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TMI Blog2024 (9) TMI 1617X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 7, 11, 46 and 47 of Customs Act, 1962 read with Section 3 (2) of the Foreign Trade (Development and Regulation) Act, 1992; (ii) Vacation of the Seizure order dated 02.04.2024 and consequential discharge of the Bank Guarantee and the bond furnished by the petitioner to secure the provisional release of the seized goods; and (iii) Restraining the Respondents from giving effect to and taking any coercive action arising out of Seizure dated 02.04.2024 during the pendency of the present writ application and/or without the leave of this Hon'ble Court." 2. The petitioner is a registered dealer / trader in the name of M/s Assam Supari Traders. He is in possession of GST Number i.e. GSTIN/UIN No.18ABQFA3393P1ZK issued by the competent authority. He is employed in the business of dried Areca Nuts. He had booked a consignment of 24,288 Kgs of dried Areca Nuts contained in 352 bags invoiced at the rate of Rs. 262.50 per kg inclusive of taxes to one M/s Rabia Traders, District - Chikkamangluru, Karnataka having GSTIN/UIN No. 29CSBPA4742E1Z2. This is evident from the invoice no. AST29/2023-2024 dated 30.03.2024. The consignment E-Way Bill No. 811399620869 stated to be generated at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rports, etc. The central government may, by notification in the official Gazette appoint ........, Section 11 of the Act, 1962 relates to Power to Prohibit importation and exportation of goods......, Section 46 of the Act, 1962 relates to Entry of goods on importation, Section 47 of the Act, 1962 relates to Clearance of Goods for Home Consumption ...... and Section 3(2) of the Act, 1992 related to powers to make provisions relating to import and export by which Central Government may also issue order like prohibiting, restraining or otherwise regulating import or export goods etc., are not attracted to the case in hand so as to invoke the aforementioned provisions of law insofar as drawing up of seizure memo and seizure of the goods along with Truck, for the reasons that petitioner had valid documents insofar as purchasing from a genuine trader and it was transporting from a reputed goods carrier. The aforementioned parties are having all legal documents insofar as trading and transportation with all relevant licences as well as tax registration etc. are concerned. 7. Learned counsel for the petitioner submitted that from the counter affidavit one has to draw inference that seized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Nuts to laboratory and findings are that seized goods are of Indian origin. Submission of Respondents' counsel 9. Learned counsel for the respondents resisted the aforementioned contentions and submitted that there is no infirmity in the seizure memo dated 02.04.2024. The official who has seized the goods need not give reasons and it is sufficient if statutory provision of law is narrated to the extent that the petitioner has violated. Thereafter, one has to draw inference that reasons for seizure is to the extent that there is a violation of statutory provision on behalf of the petitioner which is reflected in Item No. 6 of the seizure memo dated 02.04.2024 suffice to overcome the contention of the petitioner that seizure memo is not in terms of Section 110 of the Act, 1962. 10. The cited decisions on behalf of the petitioner are not assisting his case. On the other hand, judgments of this Court passed in the case of Santosh Kumar Murarka vs. Union of India and Others (CWJC No. 5427 of 2022), Paragraph Nos. 8 and 9 and The Commissioners of Customs vs. Sir Rajendra Sethiya (MA No. 528 of 2022), Paragraph Nos. 11, 13 and 17, suffice to the extent of compliance to Section 110 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a thing if he has sufficient cause to believe that thing. Identical provision of 'reason to believe' is forthcoming under Section 5 (1) of Prevention of Money Laundering Act, 2002 (hereinafter referred to as 'PMLA Act') and it reads as under : (1) Where the Director or any other officer not below the rank of Deputy Director authorised by the Director for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that - Underline Supplied (a) any person is in possession of any proceeds of crime; and (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief is that of the Income-tax Officer, the sufficiency of reasons for forming the belief, is not for the Court to judge but it is open to an assessee to establish that there in fact existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and nonspecific information. To that limited extent, the Court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief." 16. In the case of Income Tax Officer, I Ward, DIST, VI, Calcutta and Others vs. Lakhmani Mewal Das [1976 SCR (3) 956], the Supreme Court held that there should be a live link or close nexus between the material before ITO and the formation of his belief that assessee has escaped assessment. 17. In the case of Aslam Mohammad Merchant vs. Competent Authority [(2008) 14 SCC 186], the entire legal position has been explained elaborately by the Hon'ble Supreme Court as under: "28. It is, however, beyond any doubt or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 (Delhi)], - the prima facie formation of belief should be rational, coherent and not ex facie incorrect and contrary to what is on record. A rubberstamp reason can never take the character of 'reasons to believe', as explained by the Hon'ble Supreme Court in the case of Union of India vs. Mohanlal Capoor [(1973) 2 SCC 836]. In Dilip N. Shroff vs. Joint Commissioner of Income Tax [(2007) 6 SCC 329], the Hon'ble Supreme Court deprecated the practice of issuing notices in a standard proforma manner - without material particulars. 19. In the case of Sabh Infrastructure vs. Assistant Commissioner of Income Tax [(2017) 398 (ITR) 198 (Delhi)], the Delhi High Court specifically held that it is also now well settled that the reasons to believe have to be self explanatory. The reasons cannot be, thereafter, supported by any extraneous material. 20. The Hon'ble Supreme Court in the case of Oryx Fisheries (P) Ltd. vs. Union of India [(2010) 13 SCC 427], Para 41, the legal position was summarized in a quasi judicial exercise of power and such quasi judicial functions are amenable to judicial review, in other words, recording of reasons is mandatory while exercising quasi judicial functions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. n. Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process"." 21. The failure to disclose right at the beginning, 'reason to believe' in the seizure memo read with Section 110 of the Act, 1962 would not be a mere irregularity but an illegality in not assigning some material information and reasons in support of violation of any statutory provision. A violation thereof would vitiate the entire proceedings and cause the order of provisional attachment to be rendered illegal. 22. For seizure of goods, unless there are strong and compelling reasons to believe that goods is 'imported', one cannot draw inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of the Act, 1962 read with the Act, 1992 are not sufficient, for the reasons that seizing officer is exercising a quasi judicial functions under the Act 1962 read with the Act, 1992 and it is amenable to judicial review, therefore, in not assigning or referring to some material information so as to have nexus to the word 'reason to believe', the seizing officer should have recorded in writing in specific reasons in the light of existing documents. Subsequent events like subjecting certain samples of the seized Areca Nuts to local traders and their opinion is suspected to be seized goods is foreign origin and Indian origin is not reliable and acceptable in the absence of concrete finding that the seized dried Areca Nuts is of the foreign origin with corroborative evidences. Perusal of the records, it is evident that no material information is in support of 'reason to believe' could be drawn inference, therefore, prima facie there are no violation of any of the provisions of the Act, 1962 read with the Act, 1992. Local traders' opinion is not authenticated or any standard adopted so as to rely on their opinion. In fact, Ministry of Agriculture and Farmer Welfare and ICAR are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nistry of Agriculture and Farmer Welfare as well as ICAR were of the view that there is no mechanism available to trace the country of origin of 'Areca Nuts' and there is no laboratory test available for the same and further on the basis of examination by naked eye, it cannot be conclusive determined with regard to origin of the 'Areca Nuts'. The ICAR also expressed their opinion that without their being a samples available from the country origin, it was not possible to determine the country origin of the seized 'Areca Nuts'. In this backdrop it is difficult to comprehend as to how the basis of examination by naked eye and the opinion of the local traders can lead to forming of an opinion that the goods in question namely the 'Areca Nuts' are suspected to be foreign origin. Even otherwise there is nothing on record to form a belief that the goods in question were imported without payment of import duty (even if it is assumed for the sake of argument that the goods are of foreign origin). The opinion of the local traders that seized Areca Nuts suspected to be foreign origin failed the test Wednesbury Principles as no reasonable person can reach the conclusion of country of origin o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... test of a reasoned order or judgment. A non-speaking, unreasoned or cryptic order passed or judgment delivered without taking into account the relevant facts, evidence available and the law attracted thereto has always been looked at negatively and judicially de-recognized by the courts. Mere use of the words or the language of a provision in an order or judgment without any mention of the relevant facts and the evidence available thereon has always been treated by the superior courts as an order incapable of withstanding the test of an order passed judicially. Ours is a judicial system inherited from the British Legacy wherein objectivity in judgments and orders over the subjectivity has always been given precedence. It has been judicially recognized perception in our system that the subjectivity preferred by the Judge in place of objectivity in a judgment or order destroys the quality of the judgment or order and an unreasoned order does not subserve the doctrine of fair play as has been declared by the Apex Court in the matter of Andhra Bank v. Official Liquidator [2005 (3) SCJ 762]. For a qualitative decision arrived at judicially by the courts, it is immaterial in how many pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons for its decision by an administrative authority exercising quasi-judicial functions achieves this object by excluding chances of arbitrariness and ensuring a degree of fairness in the process of decision-making. Keeping in view the expanding horizon of the principles of natural justice, we are of the opinion, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities. The rules of natural justice are not embodied rules. The extent of their application depends upon the particular statutory framework whereunder jurisdiction has been conferred on the administrative authority. With regard to the exercise of a particular power by an administrative authority including exercise of judicial or quasi-judicial functions the legislature, while conferring the said power, may feel that it would not be in the larger public interest that the reasons for the order passed by the administrative authority be recorded in the order and be communicated to the aggrieved party and it may dispense with such a requirement. It may do so by making an express provision to that effect as those contained in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sphinx", it can, by its silence, render it virtually impossible for the courts to perform their appellate function or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before court. Another rationale is that the affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out. The "inscrutable face of the sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance." 32. Again, in East Coast Railway versus Mahadev Appa Rao [(2010) 7 SCC 678], this Court observed that arbitrariness in the making of an order by an authority can manifest itself in different forms. Nonapplication of mind by the authority making the order is only one of them. Application of mind is best demonstrated by disclosure of mind by the authority making the order and disclosure is best done by recording the reasons that led the authority to pass the order in question. Absence of reasons e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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