Demand notices must adhere to principles of natural justice and proper procedural requirements; violations necessitate annulment and remand for reconsideration.

ORDER :

K. LAKSHMAN, J.

Heard Mr. Kondaveeti Ravi, learned Senior Counsel representing Mr. Kirthi Teja, learned counsel for the petitioner, Mr. Mohd. Imran Khan, learned Additional Advocate General appearing on behalf of the respondents.

2. CASE OF THE PETITIONER

i) The petitioner herein has obtained quarry lease for stone and metal over an extent of Acs.7.20 guntas in Survey No.50, situated at Allampally Village, Vikarabad Mandal, Vikarabad District, for a period of fifteen (15) years vide proceedings dated 24.08.2018. The lease deed was also executed on the same day on the specific terms and conditions mentioned therein.

ii) Pursuant to the said lease deed, the petitioner had entered into a Memorandum of Understanding (MOU) with Mr. L.Sudarshan Reddy, a Government Contractor for supply of mineral for utilization of the same in Government works. As per G.O.Ms.No.94, Irrigation & CAD Department, dated 01.07.2003, seigniorage charges will be recovered from the contractor’s bill for the material used for the Government work and will be directly paid into the Government account. For the mineral excavated and supplied to the said Contractor, seigniorage charges to an extent of Rs.1,83,02,766/- were recovered from the bills paid to the petitioner and were directly remitted to the Revenue Head of Account of Mines and Geology Department during the period from 2017-18 to 2024-25.

iii) The Regional Vigilance and Enforcement Officer, Hyderabad along with Technical Staff inspected the working lease area of the petitioner on 07.02.2024 and 09.02.2024 respectively. A report was submitted to respondent No.4. Basing on the said report, respondent No.4 has issued a show-cause notice dated 03.06.2024 stating that the petitioner has excavated and transported mineral more than the permitted quantity of 295645MT. Therefore, respondent No.4 sought to realize normal seigniorage fee of Rs.1,92,16,925/- and five times penalty of Rs.9,60,84,625/- and permit fee of Rs.1,53,73,540/-, DMFT of Rs.57,65,078/-, SMET of Rs.3,84,339/- and I.T. of Rs.3,84,339/-, making a total of Rs.13,72,08,846/-.

iv) It is also alleged in the said show-cause notice that the actual excavated quantity as per the calculation was arrived at 3,13,095MT, however, permits were obtained only for 17,450MT. Thus, according to respondent No.4, the petitioner transported excess quantity of 2,95,645MT. Fifteen (15) days time was granted to the petitioner to submit explanation.

v) It is the specific contention of the petitioner herein that it has received the said show-cause notice dated 03.06.2024 only on 12.07.2024. It has submitted explanation on 29.07.2024, but the same was received by respondent No.4 on 08.08.2024. It is also specifically contended by the petitioner that despite making an attempt by the petitioner to serve the said explanation personally, respondent No.4 has received the same only on 08.08.2024. Without considering the said explanation, respondent No.4 has issued demand notice dated 30.07.2024 directing the petitioner to remit the aforesaid amounts.

vi) It is also the specific contention of the petitioner that after receipt of the explanation dated 08.08.2024, respondent No.4 has issued a demand notice dated 30.07.2024 i.e., back-dated. Therefore, the impugned demand notice is not on consideration of the explanation dated 08.08.2024 and it is in violation of principles of natural justice.

vii) The mineral which has been excavated has been utilized for Government work and as per G.O.Ms.No.94, dated 01.07.2003, seigniorage fee would be recovered from the contractor’s bill and would be remitted to the head of account of the concerned department. An amoun