Writ Jurisdiction Improper Where Petitioner Avoids Adjudicative Process and Contributes to Delay in Challenging Show Cause Notices

The petitioner, ITC Ltd., manufactures cigarette packaging materials (Shells, Slides, HLPs, etc.) at its Munger factory.

Classification and valuation disputes led to provisional assessments for the period 1982-83 to 2004-05.

While issues regarding valuation and MODVAT credit were eventually settled by the CESTAT, Kolkata in October 2023, the Revenue issued five Show Cause Notices (SCNs) in 2008 demanding differential duty of approximately ₹58.55 Crores by unilaterally denying exemptions under Notification No. 67/82-C.E.

The petitioners challenged these 2008 SCNs in 2026, primarily arguing that the adjudication was barred by inordinate delay (17 to 36 years) and that records were no longer available.

The Revenue contended that the delay was attributable to the petitioners’ repeated requests for adjournments and the pendency of related litigations.

1. Whether the High Court should exercise its extraordinary writ jurisdiction under Article 226 to quash Show Cause Notices on the grounds of inordinate delay in adjudication.

2. Whether the delay in adjudication was solely attributable to the Department or significantly contributed to by the petitioner’s conduct.

3. Whether it is appropriate for a Writ Court to adjudicate upon the merits of a tax demand while the statutory adjudication process is pending.

The Court applied the principle that interference at the stage of a Show Cause Notice is permissible only in exceptional circumstances, such as patent lack of jurisdiction, non-application of mind, or a pre-determined approach, as established in J. Sri Nisha v. Special Director, Adjudicating Authority, Directorate of Enforcement (2024 INSC 309).

Regarding the application of precedents, the Court relied on Bharat Petroleum Corporation v. N.R. Vairamani, which cautions against applying judicial observations as "Euclid's theorems" without analyzing factual fitment.

The court also considered the discretionary nature of Article 226, where relief may be denied if the petitioner’s own conduct (laches and seeking adjournments) contributed to the delay.

The Court distinguished the present matter from precedents cited by the petitioner (Godrej & Boyce and Surendralal Girdharilal Mehta) by noting that in those cases, either an adjudicatory order had already been passed or the delay was entirely the Department's fault.

Here, the petitioners failed to challenge the 2008 SCNs for 18 years, establishing significant laches.

Furthermore, the records showed the petitioners avoided local hearings by raising "preliminary objections" and seeking adjournments while other related litigations (settled only in 2023) were pending.

The Court reasoned that since factual determinations regarding the fulfillment of exemption conditions and availability of documents are required, the competent authority is the appropriate forum for the first instance.

The Court found no "patent lack of jurisdiction" to warrant bypassing the statutory process.

It ruled that the delay was not "solely attributable" to the Department and that the petitioners must participate in the adjudication process.

The petitioners were granted four weeks to appear before the competent authority and raise all available legal and factual defenses, including those regarding the CESTAT’s 2023 findings.

The Court clarified it expressed no opinion on the merits of the tax demand.