The Bombay High Court has imposed costs of Rs5 lakh on a company for “taking a chance” by filing a petition challenging a show cause notice issued by the Central Board of Indirect Taxes and Customs, rather than approach appropriate appellate authority.
The court noted the entire objective of filing such petitions is to “wriggle out some orders” by taking undue advantage of the pressure on the Court’s docket or to keep such matters pending and delay the adjudication proceedings by citing the pendency of the Petitions.
The court dismissed the petition by Viswaat Chemicals Ltd. observing that it was a manoeuvre to avoid available remedies since the company had raised no such grievance at the time of responding to the notice.
“This is nothing but an attempt to circumvent the alternate remedy and to take a chance to see whether any relief can be wriggled out of this Court,” a bench of Justices MS Sonak and Jitendra Jain said on October 14.
The company has filed the petition challenging the show cause notice issued on December 7, 2023, which alleged irregularities in tax compliance and sought explanations from the company. It argued that the notice was vague and lacked essential details, hindering their ability to respond effectively. The company sought quashing of both the notice and the subsequent order from July 22, 2024.
Petitioner’s advocate argued that the notice was “bereft of relevant particulars” and violated the principles of natural justice, leaving the company unable to adequately defend itself.
However, the advocate for the Union of India argued that the show cause notice was comprehensive and provided a clear basis for the petitioners’ defense. The allegation of vagueness was an afterthought besides being frivolous, the UOI contended.
The bench remarked that the company had submitted a detailed reply to the notice in which it had addressed multiple allegations without indicating any significant confusion. The company had not only failed to challenge the notice promptly but had also filed a detailed response without raising serious concerns about the alleged vagueness, it added.
If the petitioner genuinely regarded the show cause notice as vague or if there were any real difficulties in responding to the allegations, it was expected that they challenge such notice at the earliest instance, the bench said.
The court then imposed Rs 5 lakh costs on the petitioner to deter frivolous litigation. The amount has to be paid to the Maharashtra Legal Services Authority within four weeks and proof of payment must be submitted by November 21, the Bench directed.
However, it permitted the company to pursue other legal remedies under the CGST Act.
