Authorities must endeavour to conclude adjudication with due expedition

The Supreme Court has issued notice in cases challenging a Delhi High Court ruling that favoured taxpayers. The High Court had previously stated that authorities cannot use 'where it is possible' clauses to justify prolonged delays in resolving disputes. Adjudicating authorities must now prove genuine hindrances if proceedings are delayed, otherwise, the proceedings may be quashed due to inordinate delays, particularly after amendments to the Customs Act in 2018.

The Hon'ble Supreme Court issued notice in a batch of 40 cases where the Revenue is challenging the Delhi High Court's ruling in favour of taxpayers.

The Hon'ble Delhi High Court in the case of M/s. VOS Technologies India Pvt. Ltd. v. The Principal Additional Director General &Anr. [W.P. (C) 4831/2021 dated December 10, 2024] allowed a batch of 47 writ petitions which involved delay in adjudication. The Court held as follows:

• Observed that, the term "where it is possible to do so" used in the statutes to conclude proceedings within a stipulated time cannot be allowed as a license to keep matters unresolved for years. Necessitating the burden of proof on the Adjudicating Authority that there was a genuine hindrance in solving the dispute with reasonable speed.
• Noted that, the Respondents clearly failed to establish the existence of an insurmountable constraint which operated, and which could be acknowledged in law as impeding their power to conclude pending adjudications. The failure of the Revenue to take the proceedings to a logical conclusion within a reasonable period, noted various amendments to the statute including Section 28 of the Customs Act, 1994 ("the Customs Act") that were clearly intended to ratify and reinforce the jurisdiction which the Legislature recognized as inhering in them.
• Observed that, the removal of term "where it is possible to do so" in 2018 in Section 28 of the Customs Act, charts out the gist of petitions that would be covered by the position of law as it existed prior to the said amendment consequently quashing the proceedings on account of inordinate delay by observing that he second proviso where applicable would in any case deprive the Respondents of the right to continue a pending adjudication or frame a final order once the terminal point constructed by statute came into effect. Extensively interpreting the amendment to Section 28(9) in 2018 that prescribes insertion of second proviso that created a deeming fiction leading to the presumption that an Show Cause Notice has never been issued if the adjudicating proceedings are not concluded within the stipulated time frame in certain situations, reverts to Explanation-1 and Explanation-2 appended to the statute that charts out the applicability of the said provisions from various times.

Hence, the Hon'ble High Court held that:

• Matters which have the potential of casting financial liabilities or penal consequences cannot be kept pending for years and decades together.
• A statutory authority when faced with such a challenge would be obligated to prove that it was either impracticable to proceed or it was constricted by factors beyond its control which prevented it from moving with reasonable expedition.
• This principle would apply equally to cases falling either under the Customs Act, the 1994 Act or the CGST Act.

OFFICIAL JUDGMENT COPY HAS BEEN ATTACHED