Karnataka High Court
M/S. Royaloak Furniture India Llp vs Additional Director General on 30 January, 2018
Author: Vineet Kothari
Bench: Vineet Kothari
1/19
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 30TH DAY OF JANUARY, 2018
BEFORE
THE HON'BLE Dr.JUSTICE VINEET KOTHARI
WRIT PETITION Nos.9504 & 9519-9521/2017 (T-CUS)
BETWEEN:
M/s. Royaloak Furniture India LLP.,
No.5, 2nd A Cross, 1st Floor,
Kamanahalli Main Road,
St. Thomas Town Post
Bangalore-560 043.
[Represented by Mr. Vijay Subramaniam
S/o V. Subramaniam, Managing Partner of
M/s. Royaloak Furniture India LLP.,
Aged about 42 years.]
... Petitioner
(By Sri V. Raghuraman, Advocate)
AND:
1. Additional Director General
Directorate Revenue Intelligence (DGCEI)
No.8 (2) P, 1st Stage, 3rd Block,
Opp: BDA Complex, HBR Layout
Kalyan Nagar Post,
Bangalore-560 043.
2. The Principal Commissioner of Customs
Central Revenue Building
Bangalore-560 001.
3. Central Board of Excise and Customs
R.No.227-B, CBEC
Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017
M/s. Royaloak Furniture India LLP.
Vs.
Additional Director General & ors.
2/19
Department of Revenue
North Block
New Delhi-110 001.
4. Union of India
Ministry of Finance
Represented by Secretary
North Block,
New Delhi-110 001.
...Respondents
(By Sri Jeevan J. Neeralgi, Advocate)
These Writ Petitions are filed under Articles 226 and
227 of the Constitution of India praying to quash the
impugned show-cause notice dated 06.01.2017 issued by
the R-1 vide Annexure-A, by a Writ of Certiorari or any other
appropriate writ or order as violative of Articles 14, 19, 265
and 300A being unreasonable, arbitrary, oppressive,
excessive, premediated and without the authority of law.
These Writ Petitions coming on for orders, this day the
Court made the following:
ORDER
Mr. V. Raghuraman, Adv. for Petitioner. Mr. Jeevan J. Neeralgi, Adv. for Respondents.
1. The petitioner M/s. Royaloak Furniture India LLP., Bengaluru, has filed these writ petitions in this Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
3/19 Court on 27.2.2017 assailing the show-cause notice- cum-demand notice, Annexure-A, dated 6.1.2017, issued by the respondent-Additional Director General, Directorate Revenue Intelligence, Ministry of Finance, Department of Revenue, Government of India, to the petitioner in pursuance of the search operations carried out at the business place of the petitioner on 1.12.2015 and the petitioner has also challenged the provisions of sub-section (11) of Section 28 of Customs Act, 1962 ('Act' for short) inserted by the Customs (Amendment & Validation) Act, 2011, with effect from 16.9.2011.
2. The present writ petitions have been filed in this Court under Article 226 of the Constitution of India against the impugned show-cause notice Annexure-A, dated 6.1.2017 on the twin grounds of validity of provisions of the Act and also lack of jurisdiction of the respondent-Additional Director General to issue the said show-cause notice.
Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
4/19
3. The learned counsel for the petitioner Mr.Raghuraman has submitted before the Court that the Hon'ble Supreme Court in the case of Commissioner of Customs Vs. Sayed Ali [2011 (265)E.L.T.17 (S.C.)] decided on 18.2.2011 had laid down that it is only the officers of customs, who are assigned the functions of assessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations has been filed and the consignments have been cleared for home consumption, will have the jurisdiction to issue notice under Section 28 of the Act and therefore the authorities belonging to the Intelligence Wing, who are the authorities assigned the functions of preventing evasion of duty do not have the assessment of powers under the Customs Act.
Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
5/19
4. He submitted that Section 28(11) inserted by way of amendment to the Act with effect from 16.9.2011 does not remove the defect, on the premise of which the decision in Sayed Ali's Case (cited supra) was rendered by the Apex Court and in the absence of any guidelines on the basis of which such multiple authorities in the Intelligence Wing will exercise the assessment powers, the said provision of Section 28(11) of the Act itself is ultra vires and is liable to be struck down by this Court and consequently the impugned show-cause notice issued by the Additional Director General also deserves to be quashed as there is complete lack of jurisdiction with him to issue any such show-cause notice, albeit the said authority- Additional Director General while issuing 37 pages impugned show-cause notice has called upon the petitioner- company to finally show-cause before the Principal Commissioner/Commissioner of Customs, Bangalore, in pursuance of the said notice issued by him.
Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
6/19
5. learned counsel Mr.Raghuraman has also drawn the attention of the Court to the following judgments to support his contentions:
1. Sri Balaji Rice Company Vs. Commercial Tax Officer No.1, Nellore & others - (1984) 55 STC 292
2. Sivaramakrishnan Vs. State of Kerala & others -
Docid # IndLawLib/556192
6. Upon issuance of notice, the respondents have put in appearance before this Court and Mr.Jeevan Neeralgi appeared on behalf of the respondents.
7. Mr.Jeevan Neeralgi has submitted before the Court that to undo the effect of the judgment of the Hon'ble Supreme Court in Sayed Ali's Case only the sub-section (11) was inserted in Section 28 of the Act with a non-obstante clause and the powers of assessment have been conferred now on all the persons appointed as Officers of Customs under Sections 4(1) of the Act and they have been deemed to be 'proper Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
7/19 officers' for the purpose of the said Section 28. He submitted that there is no illegality or ultra vires in the said provisions of Section 28(11) of the Act and the power to issue such show-cause notice with the Additional Director General is also saved by the relevant Notifications issued by the Central Government.
8. He has drawn the attention of the Court towards two of such notifications, namely, Notification No.80/2014-Cus.(N.T.), dated 16.9.2014 and Notification No.17/2002-Cus.(N.T.), dated 7.3.2002. Both these Notifications are quoted below for ready reference:
"Appointment of officers of DGCEI as Customs officers for whole of India.-In exercise of the powers conferred by sub-section (1) of section 4, read with sub-section (1) of section 5 of the Customs Act, 1962 (52 of 1962), and in supersession of the notification of the Government of India in the Ministry of Finance, Department of Revenue, No.27/2009-Customs (N.T.), dated the Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.8/19
17th March, 2009, published vide number G.S.R. 173(E), dated the 17th March, 2009, except as respects things done or omitted to be done before such supersession, the Central Board of Excise and Customs hereby appoints the following officers specified in column (2) of the Table below as the officers of Customs having jurisdiction over the area mentioned in column (4) and of the rank specified in the corresponding entry in column (3) of the said Table, namely:-
Officer of Sl. Directorate General Area of Rank of Officer of Customs No. of Central Excise Jurisdiction Intelligence (1) (2) (3) (4) 1 Principal Director Principal Chief Whole of General Commissioner of Customs India 2 Principal Additional Principal Commissioner of Director General Customs 3 Additional Director Commissioner of Customs General 4 Additional Director Additional Commissioner of Customs 5 Joint Director Joint Commissioner of Customs 6 Deputy Director Deputy Commissioner of Customs 7 Assistant Director Assistant Commissioner of Customs 8 Senior Intelligence Superintendent/Appraiser Officer 9 Intelligence Officer Inspector/Preventive Officer/Examiner Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
9/19
2.This Notification shall come into force with effect from 15th October, 2014.
