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March 13, 2023
All Articles by: Mr. M. GOVINDARAJAN       View Profile
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The tax laws provide for adjudication of cases by the Adjudicating Authority which is a statutory authority.  The appeal can be filed against the decision of the Adjudicating Authority before the Appellate Authority.  In some laws specific period is mentioned for the disposal of the adjudication.  But in some laws no specific period is prescribed for the disposal of the case.  It is expected that such statutory authority shall pass the order within a reasonable time.  No mention of period for disposal of a case in the provisions of a law will not give right to such authorities to prolong the case for a long time without disposal.  Such orders are liable to be quashed.

In STATE OF PUNJAB VERSUS BHATINDA DISTRICT CO-OP. MILK P. UNION LTD. - 2007 (10) TMI 300 - SUPREME COURT the Supreme Court considered the question as what should be the reasonable period for reopening an order of assessment under the Punjab General Sales Tax Act.  The Supreme Court held that Section 21 of that Act had not fixed any period of limitation for completion of the re-assessment. However, the Court applying the well settled proposition that where no period of limitation have been prescribed, the Statutory authority must exercise jurisdiction within a reasonable period took a cue from the periods of limitation prescribed for revisional jurisdiction, being three years, concluding that a reasonable limitation for completion of the re-assessment would be a period of five years. In that case, since the notice itself had been issued after a period of five and half years, it was held to be invalid.

In M/S. J.M. BAXI & CO. VERSUS THE GOVERNMENT OF INDIA - 2016 (6) TMI 813 - MADRAS HIGH COURT, the original order of adjudication itself shows that the appellant claimed to have discharged more quantity than what was entrusted to them. But, after arrival, a landing certificate was issued only in 1994 to the effect that there was short delivery. At the time when the landing certificate was issued on 30.9.1994, the vessel had already gone and a period of more than two years had passed and the importer had also cleared the cargo by then. Therefore, the concession granted by the Department to the importer in the form of remission of duty, behind the back of the Steamer Agent, cannot now be taken advantage of by the Department. Therefore, even on merits, we find that the act of Department cannot be accepted. No Penalty can be imposed on the petitioner.

In M/S. TRANSWORLD SHIPPING SERVICES PVT. LTD. VERSUS THE GOVERNMENT OF INDIA, THE COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE (APPEALS) , THE JOINT COMMISSIONER OF CUSTOMS - 2018 (3) TMI 283 - MADRAS HIGH COURT a learned single Judge of Madras High Court, and in SURENDRALAL GIRDHARILAL MEHTA VERSUS UNION OF INDIA - 2018 (5) TMI 1841 - CALCUTTA HIGH COURT the Calcutta High Court once again reiterated the settled position that an authority exercising power under the Statute can engage in an action that has the effect of disturbing the rights of a citizen only within the time stipulated and where such limitation was not stipulated, within a reasonable time.

In MR. J. SHEIK PARITH (MR. J. SHEIKPARITH) VERSUS THE COMMISSIONER OF CUSTOMS (SEAPORT-EXPORTS) CHENNAI, THE ADDITIONAL DIRECTOR GENERAL DIRECTORATE OF REVENUE INTELLIGENCE SOUTH ZONAL UNIT, CHENNAI - 2020 (9) TMI 311 - MADRAS HIGH COURT, the petitioner had imported consumer goods.   According to the petitioner, there were certain mistakes committed by the suppliers of the imported goods, on account of which, the consignment under Bill of Entry No.4565925 dated 06.09.2011 imported by SSP Enterprises was found to contain undeclared as well as short declared goods.   The aforesaid consignments were seized and enquiry commenced. Along with the offending consignment, other containers had also been seized.   A search by the Department of Revenue (Intelligence) (DRI) at the residential premises of the petitioner as well as in the premises of the concerned customs broker was conducted. Voluminous documents appear to have been seized by the DRI in the course of search.   A show cause notice dated 22.12.2011 in terms of Section 28(4) of the Customs Act, 1962 (‘Act’) was issued by the DRI demanding duty in respect of 84 bills of entry and three Import General Manifests including additional duty on consignments covered by 83 bills of entry already seized.    The petitioner, on 19.04.2012,  sought copies of various documents including copies of the seized documents to enable it to furnish its reply which was rejected.  on 19.10.2012, the Commissioner of Customs issued summons for personal hearing. 

