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2025 (6) TMI 1980 - HC - CustomsChallenge to SCN - SCN directed to submit reply to the show-cause notice alleging that he has received smuggled gold of foreign origin being carried by two persons - suppression of facts or not - opportunity of hearing provided or not - violation of principles of natural justice - HELD THAT - A perusal of the SCN would show that preliminary submissions were made by the petitioner as well as his representative(s) and after consideration thereof the notice under challenge was issued. The show-cause notice appears to have been issued after the initial reply. The details of notice purports that the averments of the petitioner was too considered and thereafter he was given opportunity of hearing in person before adjudication of the case. The said notice further shows that the case is posted for hearing and the petitioner was given opportunity of being heard before any orders have been passed. The language of show cause notice would show that after preliminary consideration the authority issuing the same came to a conclusion that the petitioner has willfully suppressed certain facts of rendering service provided to him. The show-cause further speaks that such facts came to fore when the investigation of records was carried out and after examination of records the authority was of the opinion that suppression of facts exists. According to the show-cause notice if suppression of certain facts exists then in such background the arguments of the petitioner that the writ petition would be required to be decided on admitted facts cannot be considered. The suppression destroys all the facts. If certain facts come to fore which were earlier suppressed then the admitted facts become porous and new facts surface which may require reconsideration. The attention that the issue has generated is predominantly on the mixed question of facts and law. If certain facts emerge which were under the veil the entire dimension of an issue may be changed. The Supreme Court in the matter of Oryx Fisheries Private Limited v. Union of India 2010 (10) TMI 660 - SUPREME COURT laid down the ratio that the person to whom the show cause notice has been issued must be told the charges against him at that stage. Here the show-cause notice would show that those charges of suppression have been arrived at after consideration of the preliminary submission. Taking into consideration overall facts and circumstances of the case this Court is of the opinion that as of now the petitioner is challenging the show-cause notice by way of writ petition wherein undisputedly the petitioner is having remedy of appeal under Section 128 of the Customs Act and thereafter further remedy of appeal under Section 129 before the Customs Excise and Service Tax Appellate Tribunal. All the grounds raised in this petition are available to the petitioner to be raised before the Appellate Authority. The Appellate Authority is competent to appreciate the technical grounds raised by the petitioner therefore this Court does not find any ground to interfere with the show cause notice under a writ petition filed under Article 226 of the Constitution of India. Petition dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court in this matter include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Legality and Validity of the Show-Cause Notice Legal Framework and Precedents: The show-cause notice was issued under the Customs Act, 1962, specifically invoking the authority of the Directorate of Revenue Intelligence (DRI). The Court referred to the Supreme Court's ruling in Oryx Fisheries Private Limited v. Union of India, which mandates that the person to whom a show-cause notice is issued must be informed of the charges against him so that he can defend himself adequately. Court's Interpretation and Reasoning: The Court observed that the show-cause notice was issued after preliminary submissions by the petitioner were considered, indicating that the authorities did not act arbitrarily or without due consideration. The notice detailed the allegations of suppression of facts by the petitioner, which emerged during the investigation. The Court noted that the notice provided the petitioner an opportunity for personal hearing before any adjudication. Key Evidence and Findings: The DRI intercepted two persons carrying smuggled gold; one was caught with a gold bar, and subsequent investigation linked the petitioner through a tax invoice to the Ankita Gold Workshop. Although the petitioner contended that the invoice contained a bona fide mistake regarding gold purity, the authorities found evidence of suppression of facts during investigation. Application of Law to Facts: The Court held that the issuance of the show-cause notice was based on objective satisfaction and investigation results, and the petitioner was given a fair opportunity to respond. The Court emphasized that the notice did not represent a final conclusion of guilt but was an invitation to explain and rebut the charges. Treatment of Competing Arguments: The petitioner argued that the notice was illegal and issued without jurisdiction, and that he was wrongly implicated. The Court rejected these contentions, noting that the authorities had acted within their jurisdiction and that the petitioner had the opportunity to contest the charges. Conclusion: The show-cause notice was validly issued in accordance with law and procedure, and the petitioner's challenge at this stage was premature. Issue 2: Maintainability of Writ Petition Against Show-Cause Notice Legal Framework and Precedents: The Court relied on established principles that statutory remedies under the Customs Act must be exhausted before approaching the High Court under Article 226. Reliance was placed on judgments from the Supreme Court and the High Court, including Trade Tax Officer v. Royal Trading Co., Union of India v. Knisetty Satyanarayana, and others, which emphasize the availability and efficacy of alternative remedies such as appeals before the adjudicating authority and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). Court's Interpretation and Reasoning: The Court observed that the petitioner had not availed the statutory remedy of replying to the show-cause notice and pursuing adjudication and appellate processes. The Court noted that the petitioner's grievances could be effectively raised and adjudicated before the competent authorities and that premature judicial intervention would circumvent the statutory scheme. Key Evidence and Findings: The petitioner's writ petition was filed immediately after issuance of the show-cause notice without awaiting or participating in the adjudication process. The authorities had provided opportunity for hearing and submission of evidence. Application of Law to Facts: The Court applied the principle of exhaustion of alternative remedies and held that the writ petition was premature and not maintainable. The petitioner was directed to pursue the statutory adjudication and appellate remedies. Treatment of Competing Arguments: The petitioner contended that the show-cause notice was illegal and arbitrary, justifying immediate judicial intervention. The Court held that such contentions could be raised before the adjudicating authority and appellate forums and did not warrant quashing of the notice at this stage. Conclusion: The writ petition challenging the show-cause notice was dismissed for want of alternative and efficacious remedy. Issue 3: Allegations of Bias and Predetermination by Authorities Legal Framework and Precedents: The Court considered the principle that a show-cause notice must not be issued with bias or pre-judgment of guilt, as emphasized in Oryx Fisheries Private Limited. If the authority issues a notice with a definite conclusion of guilt, it vitiates the proceedings. Court's Interpretation and Reasoning: The Court examined the language of the show-cause notice and found that it did not demonstrate any premeditated mind or bias. The notice reflected objective satisfaction based on investigation and gave the petitioner an opportunity to be heard. The Court held that the issuance of the notice was not unfair or biased. Key Evidence and Findings: The notice was issued after preliminary submissions and investigation, and the petitioner was invited to respond. The Court found no evidence of unfairness or bias in the proceedings. Application of Law to Facts: The Court applied the principle that mere expression of suspicion or preliminary conclusion in a show-cause notice is not evidence of bias, provided the accused is given a fair hearing. Treatment of Competing Arguments: The petitioner argued that the notice was issued with predetermined views. The Court rejected this, emphasizing the procedural fairness observed. Conclusion: No bias or predetermination was found in the issuance of the show-cause notice. 3. SIGNIFICANT HOLDINGS "It is no doubt true that at the stage of show cause, the person proceeded against must be told the charges against him so that he can take his defence and prove his innocence. It is obvious that at that stage the authority issuing the charge sheet, cannot instead of telling him the charges, confront him with definite conclusion of his alleged guilt. If that is done, as has been done in this instant case, the entire proceeding initiated by the show cause notice gets vitiated by unfairness and bias and the subsequent proceeding become an idle ceremony." This principle was applied to hold that the show-cause notice in the instant case was not issued with a definite conclusion of guilt but rather as an opportunity for the petitioner to respond. Core principles established include:
Final determinations:
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