within five years under Section 11A(4) is valid when the petitioner has deposited part of the disputed duty amount and contends applicability of Sections 11A(5), 11A(6), and 11A(7) limiting the period to one year.Whether participation by the petitioner in the proceedings (including cross-examination of witnesses and seeking documents) amounts to submission to jurisdiction and precludes challenge to the validity or jurisdiction of the show cause notice.Whether the allegation of prejudgment of the issue by the revenue authority justifies quashing the show cause notice. RULINGS / HOLDINGS: The writ petition challenging the show cause notice is maintainable only if the notice is 'apparently without jurisdiction and without authority of law,' as the High Court has power to issue prerogative writs to prevent 'lengthy proceedings and unnecessary harassment' when conditions precedent for issuance of the notice do not exist.The extended period of limitation under Section 11A(4) of the Act applies exclusively in cases involving 'fraud, collusion, or any willful misstatement or suppression of facts or contravention of any of the provisions of the Act or the rules made thereunder with intent to evade payment of duty,' and absent such ingredients, invocation of the extended period is without authority.Where a petitioner has deposited part of the duty amount and claims applicability of Sections 11A(5), 11A(6), and 11A(7), the limitation period for issuance of the show cause notice is one year; however, adjudication of this issue involves disputed questions of fact not amenable to determination at the writ stage.Participation in proceedings by requesting and availing cross-examination of witnesses and seeking documents constitutes submission to the jurisdiction of the authority and estops the petitioner from subsequently challenging the jurisdiction or validity of the show cause notice.The allegation that the revenue authority has 'prejudged the issue' is untenable where the petitioner has delayed challenging the notice and actively participated in the inquiry, and such a ground cannot be raised as an afterthought to evade a valid notice. RATIONALE: The Court applied the principle established in Calcutta Discount Co. Ltd. v. Income-Tax Officer and subsequent Supreme Court precedents, holding that High Courts may exercise jurisdiction under Article 226 of the Constitution to quash notices issued without jurisdiction to prevent unnecessary harassment, but will not ordinarily interfere with the merits or reappraisal of evidence at the notice stage.The Court relied on statutory interpretation of Section 11A of the Central Excise Act, 1944, emphasizing that the extended limitation period under sub-section (4) is conditional upon the presence of fraud or intent to evade duty, consistent with the legislative scheme and judicial precedents including Godrej Food Ltd. v. Union of India.Participation in proceedings, including cross-examination of witnesses and document exchange, was held to constitute submission to jurisdiction, invoking the doctrine that a party cannot accept the benefits of a proceeding and simultaneously challenge its jurisdiction, as supported by precedents such as Pannalal Binjraj v. Union of India and Maharashtra State Road Transport Corporation v. Balwant Regular Motor Service.The Court recognized that disputed factual questions concerning limitation and intent to evade duty are to be adjudicated by the competent authority through due process, and not in writ proceedings at the notice stage.The Court rejected the claim of prejudgment as an afterthought, noting the petitioners' delay and active engagement in the inquiry, thereby precluding relief on that ground.
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