Bombay HC denied indefinite stay where taxpayer was given substantial time to reach Settlement Commission

Case Details: Mehta Infocomm v.Additional Director General (Adjudication), Directorate of Revenue intelligence* - [2022] 138 taxmann.com 568 (Bombay)

Judiciary and Counsel Details

• • Dipankar Datta, CJ. & Milind N. Jadhav, J.
  • Devesh Tripathi, Pankti Shah & Krishnaprasad Mundayoor for the Applicant.
  • Jitendra B. Mishra & Dhananjay B. Deshmukh for the Respondent.

Facts of the Case

The Petitioner was engaged in the import of Set Top Boxes (STB) embedded with Conditional Access Systems (CAS) either imported directly or purchased on the high sea sale basis.

An investigation was conducted by the department and a common show cause notice was issued to the petitioner on March 27, 2019, on the ground of non-declaration of the licence fee paid/payable to the CAS provider, suppression of actual value of STB unit, fabrication of invoices, etc.

The petitioner informed the Department on July 25, 2019 that a show cause notice on a similar issue was received from the Settlement Commission and the Petitioner was desirous of filing a consolidated application before the Settlement Commission.

The Petitioner later on requested for the adjournment of the hearing to enable them to approach the Settlement Commission, multiple times. The Petitioner further emailed the Department on March 11, 2020, for seeking more time to file the application before the Settlement Commission.

However, the Additional Director General (Adjudication), Directorate of Revenue Intelligence, Mumbai passed the Order-in-Original holding that the Petitioner were liable for the payment of differential duty, penalty and interest.

The petitioners challenged the said Order-in-Original contending that the order is passed in gross violation of the principles of natural justice as the adjudicating authority was being informed about the intent of the Petitioners to approach the Settlement Commission.

High Court Held

The Bombay High Court observed that the Adjudicating Authority passed the order in the stipulated period of time as mandated under section 28(4) of Customs Act, 1962, which would have otherwise rendered show cause notices as null and void and the petitioners were not prevented from approaching the Settlement Commission during the substantial time granted. Thereby, the High Court dismissed the petition.

List of Cases Reviewed

• • Thirumurugan Enterprises v. Addl. CCE [W.P. No. 11114 of 2015, dated 17-4-2015] (para 8.5) – distinguished.

List of Cases Referred

• • Thirumurugan Enterprises v. Addl. CCE [W.P. No. 11114 of 2015, dated 17-4-2015] (para 8.5).