The Additional Director General Directorate Of Revenue Intelligence Kolkata Zonal Unit And Anr vs. M/S Dec Agrotech PVT LTD And Ors

Held

The High Court held that the order dated 24.06.2020, extending the period for issuance of a Show Cause Notice, was valid on all counts. The Court found that the reasoning provided in the extension order, which referred to the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, was not questioned by the writ petitioners and was not commented upon by the writ court. The Court relied on the Supreme Court's decision in I.J. Rao, Assistant Collector of Customs Vs. Bibhuti Bhushan Bagh, as interpreted in subsequent judgments, which held that no separate notice is necessary before extending the period of limitation by a further six months, especially given the availability of provisional release of goods. The Court emphasized that in taxation statutes, the language of the statute must be strictly adhered to, and there is no room for intendment or presumption. Therefore, the writ appeal was allowed, the order of the writ court was set aside, and the writ petition was dismissed. The Court clarified that this judgment would not prejudice the writ petitioners' right to challenge the final order of adjudication, except on the issue canvassed in the appeal.

Facts

The Directorate of Revenue Intelligence (DRI) appealed an order from the High Court that allowed a writ petition filed by M/s. Dec Agrotech Pvt. Ltd. and its Managing Director. The writ petition sought to cancel an order passed by the DRI under the proviso to Section 110(2) of the Customs Act, 1962, which extended the period for issuing a Show Cause Notice concerning seized export consignments of Chewing Tobacco. The goods were seized in September 2019 due to alleged mis-declaration. The writ petitioners argued that the six-month period from the date of seizure expired on April 17, 2020, and no Show Cause Notice was issued, necessitating the return of the goods. The DRI passed an order on June 24, 2020, extending this period by six months, citing the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020. The writ petitioners contended this extension order was passed ex parte and without sufficient cause.

Key Issues

1. Whether the order dated 24.06.2020 passed by the revenue under proviso to Section 110(2) of the Customs Act, 1962, extending the period for issuance of Show Cause Notice, is valid and legal, considering the arguments that it was passed ex parte and without sufficient cause, thereby infringing the writ petitioners' statutory right to have the seized goods returned. Petitioner's Arguments: - The six-month period for issuing a Show Cause Notice expired on 17.04.2020, and no notice was issued, triggering a statutory obligation under Section 110(2) to return the seized goods. - The extension order under proviso to Section 110(2) cannot be mechanically passed and requires the authority to be satisfied of sufficient cause, with the burden of proof on the investigating authority. - Prior opportunity of hearing was not granted to the writ petitioners before passing the extension order, making it arbitrary and illegal, violating Articles 14, 19(1)(g), 21, 300A, and 301 of the Constitution of India. - Reliance was placed on Supreme Court decisions in Assistant Collector of Customs vs. Charan Das Malhotra and I.J. Rao vs. Bibhuti Bhushan Bagh, arguing that prior opportunity of hearing is mandatory. Revenue's Arguments: - The judgment in I.J. Rao, Assistant Collector of Customs Vs. Bibhuti Bhushan Bagh, as interpreted in later pronouncements, held that no separate notice is necessary before extending the period of limitation by a further six months, especially with the availability of provisional release of goods. - The order dated 24.06.2020 was a speaking order, recording reasons, including the applicability of the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020, which extended time limits.