Delhi High Court quashes all the Show Cause Notice issued u/s 28(11) of the Customs Act on Ground of Lack of Jurisdiction.
The Division Bench of the Delhi High Court comprised of Justice Muralidhar and Justice Vibhu Bhakru while deciding a batch of writ petitions brought before it quashed all the show cause notice (SCN)s sent by the Customs Authorities prior to the period of 6th July 2011 alleging that the authorities have no jurisdiction to exercise this power u/s 28(11). The common question raised in all these petitions were the constitutional validity of section 28(11) of the Customs Act which states that the provision would take effect “notwithstanding anything to the contrary contained in any judgment, decree or order of any court of law, tribunal or other authority.” However, this amendment adversely impacts the Petitioners herein in that it seeks to validate the show-cause notices issued prior to 6th July 2011 by not only officers of the Customs but also officers of the Commissionerates of Customs (Preventive), Directorate General of Revenue Intelligence, Directorate General of Central Excise Intelligence and similar placed officers.
The principal submission on behalf of the Petitioners is that although the insertion of Section 28 (11) is by the Validation Act, 2011 which was meant to cure the defects pointed out in Section 28 of the Act by the Supreme Court in Commissioner of Customs v. Sayed Ali (2011) 3 SCC 537, in fact, it does not do so. The further submission is that for the period prior to 6th July 2011 the decision of the Supreme Court in Sayed Ali (supra) would still apply and even in terms of Section 28 (11) of the Act the offices of the Commissionerates of Customs (Preventive), DRI, DGCEI would not have jurisdiction to continue proceedings in relation to the SCNs already issued or issue fresh SCNs for the period prior to 6th July 2011.
The Court while concluding the issue observed that the Department cannot seek to rely upon Section 28(11) of the Act as authorising the officers of the Customs, DRI, the DGCEI etc. to exercise powers in relation to non-levy, short-levy or erroneous refund for a period prior to 8th April 2011 if, in fact, there was no proper assigning of the functions of reassessment or assessment in favour of such officers who issued such SCNs since they were not „proper officers‟ for the purposes of Section 2(34) of the Act and further because Explanation 2 to Section 28 as presently enacted makes it explicit that such non-levy, short-levy or erroneous refund prior to 8th April 2011 would continue to be governed only by Section 28 as it stood prior to that date and not the newly re-cast Section 28 of the Act.
Justice Muralidhar, pointed out that, “Section 28 (11) interpreted in the above terms would not suffer the vice of unconstitutionality. Else, it would grant wide powers of assessment and enforcement to a wide range of officers, not limited to customs officers, without any limits as to territorial and subject matter jurisdiction and in such event the provision would be vulnerable to being declared unconstitutional.”
“As regards the period subsequent to 8th April 2011, it is evident that if the administrative chaos as envisaged by the Supreme Court in SayedAli (supra) should not come about, there cannot be any duplicating and/or overlapping of jurisdiction of the officers. It would have to be ensured through proper co-ordination and administrative instructions issued by the CBEC that once a SCN is issued specifying the adjudicating officer to whom it is answerable, then that adjudication officer, subject to such officer being a ‘proper officer’ to whom the function of assessment has been assigned in terms of Section 2 (34) of the Act, will alone proceed to adjudicate the SCN to the exclusion of all other officers who may have the power in relation to that subject matter” he added.
Read the full text of the judgment here.
[googleapps domain=”drive” dir=”file/d/0B3j3oXdY53gVWmdtTVRFaHhsODA/preview” query=”” width=”640″ height=”480″ /]
