Show Cause Notice must clearly spell out its intention of blacklisting the Noticee: Supreme Court

We all understand and well appreciate what crucial role the Principles of Natural Justice play in matters before Quasi judicial Authorities, Administrative Authorities and other authorities. Principles of Natural Justice are deeply entrenched in our Constitutional Jurisprudence. These principles ensure elimination of bias, arbitrariness.

In a recent decision, the Hon’ble Supreme Court of India has laid down an important principle of law pertaining to Principles of Natural Justice.

Citation: UMC Technologies v. Food Corporation of India , Civil Appeal No. 3687 of 2020

Facts

It was the case of the Appellant that the contents of the Show cause notice did not propose that blacklisting was being contemplated by the Corporation. Had the SCN clearly spelt out its intention to blacklist, the Appellant could have offered a more suitable reply.  On the other hand, SCN merely stated that appropriate action will be taken against the Appellant. However, a consequential order was passed thereby blacklisting the Appellant.

Decision

The Court observed at the outset that it is the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose rights or interests are being affected should be given a reasonable opportunity to defend himself. The basic principle of natural justice is that before adjudication starts, the authority concerned should give to the affected party a notice of the case against him so that he can defend himself. Such notice should be adequate and the grounds necessitating action and the penalty/ action proposed should be mentioned specifically and unambiguously.

Relying upon its previous decision in the case of Gorkha Security Services, the Court held that that the Show Cause Notice  must clearly spell out that its intention is to blacklist the noticee. Such a clear notice is essential for ensuring that the person against whom the penalty of blacklisting is intended to be imposed, has an adequate, informed and meaningful opportunity to show cause against his possible blacklisting.

The Court ultimately went on to hold that the Show Cause notice issued to the Appellant did not fulfill the requirement of a valid show cause notice for blacklisting. In the Court’s view, the order of blacklisting the Appellant clearly traversed beyond the bounds of the show cause notice which is impermissible in law. As a result, the consequent blacklisting order was set aside being unsustainable.

Conclusion

From the above, it is clear that the Court has laid down a very clear requirement of a valid Show Cause Notice and that the consequential order cannot traverse beyond the same.

Click here to read the Judgment: UMC TECHNOLOGIES PRIVATE LIMITED vs FCI

To watch our video on “How to handle GST Notices and Summons including Assessments”, click on the following link: https://gstlawindia.in/how-to-handle-gst-notices-and-summons-including-assessments/

 

Gaurav is an advocate by profession and has done his B.Com(H) from Hansraj College and LL.B(H) from Faculty of Law, Banaras Hindu University. He has represented clients from Diverse sectors, providing services in Litigation involving Indirect Taxes, IBC, Commercial laws, Direct Taxes, RBI. He has been active in Constitutional Courts, Tribunals and Quasi-Judicial Authorities in matters of legal importance.

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