News Update

GST - Penalty demand of Rs.3731 crores - A person who would fall within the purview of sub-section (1-A) of s.122 should necessarily be a taxable person who retains the benefits of transactions: HCGST - Threatening and pressurising petitioner who is merely an employee - Highly unconscionable and disproportionate on the part of the officer: HCGST - Same relief was claimed in earlier petition which was withdrawn unconditionally - Fresh petition seeking same relief is barred by the estoppel principle: HCIncome tax hands over Rs 1700 Cr tax demand to Congress PartyGST - Neither SCN nor the order spell out the reasons for retrospective cancellation of registration, hence cannot be sustained: HCStage-2 of Vikram-1 orbital rocket successfully test-firedGST - Non-application of mind - If reply was unsatisfactory, details could have been sought - Record does not reflect that such exercise was done - Matter remitted: HCHouthis claim UK has not capability to intercept their hypersonic missilesGST - Merely because a taxpayer has not filed returns for some period does not mean that registration is required to be cancelled with retrospective date also covering the period when returns were filed and taxpayer was compliant: HCIsraeli forces kill 200 Palestinians at Gaza medical complex & arrest over 1000GST - Petitioner's reply, although terse, is not taken into account while passing assessment orders - Petitioner put on terms, another opportunity provided: HCUnveil One Nation; One Debt Code; One Compliance Rule for Centre & StatesChina moves WTO against US tax subsidies for EVs & renewable energyMore on non-doms - The UK Spring Budget 2024 (See TII Edit)Notorious history-sheeter Mukhtar Ansari succumbs to cardiac arrest in UP jailTraining Program for Cambodian civil servants commences at MussoorieNY imposes USD 15 congestion taxCBIC revises tariff value of edible oils, gold & silver45 killed as bus races into ravine in South AfricaCBIC directs all Customs offices to remain open on Saturday & SundayBankman-Fried jailed for 25 yrs in FTX scamI-T- Once the citizen deposits the tax upon coming to know of his liability, it cannot be said that he has deliberately or willfully evaded the depositing of tax and interest in terms of Section 234A can be waived: HCHouthis attack continues in Red Sea; US military shoots down 4 dronesFederal Govt hands out USD 60 mn to rebuild collapsed bridge in BaltimoreI-T - Receipts of sale of scrap being part & parcel of activity and being proximate thereto would also be within ambit of gains derived from industrial undertaking for purpose of computing deduction u/s 80-IB: HCCanadian School Boards sue social media titans for 4 bn Canadian dollar in damagesFormer IPS officer Sanjiv Bhatt jailed for 20 yrs for planting drugs to frame lawyerCus - No Cess is payable when Basic Customs Duty is found to be Nil: CESTAT
 
Cus - s.153 - Legislature has done away with service on agent completely - notices need to be served on person for whom they are intended - SCN u/s 110(2) served on CHA does not meet rigor of law - seized goods to be returned: HC

By TIOL News Service

NEW DELHI, NOV 24, 2015: THE petitioner claims that the Respondent has detained the imported goods beyond the period of six (6) months without issuing a SCNas contemplated u/s 110(2) of the Customs Act, 1962.

Inasmuch as it is submitted that the SCN & the order passed thereof to demonstrate that they have taken recourse to the proviso appended to Section 110(2) of the Act, which enables triggering of an extended period of six (6) months, has no legal sanctity, for the following reasons:

(i) Firstly, the show cause notice seeking extension of time for compliance of the requirements of Section 124 of the Act is ante-dated;

(ii) Secondly, the service of show cause notice effected on the Customs House Clearing Agent (CHA), is no service in the eyes of law, being contrary to the provisions of Section 153 of the Act.

The case in brief - DRIdetained the goods on 25.07.2014, on the ground that the goods imported were not quilt covers. The officers of the DRI were of the view that the goods imported were in fact "….a running length of printed fabric which has been folded at mid length having loose stitching on two sides…".

The petitioner sought for provisional release. In the interregnum, the petitioner obtained a report of the Textile Committee dated 25.08.2014 which confirmed that the sample submitted to it could be classified as "…polyester woven printed quilt case…".

By a communication dated 26.11.2014, the Deputy Commissioner of Customs ordered provisional release of goods on submission of bonds and bank guarantees.

Since the goods were detained/ seized by the DRI on 25.07.2014 , and no SCNunder Section 124(a) of the Act had been issued within the prescribed statutory period of six (6) months, a decision was taken by the respondentCommissioner of Customs (Import) to trigger the extended period of six (6) months, as investigation in the matter had not concluded.

Accordingly, on 23.01.2015 , a show cause notice under the proviso to sub-section (2) of Section 110 was served on the petitioner's CHA. The CHA, apparently, acknowledged the receipt of the show cause notice and waived personal hearing in the matter on behalf of the petitioner.

Consequently, Commissioner of Customs (Import) on that very date i.e. 23.01.2015 , passed an order extending the period for issuance of show cause notice under Section 124(a) of the Act for a further period of six (6) months after the expiry of the initial period of six (6) months from the date of seizure.

Notably, the show cause notice dated 23.01.2015 for extension of time, which was adjudicated upon on that very date by effecting service on the petitioner's CHA, was dispatched to the petitioner only on 30.01.2015 .

The order, which was passed on 23.01.2015 , was also dispatched to the petitioner by post on 31.01.2015 .

