The Bombay High Court recently imposed a penalty of ₹5 lakh on Viswaat Chemicals Ltd. for “taking a chance” by filing a writ petition against a show cause notice issued by the Central Board of Indirect Taxes and Customs (CBIC) [Viswaat Chemicals Ltd. & Anr v. Union of India].
The bench, consisting of Justices MS Sonak and Jitendra Jain, criticized the company’s approach, highlighting that the petition was a tactic to bypass available remedies. The company had not raised any issues about the notice’s vagueness when initially responding to it.
“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,” the bench remarked.
The petition challenged the show cause notice issued on December 7, 2023, alleging tax compliance irregularities and requesting explanations from the company. Viswaat Chemicals contended that the notice was vague, lacking necessary details, which made it difficult for them to respond effectively. They sought to have both the notice and a subsequent adjudicating order from July 22, 2024, overturned.
During the hearing, Advocate Vishal Agrawal, representing Viswaat Chemicals, argued that the notice was “bereft of relevant particulars” and violated principles of natural justice, making it difficult for the company to defend itself. He claimed that the adjudicating authority had acknowledged this vagueness in its order, leading to a significant breach of natural justice.
However, Advocate Jitendra B. Mishra, representing the Union of India, argued that the notice was detailed and provided sufficient grounds for defense. He pointed out that it included “intelligence inputs” and references to various legal provisions and previous judgments. He dismissed the claims of vagueness as an afterthought and frivolous.
The Court observed that Viswaat Chemicals had submitted a detailed reply to the notice, addressing the allegations without raising any significant concerns about vagueness at that time. It noted that the company failed to challenge the notice promptly and only sought to dispute it after receiving the adjudicating order dated July 22, 2024.
The court emphasized that if the petitioner genuinely found the show cause notice to be vague or faced challenges in responding, it should have raised these issues immediately. As a result, the court imposed a ₹5 lakh penalty to discourage such frivolous litigation. The company was directed to pay the amount to the Maharashtra Legal Services Authority within four weeks, with proof of payment required by November 21.
Despite the penalty, the court allowed Viswaat Chemicals to pursue other legal remedies available under the CGST Act.
Advocate Vishal Agrawal, along with Advocates Abhishek Deodhar and Rishabh Jain of TLC Legal LLP, represented the petitioner. Advocates Jitendra B. Mishra, Ashutosh Mishra, Sangeeta Yadav, and Rupesh Dubey appeared for the Union of India, while Advocates Satyaprakash Sharma and Megha Bajoria represented the Assistant Commissioner of CGST and Customs.