The petitioner filed the present writ petition before High Court.  An order of interim injunction granted in J. SHEIKH PARITH VERSUS THE COMMISSIONER OF CUSTOMS, THE ADDITIONAL DIRECTOR GENERAL - 2020 (1) TMI 72 - MADRAS HIGH COURT. M/S. MAJESTIC IMPEX, VERSUS THE COMMISSIONER OF CUSTOMS, SEA PORT (EXPORTS) - 2012 (11) TMI 610 - MADRAS HIGH COURT  filed by the petitioner.  The same was dismissed on the ground that only summons for personal hearing was challenged by the petitioner, who had not chosen to challenge the show cause notice dated 22.12.2011 that constituted the basis of the proceedings.   The petition came to be disposed on 13.12.2019 by a learned single Judge of this Court directing the supply by the respondents to the petitioner of all documents, both relied upon as well as not relied upon, on or before 31.12.2019, and the completion of adjudication thereafter.

The High Court observed that there is no bar, legal or otherwise that stood in the way of completion of adjudication.  What would construe a reasonable period for completion of proceedings where no time period or limitation had been set out in the relevant statute, Courts have held that such proceedings should be completed within a reasonable period, also taking note of the scheme of limitation prescribed in other provisions in that statute.  This is a matter where the Customs Department has clearly been remiss in not proceeding with the enquiry and completing the adjudication in time, missing the bus altogether. The impugned show cause notice dated 22.12.2011 is quashed by the High Court.  The High Court allowed the writ petition.

In TEXEL INDUSTRIES REPRESENTED BY ITS PROPRIETRIX VALLI PALANIAPPAN VERSUS THE ASSISTANT COMMISSIONER OF CUSTOMS (DRAWBACK - AIR) , THE ASSISTANT DIRECTOR - 2023 (3) TMI 138 - MADRAS HIGH COURT, a show cause notice was issued to the petitioner on 12.03.2009.  The petitioner filed reply to the show cause notice on 09.09.2009.  Personal hearing was also afforded to the petitioner on 10.09.2009.  But the order has been passed only on 25.09.2020 after a lapse of 11 years from the date of issuing of show cause notice.   Under the impugned Order-in-Original, the petitioner has been called upon to pay a sum of Rs.1,74,441/- in terms of Section 75(1) read with Rule 16A of the Customs and Central Excise Duty Drawback Rules, 1995 and another sum of Rs.63,563/- towards interest as per the provisions of Section 75A(2) of the Customs Act, 1962.

Being aggrieved against this order the petitioner filed the present writ petition before Madras High Court. 

The petitioner contended that even though Section 75 of the Customs Act, 1962 does not prescribe a period of limitation for recovering the duty drawback amount, any recovery can be made only within a reasonable period.  The petitioner relied on the following case laws-

  • J.Sheik Parith vs. The Commissioner of Customs and another (supra)
  • Bhattinda District Co-operative Milk P. Union Ltd. vs State of Punjab & Others (supra)

The only point that arises for consideration in this writ petition is whether the impugned Order-in-Original, dated 25.09.2020 passed under Rules 16A of the Customs and Central Excise Duty Drawback Rules, 1995 read with Section 75 and 75A(2) of the Customs Act,1962 can be quashed by this Court on the ground that the show cause notice was issued to the petitioner in the year 2009 and a personal hearing was granted to them in the very same year but the impugned order came to be passed only in the year 2020 after a lapse of more than eleven years.

The High Court observed that the respondents have not passed the Order-in- Original within a reasonable time, despite the fact that the show cause notice was issued as early as in the year 2009.   The decisions relied upon by the petitioner referred to supra squarely apply to the facts of the instant case.  Therefore the High Court was of the view that the Order-in-original has to be quashed.

The petitioner contended that the amount demanded in the order has already been paid by the petitioner under protest.  There is no documentary evidence for this.  The High Court observed that even assuming that the petitioner's statement that the said amount was paid under protest is to be accepted by this Court, even otherwise, the petitioner is not entitled for refund, as any refund claim will also be barred by limitation.   When the petitioner has pleaded before this Court that on the ground of limitation the Order-in-Original ought not to have been passed, the same yardstick applies to the petitioner as well.   The High Court held that the petitioner is not entitled for refund of the amount, which they had already paid in the year 2007 itself, which is the subject matter of the Order-in-Original which is challenged in this writ petition.

The High Court quashed   the impugned show cause notice dated 12.03.2009 and the Order-in-Original, dated 25.09.2020.  The High Court further clarified that  the petitioner is also not entitled to claim refund of money that they have already paid in the year 2007 itself, which is much prior to the date of show cause notice also on the ground that said claim is also barred by limitation .


By: Mr. M. GOVINDARAJAN - March 13, 2023



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