A Show Cause Notice to be Replied to After 25 Years
ON 4th November 1988, the Superintendent of Central Excise, Range VI, Thane Division issued a Show Cause Notice to Voltas Ltd to show cause as to why the 7.5% abatement claim in the price lists filed by the assessee should not be disallowed and why Central Excise Duty of Rs. 7,94,648.42 should not be demanded from them.
Instead of replying to the Show Cause Notice, the assessee approached the Bombay High Court, which granted interim relief restraining the Department from taking any action in pursuance of the Show Cause Notice.
The assessee's argument was that the issue had reached finality by a decision of the Tribunal in their favour for the previous period and the issue has, therefore, become final and conclusive between them and the Department. They argued that by the Show Cause Notice, an issue is sought to be agitated which is already decided conclusively.
The High Court observed,
"The impugned show cause notice proceeds on the footing that subsequently there is a change in the pattern of sales. If that be so, the principles of res judicata will have no application. Moreover, the finding of CEGAT is on the basis of consideration of the invoices for the relevant period which were produced before it. The learned Senior Counsel appearing for the Petitioners submitted that neither the Department has proved that there was a change in the pattern nor the Petitioners have been called upon to produce the material before this Court. However, all this is a matter of adjudication after reply to the show cause notice is given. The show cause notice specifically makes factual allegations regarding change of pattern of sales. The principles of res judicata cannot be applicable as a change in pattern of sales is alleged. Therefore, we are of the considered view that by invoking principles of res judicata, the show cause notice cannot be quashed, and therefore, the Petitioners will have to file a reply to the show cause notice and the issue whether there is a change of pattern of sales will have to be decided by the concerned Authority. All issues in that behalf are kept open."
This was on 17.10.2012 - 24 years after the Show Cause Notice was issued!
The assessee took the matter to the Supreme Court. The Supreme Court, day before yesterday - 04.03.2013, dismissed the SLP. However, the Supreme Court granted six weeks' time to the assessee to file reply to the Show Cause Notice of 4th November 1988.
So, the assessee will be filing the reply after about 25 years! Will the Central Excise Department be able to trace this 25 year old file and adjudicate the case? The Range, Division and Commissionerate must have all changed in the last quarter of a century - and the case is not going to end there - it can live for another twenty five years in the maze of Indian Litigation Industry.