2025 (3) TMI 1131 - HC - GST

Delhi HC quashes customs confiscation orders after 11-year delay in adjudicating Show Cause Notice

Paras Products, Sai Enterprises, Jaina Polymers Versus Commissioner Central GST, Delhi North

Paras Products, Sai Enterprises, Jaina Polymers Versus Commissioner Central GST, Delhi North - 2025:DHC:1770 - DB ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the inordinate delay of over 11 years in the adjudication of the Show Cause Notice (SCN) dated 25.10.2011 constitutes a sufficient ground to quash the Orders-In-Original (OsIO) issued on 30.12.2022 and 02.03.2023.Whether the reasons provided by the Respondent authorities for the delay in adjudication, including the introduction of the Central Goods and Services Tax Act (CGST Act), COVID-19, and alleged non-cooperation by the Petitioners, justify the delay.Whether the Respondent authorities are obligated to release the Bank Guarantee furnished by the Petitioners at the time of the release of the seized goods.ISSUE-WISE DETAILED ANALYSISInordinate Delay in AdjudicationRelevant Legal Framework and Precedents: Section 11A of the Central Excise Act, 1944, mandates that authorities determine the amount of duty within six months or two years from the date of notice, where possible. The case law cited, including Vos Technologies India, emphasizes that inordinate delays without reasonable justification can lead to annulment of proceedings.Court's Interpretation and Reasoning: The Court observed that the phrase 'where it is possible to do so' in Section 11A allows for flexibility but does not permit indefinite delays. The Court emphasized that authorities must conclude adjudication with due expedition and cannot use statutory flexibility as a license for lethargy.Key Evidence and Findings: The SCN was issued on 25.10.2011 and adjudicated only on 30.12.2022 and 02.03.2023, amounting to a delay of over 11 years. The Respondents failed to provide a satisfactory explanation for the delay, particularly for the period between 2011-2017.Application of Law to Facts: The Court applied the principles established in Vos Technologies India, concluding that the delay was unjustified and the Respondents failed to act within a reasonable time.Treatment of Competing Arguments: The Respondents argued that the delay was due to restructuring under the CGST Act, COVID-19, and non-cooperation by the Petitioners. However, the Court found these reasons insufficient to justify the delay, particularly before 2017.Conclusions: The Court concluded that the inordinate delay in adjudication without sufficient justification warranted the quashing of the impugned OsIO.Release of Bank GuaranteeRelevant Legal Framework and Precedents: The release of the Bank Guarantee is contingent upon the quashing of the OsIO, as the guarantee was furnished for the release of seized goods under the impugned orders.Court's Interpretation and Reasoning: Given the quashing of the OsIO, the Court directed the Respondents to release the Bank Guarantee.Conclusions: The Court ordered the release of the Bank Guarantee within six weeks.SIGNIFICANT HOLDINGSVerbatim Quotes of Crucial Legal Reasoning: 'Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together. A statute enabling an authority to conclude proceedings within a stipulated period of time 'where it is possible to do so' cannot be countenanced as a license to keep matters unresolved for years.'Core Principles Established: The Court reaffirmed that statutory authorities must conclude adjudication within a reasonable time and cannot rely on statutory flexibility to justify indefinite delays.Final Determinations on Each Issue: The Court quashed the impugned OsIO due to the unjustified delay in adjudication and ordered the release of the Bank Guarantee furnished by the Petitioners.