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2014 (12) TMI 356 - HC - CustomsDetention under the provisions of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - forfeiture of the property under the SAFEMA - hold of properties purchased and/or developed by tented money earned out of smuggling activities - Bar of limitation - Held that:- There is delay in issuing the impugned notices. However, we believe that delay is to be considered inclusively, as it differs from case to case. In service matters, delay is an important aspect but, the same yardstick cannot be applied in matters involving smuggling and foreign exchange manipulations. Persons engaged in such activities do not keep regular and proper accounts with respect to such activities. Evasion of taxes is integral to such activity. It would be difficult for any authority to say, in the absence of any accounts or other relevant material, that among the properties acquired by a smuggler, which of them or portions thereof, are attributable to violation of law. It is probably for this reason that the burden of proving that the properties specified in the show cause notice are not illegally acquired properties is placed upon the person concerned. For this reason also, the SAFEMA does not prescribe any time-limit for issuance of show cause notice u/s 6(1). Whether the competent authority had “reasons to believe” that the properties of the original petitioners are “illegally acquired properties” under the definition of SAFEMA - Held that:- Section 6(1) of the SAFEMA provides that the competent authority is empowered to serve a notice of forfeiture upon such person whom it has reason to believe that all or any of the properties of such person is illegally acquired. The condition precedent for issuing a notice u/s 6(1) is that the authority should have reason to believe that all or any of such properties are illegally acquired properties and the reasons for such belief have to be recorded in writing. The language of the section does not show that there is any requirement of mentioning any link between the detenue and property ostensibly standing in the name of the person to whom the notice has been issued. Section 8 of SAFEMA states that the burden of proving that any properties specified in the notice u/s 6 is not illegally acquired property shall be on the person affected. It is apparent that the authority had sufficient reasons to believe that the said two properties had been illegally acquired. The authority recorded the satisfaction on the ground that neither AP-2 nor AP-3 had any ostensible source of income. They were not income tax assessees. In spite of that the properties stood in their name and also in the revenue records. Considering the antecedents of AP-1 and his criminal record and when AP-2, who is the wife of AP-1, was found to be having no ostensible source of income and also not an income tax assessee, the impugned notice u/s 6(1) cannot be said to have been issued without arriving at a subjective satisfaction regarding the alleged financial manipulation. Decision in the case of Whirlpool Corporation distinguished [1998 (10) TMI 510 - SUPREME COURT] since the instant case do not would fall under any of the three contingencies mentioned in Whirpool's case. Neither there is any breach of the fundamental rights of the affected party nor there is any violation of the principles of natural justice or that the proceedings are without jurisdiction. The impugned action is only a show cause notice issued under the SAFEMA. Mere issuance of a show cause notice by a statutory authority cannot be said to be infringing the fundamental rights of a person. In our opinion, it also cannot be said to be violative of the principles of natural justice since the impugned action is only the initiation of proceedings and not the final conclusion. The affected persons could avail the opportunities provided under the SAFEMA to defend themselves. The proceedings are ripe and at this stage, to say that there has been breach of the principles of natural justice, would be premature and improper. Writ jurisdiction under Article 226 ought to be refused by Single Judge since the issue was totally premature. - Impugned order set aside - Decided in favour of Revenue.
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