M/S.Kse Limited vs. Union Of INDIA

Held

The Court held that the respondents are obligated to issue a speaking order under Section 17(5) of the Customs Act, 1962. The reasoning is based on the petitioner's grievance that no speaking order was issued despite the levy of IGST and the petitioner's objections. The Court accepted the submission made by the learned Standing Counsel for the Central Board of Indirect Taxes and Customs, which stated that the payment of IGST was accepted under protest and that a speaking order would be passed by the competent authority without further delay. The ratio decidendi is that procedural fairness, including the issuance of speaking orders under Section 17(5) of the Customs Act, 1962, must be adhered to when tax is levied, especially when there is a dispute or payment under protest. The Court directed the additional 5th respondent to pass a speaking order under Section 17(5) of the Act concerning Ext.P1 Bill of Entry and further directed the additional 6th respondent to ensure similar orders are passed for Exts.P6, P9, and P12 Bills of Entry within two months from the date of receiving a certified copy of the judgment.

Facts

The petitioner, M/s. KSE Limited, a manufacturer of cattle feed, imported ‘Acid Buf’ for its production. The petitioner contended that IGST should not be levied on ‘Acid Buf’. However, following a personal hearing, IGST at 5% was imposed, classifying ‘Acid Buf’ as ‘Fish Soluble Paste’. The petitioner is aggrieved by the absence of a speaking order, as mandated by Section 17(5) of the Customs Act, 1962. The petitioner seeks a direction for the competent authority to issue such speaking orders. The respondents, represented by the Standing Counsel for the Central Board of Indirect Taxes and Customs, acknowledged that IGST was paid under protest and assured that speaking orders would be issued promptly. They indicated that one assessment was pending with the Faceless Assessment Group Officer, Chennai, and three others with the Faceless Assessment Group Officer, Mumbai.

Key Issues

1. Whether the respondents are obligated to issue a speaking order under Section 17(5) of the Customs Act, 1962, when IGST is levied on imported goods, despite the petitioner's objection to the classification and the levy. Petitioner's Argument: The petitioner argues that the imposition of IGST on ‘Acid Buf’ was erroneous, and more importantly, the authorities failed to issue a speaking order as required by Section 17(5) of the Customs Act, 1962, which is a procedural safeguard. They seek a direction for the issuance of such an order. Revenue's Argument: The respondents, through their Standing Counsel, conceded that IGST was paid under protest by the petitioner. They submitted that speaking orders would be issued by the competent authorities without further delay, acknowledging the pending assessments with the Faceless Assessment Group Officers in Chennai and Mumbai.