Bombay High Court Quashes Municipal Cess Assessment Orders Against HPCL Over 10-Year Delay

The Bombay High Court has recently quashed municipal cess assessment orders passed by the Navi Mumbai Municipal Corporation against Hindustan Petroleum Corporation Ltd., holding that completing proceedings more than ten years after issuing show cause notices was unreasonable and liable to be set aside.

A Division Bench of Justices G. S. Kulkarni and Aarti Sathe noted that the issue raised was already covered by its earlier ruling and that the corporation was bound by it.

“In this view of the matter, it is clear that in the present case, apart from the breach of the mandate of Rule 25 of the Cess Rules, the law otherwise would also not permit the respondent/corporation to pass the impugned order. The said order was passed after a period of 10 years from the issuance of the notice (Form H) dated 24 August 2011. The petition thus needs to succeed.”

The case concerned assessment orders passed in August 2023 based on notices issued in 2011, 2012 and 2013, after the corporation remained inactive for nearly a decade.

HPCL told the court that it had transported petroleum products from its refinery to the Vashi terminal within municipal limits through pipelines. It said it had filed monthly returns and annual statements, including details of goods exported outside municipal limits, on which concessional cess was available.

In one petition, a notice dated August 24, 2011 was issued seeking documents. HPCL replied on September 9, 2011. No action followed for nearly nine years. The authority resumed proceedings only in July 2023 and passed an assessment order on August 21, 2023 along with a demand notice.

Similar delays were recorded in the connected cases. A notice dated June 15, 2012 led to an order on August 23, 2023. Another notice dated June 1, 2013 resulted in an order on August 25, 2023.

The court held that such prolonged delay in concluding proceedings is unreasonable and renders the assessment orders unsustainable

For Petitioner: Advocates Padmavati Patil and Kiran Chavan instructed by. Cenex Legal LLP

For Respondent: Addl. G. P. Shruti Vyas with Aditya Deolekar, AGP for the State, Mr. Sandeep Ghaterao, for Respondent/NMMC.