2024 (8) TMI 1571 - HC - Customs

Maintainability of petition - availability of alternative remedy - Delay of approximately nine years in finalizing the provisional assessment - HELD THAT - The petitioner was put to personal hearing notice on 26-4-2024. The delay is unreasonable and even assuming that there exists no statutory limitation for undertaking aforesaid exercise such unreasonable delay itself is a ground for interference. Apart from this what should be the reasonable amount of time cannot be gone into and decided by the departmental authorities/forum. Reliance is placed on State of Punjab v. Bhatinda District Co-Op. Milk P. Union Ltd. 2007 (10) TMI 300 - SUPREME COURT where it was held that The Revisional Authority being a creature of the statute while exercising its revisional jurisdiction would not be able to determine as to what would be the reasonable period for exercising the revisional jurisdiction in terms of Section 21(1) of the Act. The High Court furthermore in its judgment has referred to some binding precedents which have been operating in the field. The High Court therefore cannot be said to have committed any jurisdictional error in passing the impugned judgment. The Learned Counsel for the petitioner submits that even if no statutory time limit was prescribed to undertake the aforesaid exercise of assessment the exercise should have been completed within reasonable time. The period of nine years by no stretch of imagination can be said to be a reasonable period. While passing the impugned Order-in-Original (OIO) dated 29-6-2024 Learned Authority has not considered the petitioner s objections in correct perspective and the judgment of Punjab and Haryana High Court relied upon by the petitioner was not dealt with at all. Conclusion - The delay is unreasonable and even assuming that there exists no statutory limitation for undertaking aforesaid exercise such unreasonable delay itself is a ground for interference. ii) Thus no coercive action be taken against the petitioner pursuant to the impugned OIO dated 29-6-2024 - question of maintainability/limitation etc. will remain open.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

• Whether the delay of approximately nine years in finalizing the provisional assessment initiated in June 2015 is unreasonable and constitutes a ground for judicial interference despite the absence of a specific statutory limitation period for such exercise.
• Whether the petitioner's writ petition is maintainable despite the availability of an alternative statutory remedy under the relevant tax laws.
• The scope and applicability of the principle of "reasonable time" within which a statutory authority must exercise its jurisdiction when no explicit limitation period is prescribed by the statute.
• Whether the impugned Order-in-Original dated 29-6-2024 was passed without due consideration of the petitioner's objections and relevant legal precedents, thereby affecting the legality of the order.
• Whether coercive action against the petitioner pursuant to the impugned order should be restrained pending adjudication of the matter.
• The question of maintainability and limitation of the petition remains open for future consideration.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Reasonableness of Delay in Finalizing Assessment

Relevant legal framework and precedents: The Court referred extensively to the principles laid down in the judgment of the State of Punjab v. Bhatinda District Co-Op. Milk P. Union Ltd., which emphasizes that even where no statutory limitation is prescribed, the exercise of statutory jurisdiction must be within a "reasonable period." The judgment highlights that the absence of a prescribed limitation does not confer an unlimited time frame for exercising statutory powers. Section 11(1) of the relevant Act prescribes a three-year period for passing assessment orders, extendable to five years by the Commissioner with recorded reasons. Section 21(1) confers revisional jurisdiction but does not specify any limitation period.

Court's interpretation and reasoning: The Court noted that the provisional assessment was initiated in June 2015 but remained unfinalized until the issuance of a personal hearing notice on 26-4-2024, nearly nine years later. The Court agreed with the petitioner's contention that such an extended delay is unreasonable. The Court underscored that the principle of reasonableness must guide the exercise of statutory powers in the absence of explicit limitation, and a nine-year delay cannot be justified as reasonable.

Key evidence and findings: The petitioner's reliance on the personal hearing notice dated 26-4-2024, after a long hiatus post provisional assessment, was pivotal. The Court also observed that the impugned Order-in-Original dated 29-6-2024 did not address the petitioner's objections regarding delay or the relevant precedent.

Application of law to facts: Applying the principle that statutory authorities must act within a reasonable time, the Court found the delay excessive and a valid ground for interference. The petitioner's argument that the departmental authority cannot itself determine what constitutes a reasonable time was accepted, referencing the cited precedent.

Treatment of competing arguments: Although the respondent did not file a counter at the time of the order, the Court directed the respondent to file a counter within three weeks, indicating that the issue of delay and reasonableness would be further examined upon hearing both sides.

Conclusions: The Court preliminarily held that the nine-year delay in finalizing the assessment is unreasonable and that the petitioner has a valid ground to challenge the impugned order on this basis.

Issue 2: Maintainability of the Writ Petition Despite Availability of Statutory Remedy

Relevant legal framework and precedents: The Court referred to the principle that ordinarily, writ courts do not entertain petitions challenging notices or orders when efficacious statutory remedies exist. However, exceptions arise when the statutory authority itself cannot determine certain legal questions, such as the reasonable period for exercising jurisdiction.

Court's interpretation and reasoning: The Court relied on the cited precedent which held that the revisional authority, being a statutory creature, cannot decide the reasonable period for exercising revisional jurisdiction under Section 21(1). Therefore, the High Court's intervention was not a jurisdictional error. This reasoning was applied to justify entertaining the writ petition despite the availability of statutory remedies.

Key evidence and findings: The petitioner's submission was that the writ petition is maintainable because the statutory forum lacks jurisdiction to decide the question of reasonable delay, which is a legal question suitable for judicial determination.

Application of law to facts: The Court accepted that the petitioner could cross the hurdle of maintainability and entertain the writ petition on the ground that the statutory authority cannot adjudicate on the reasonableness of delay.

Treatment of competing arguments: The Court noted the usual rule but found the exception applicable based on the precedent and facts.

Conclusions: The writ petition is maintainable notwithstanding the availability of statutory remedies.

Issue 3: Legal Principles Governing Reasonable Period for Exercise of Jurisdiction

Relevant legal framework and precedents: The Court highlighted paragraphs 15 to 17 of the cited precedent, which clarify that:

• Section 11(1) empowers the Commissioner to extend the assessment period beyond three years up to five years with reasons recorded in writing.
• Section 21 does not prescribe a limitation period but the power must be exercised within reasonable time.
• Reasonableness depends on the nature of the statute, rights, liabilities, and other relevant factors.

Court's interpretation and reasoning: The Court emphasized that the absence of a statutory limitation does not imply unlimited time and that the statutory authority must act within a reasonable period.

Application of law to facts: Applying these principles, the Court found the delay of nine years clearly unreasonable.

Conclusions: The principle of reasonable time is a binding legal standard governing the exercise of jurisdiction in the absence of explicit limitation.

Issue 4: Consideration of Petitioner's Objections and Relevant Precedents by the Authority

Key evidence and findings: The petitioner contended that the impugned Order-in-Original dated 29-6-2024 did not consider the objections raised, including the reliance on the Punjab and Haryana High Court judgment.

Court's interpretation and reasoning: The Court observed that the authority failed to deal with the petitioner's objections and relevant legal precedents, thereby rendering the impugned order vulnerable to challenge.

Conclusions: The impugned order is liable to be examined for non-consideration of valid objections and precedents.

Issue 5: Restraint on Coercive Action