The High Court, inter alia, observed -

In the facts obtaining in this case, if the date of dispatch, by post, of the show cause notice dated 23.01.2015 is taken into account, then, clearly, on a plain reading of provisions of Section 110(2) read with Section 124(a), the respondents would have to return the goods to the petitioner. The reason for the same being that the show cause notice dated 23.01.2015, seeking to trigger the extended period provided for in the proviso to sub-section (2) of Section 110, was dispatched only on 30.01.2015.

Thereafter, the High Court adverted to the provisions of section 153 of the Customs Act, 1962 prior to its amendment by the Finance Act, 2012 and as it stands incorporated at present.

Section 153 reads thus -

Prior to the amendment:

153. Service of order, decision, etc.

Any order or decision passed or any summons or notice issued under this Act, shall be served,

(a) by tendering the order, decision, summons or notice or sending it by registered post to the person for whom it is intended or to his agent; or

(b) if the order, decision, summons of notice cannot be served in the manner provided in clause (a), by affixing it on the notice board of the customs house...."

(emphasissupplied)

Post amendment, the expression "or to his agent" appearing in clause (a) stands excluded.

Post amendment

153. Service of order, decision, etc.

Any order or decision passed or any summons or notice issued under this Act, shall be served,

(a) by tendering the order, decision, summons or notice or sending it by registered post or by such courier as may be approved by the Commissioner of Customs; or

(b) if the order, decision, summons of notice cannot be served in the manner provided in clause (a), by affixing it on the notice board of the customs house...."

The High Court observed –

++ A bare reading of the amended Section would show that the legislature has consciously done away with the service of orders, decisions, summons and notices on the agent. The CHA, is an agent, who operates under a special contract with an importer or exporter, and in this context is authorized to perform various functions to clear the goods from customs. It is no part of the general duty cast upon the CHA to accept service of notices, summons, orders or decisions of the customs authorities, unless he has been specially authorized to do so. The CHA's explicit and implied authority is confined to his acts, as an agent, qua transactions relating to business concerning entry or departure of conveyances or, import or export of goods at the custom stations. In case the importer or exporter, in this case the petitioner, were to enlarge his authority, a specific authorization in that behalf ought to have been issued in his favour. The scope of the duties of an agent, and in that sense, the authority of the CHA, is provided for in the definition of customs broker, in regulation 2(c) of the Customs Brokers Licensing Regulations, 2013 (in short the 2013 Regulations)….

++ In case the CHA, represents to the customs authorities that he has the authority to accept orders, notices, summons, orders or decisions, it is incumbent upon him to produce the same before the concerned authority. A provision in respect of this aspect is found in regulation 11(a) of the 2013 Regulations.

++ A conjoint reading of the definition of a Custom Broker in regulation 2(c) along with regulation 11(a) of the 2013 regulation, would show, that it is no part of the usual and ordinary duty of the CHA to accept service of orders, summons, decisions or notices issued by the custom authorities. In case CHA represents, he has such an authority, he would have to produce the same before the concerned statutory authority. In this case the respondents neither sought production of the authority nor did the CHA supply any such documents to the custom authorities, which could, in the ordinary course, have persuaded them to serve the notices on the CHAs. Therefore, in the ordinary course, the customs authorities were required to follow the provisions of Section 153 of the Act, which required the service to be effected on the importer i.e. the petitioner in this case.

While rejecting the respondents' reliance on Section 146 and Section 147 of the Act, the High Court noted -

The CHA has no general authority, to my mind, to act in respect of every act that the owner, importer or exporter is called upon to do or may be required to do under the provisions of the Act. It is, keeping in mind this object, and / or the purpose, that the legislature has consciously provided that service of orders, decisions or summons or notices, can only be effected in the manner provided in clause (a) of Section 153 by serving it upon the person for whom it is intended, in this case, the noticee. Prior to the amendment made in 2012, service under Section 153 could also perhaps be effected on an agent, albeit an authorized agent, not on a CHA. After the amendment it appears that the legislature has done away with the service on the agent completely, by recognizing the fact that orders, decisions passed, summons or notices issued, need to be served in the first instance on the person for whom they are intended. It is after the intended person is served, that he could take a decision as to who would thereafter be entitled or authorized to appear for him before the concerned statutory authority. The amendment in that sense lends greater clarity qua the scope of the provision.

Holding that the argument of the respondent that service on the CHA of the show cause notice dated 23.01.2015 , would meet the rigour of the law, is untenable in law, the High Court concluded that the respondentswould be required to release the goods seized, to the petitioner.

As regards the question as to whether the confiscation proceedings can proceed in the matter, the High Court placed reliance on the apex Court decision in HarbansLal and observed –

"… In other words while the order passed under the proviso to Section 110(2) is held invalid, it would not in any manner affect the investigation, which is presently underway. With the quashing of the show cause notice dated 23.01.2015, and the order of even date i.e. 23.01.2015, the position which will obtain is that the respondents will have to return the seized goods to the petitioner. This would, however, not mean that respondents cannot continue their investigation and proceed to the next step towards trial by complying with the provisions of Section 124 of the Act."

The reliefs sought by the Petitioner were allowed.

(See 2015-TIOL-2661-HC-DEL-CUS)


POST YOUR COMMENTS
   

AR not Afar by SK Rahman

TIOL Tube Latest

Shri Shailendra Kumar, Trustee, TIOL Trust, giving welcome speech at TIOL Awards 2023




Shri M C Joshi, Former Chairman, CBDT




Address by Shri Buggana Rajendranath, Hon'ble Finance Minister of Andhra Pradesh at TIOL Awards 2023