[Notification No.80/2014-Cus. (N.T.), dated 16-9- 2014]"
"Appointment of D.R.I. officials as Customs Officers.- In exercise of the powers conferred by sub-section (1) of section 4 of the Customs Act, 1962 (52 of 1962) and in supersession of notification of the Government of India in the Ministry of Finance (Department of Revenue) No.19/90-Customs (N.T.), dated the 26th April, 1990, the Central Government appoints the officers mentioned in Column (2) of the Table below to be the Commissioner of Customs, the officers mentioned in column (3) thereof to be the Additional Commissioners or Joint Commissioner of Customs and Officers mentioned in column (4) thereof to be the Deputy Commissioners or Assistant Commissioners of Customs for the areas mentioned in the corresponding entry in column (1) of the said Table with effect from the date to be notified by the Central Government in the Official Gazette:-
Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
10/19
Area of
Designation of the officers
Jurisdiction
(1) (2) (3) (4)
Whole of Additional Additional Deputy
Director General, Directors, or Directors, or
India
Directorate Joint Assistant
General of Directors, of Directors, of
Revenue Directorate of Directorate of
Intelligence Revenue Revenue
posted at Intelligence Intelligence
Headquarters posted at posted at
and Headquarters Headquarters
Zonal/regional and and
units Zonal/regional Zonal/regional
units units
[Notification No.17/2002-Cus. (N.T.), dated 7-3.2002.]"
9. Mr.Jeevan Neeralgi has therefore submitted that Officers specified in these Notifications have been conferred with All India jurisdiction, whereas the assessment proceedings will be undertaken by the concerned Officer having territorial jurisdiction over the place where import has been undertaken by the assessee concerned like in the present case before the Principal Commissioner of Customs, Bangalore. He has Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
11/19 also drawn the attention of the Court to the following judgments to support his contentions:
1) Raghunath International Ltd., Vs. Union of India -
2012 (280) E.L.T.321 (All.)
2) Asia tobacco Co.Ltd. Vs. Union of India & anr - 1988(33) E.L.T. 279 (Mad.)
3) Duncan Agro Industries Ltd. Vs. Union of India - 1989(39) E.L.T. 211 (Del.)
10. I have heard the learned counsel appearing for the parties and given earnest consideration to their rival contentions.
11. In the considered opinion of this Court, the present writ petitions are misconceived and are liable to be dismissed.
12. As far as the validity of the provisions of Section 28(11) of the Act is concerned, this Court does not find any illegality or lack of legislative competence or ultra vires in the said provision. As per the well settled legislation practice of undoing the effect of the Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
12/19 judgments of the Constitutional Courts by removing the defects pointed out by the Courts of law, the legislature came forward to frame laws in consonance with the legislative objects sought to be achieved. The provisions of Section 28(11) accordingly were inserted on 16.9.2011 soon after a decision of the Hon'ble Supreme Court in Sayed Ali's Case rendered on 18.2.2011, as apparently otherwise, it would result in quashing of the proceedings on the basis of lack of jurisdiction and would render several show-cause notices and proceedings liable to be quashed in terms of the said judgment.
13. To save the enquiry, investigation and initiation of assessment proceedings to prevent evasion of customs duty, such legislative amendment became necessary and that is why the Parliament in its own wisdom brought in this amendment by inserting sub- section (11) in Section 28 of the Act. The said provisions Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
13/19 cannot be said to be unguided or arbitrary so as to fall foul with Article 14 of the Constitution of India in any manner. Deeming of all designated officers to be 'proper officers' for undertaking the assessment proceedings, cannot be said to be unguided power conferred upon the authorities of concerned Revenue Department. It is left to the concerned Revenue Department itself to bifurcate, assign and divide its jurisdiction amongst its several designated officials. Nobody can deny that these authorities work for the ultimate object of implementation of the Customs Act, 1962. The tax payers have no right to choose their adjudicating authority.
14. The question of unguided powers could have arisen if the multiple authorities for the same cause would have dawned upon the same assessee for same evasion or for the same import. That is neither the case here before this Court nor it seems possible. In view of multiple imports by the same assessee which may be in Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
14/19 the different territories of India, the conferment of jurisdiction on all the authorities on pan India basis for the smooth functioning and discharge of their duties is not only necessary and essential, but appropriate also and any interpretation otherwise, if the contention of the learned counsel for the assessee was to be accepted, would defeat the very purpose of the Act and therefore Section 28(11) inserted in the provisions of Act where Section 28 deals with recovery of duties not levied or short-levied or erroneously refunded, is found to be perfectly in consonance with the scheme of the Act and the provisions of Section 28 of the Act itself.
15. The inserted amended Section 28(11) is quoted below for ready reference:
"28. Recovery of duties not levied or short-levied or erroneously.-
(1) to (10) ...................... (11) Notwithstanding anything to the contrary contained in any judgment, decree or order of any Court of law, tribunal or other Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
15/19 authority, all persons appointed as officers of customs under sub-section (1) of section 4 before the 6th day of July, 2011, shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purpose of this section."
16. The said provisions have apparently been brought in to undo the decision rendered by the Apex Court in Sayed Ali's Case.
17. The peculiar facts and circumstances and under the unamended law in which the Hon'ble Supreme had rendered the judgment in Sayed Ali's Case can be culled out from paragraph-14 which is quoted below for ready reference:
"14. From a conjoint reading of Sections 2(34) and 28 of the Act, it is manifest that only such a customs officer who has been Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.16/19
assigned the specific functions of assessment and re-assessment of duty in the jurisdictional area where the import concerned has been affected, by either the Board or the Commissioner of Customs, in terms of Section 2(34) of the Act is competent to issue notice under Section 28 of the Act. Any other reading of Section 28 would render the provisions of Section 2(34) of the Act otiose in as much as the test contemplated under Section 2(34) of the Act is that of specific conferment of such functions. Moreover, if the Revenue's contentions that once territorial jurisdiction is conferred, the Collector of Customs (Preventive) becomes a "proper officer" in terms of Section 28 of the Act is accepted, it would lead to a situation of utter chaos and confusion, in as much as all officers of customs, in a particular area be it under the Collectorate of Customs (Imports) or the Preventive Collectorate, would be "proper officers". In our view therefore, it is only the officers of customs, who are assigned the functions of assessment, which Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.17/19
of course, would include re-assessment, working under the jurisdictional Collectorate within whose jurisdiction the bills of entry or baggage declarations had been filed and the consignments had been cleared for home consumption, will have the jurisdiction to issue notice under Section 28 of the Act."
18. Since the Court found that the Revenue's contention that once the territorial jurisdiction is conferred, the Collector of Customs (Preventive) becomes a 'proper officer' in terms of Section 28 is not acceptable, the Parliament had no option, but to declare even these Anti-evasion Wing officials to be 'proper officers' to legally vest them with the jurisdiction to undertake the proceedings for assessment. This was obviously done to save the proceedings in the Courts of law particularly Constitutional Courts challenged on the technical and narrow ground of lack of jurisdiction. The very purpose of the Act cannot be allowed to be defeated on such technical grounds and therefore, need to Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
18/19 amend the law obviously arose because of the judgment of the Apex Court in Sayed Ali's Case and this Court does not find any ground to now strike down Section 28(11) of the Act. The said contention of the petitioner is therefore liable to be rejected and accordingly it is rejected.
19. On the facts of the case virtually, nothing remains for admission of the writ petitions in the Court under Article 226 of the Constitution of India. The petitioner must go to the concerned authority, namely, the Commissioner where he has been called upon to show cause in pursuance of the impugned show-cause notice issued by the Additional Director General and it is left to the concerned Commissioner to adjudicate the show-cause notice in accordance with law after giving opportunity of hearing to the petitioner in compliance with the principles of natural justice.
Date of order: 30-01-2018 in W.P. Nos.9504 & 9519-9521/2017 M/s. Royaloak Furniture India LLP.
Vs. Additional Director General & ors.
19/19
20. From the records of the present writ petitions, the petitioner does not appear to have filed any reply or objections to the said show-cause notice before the Principal Commissioner/Commissioner of Customs Bengaluru. Therefore, the challenge to such show- cause notice must fail as premature. Accordingly, the present writ petitions are liable to be dismissed. The same are dismissed. No costs.
21. In view of dismissal of the writ petitions, I.A.No.2/2017 for stay also stands dismissed.
Sd/-
JUDGE *ck/-