TIOL-DDT 2947
10 10 2016
Monday

IT is the practice for DRI and DGCEI to book cases left right and centre, prepare bulky Show Cause Notices running into hundreds of pages and then make the Jurisdictional Customs or Central Excise officers to adjudicate them. It is an unwritten rule in the field that a Show Cause Notice issued by DRI/DGCEI has to be invariably confirmed.

However, all this changed five years ago when the Supreme Court in the case of Sayed Ali - 2011-TIOL-20-SC-CUS held,

"it is only the officers of customs, who are assigned the functions of assessment, which 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".

Lo and behold! All the Show Cause Notices issued by DRI, suddenly became illegal.

Government does not tolerate such decisions of the Supreme Court and so it got Parliament to retrospectively confer the power on DRI to issue Show Cause Notices. The Parliament amended Section 28 of the Customs Act by inserting a new clause 11 with effect from 16.09.2011, which reads as:

"(11) Notwithstanding anything to the contrary contained in any judgement, decree or order of any court of law, tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of section 4 before the sixth 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 purposes of this section."

Covering this event in DDT 1701 27.09.2011 , I wrote, "No one should ever dream of challenging this in the High Courts or Supreme Court, for retrospective amendment of law to undo Court Orders, has judicial approval in India."

I was proved wrong. 20 petitioners challenged this and got relief from the Delhi High Court on 3 rd May 2016, where the Show Cause Notices issued by DRI were quashed.

The High Court observed in 2016-TIOL-877-HC-DEL-CUS;

1. The mere fact that Section 28(11) has been given retrospective effect does not solve the essential problem pointed out by the Supreme Court in the Sayed Ali case, which is the absence of the assigning of functions to 'proper officers. under Section 2(34) of the Act.

2. Section 28(11) confers validity only on 'the proper officer'.

3. If jurisdiction is exercised by one officer of the Customs or of the DRI or DGCEI, it should impliedly oust the jurisdiction of other officers over the same subject matter. The doctrine of comity of jurisdiction requires that for the proper administration of justice there should not be an overlapping of the exercise of powers and functions.

4. 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

5. As regards the period subsequent to 8th April 2011, it is evident that if the administrative chaos as envisaged by the Supreme Court in Sayed Ali 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 coordination 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.

In DDT 2838 04 05 2016, I wrote;

This is not positively the end of litigation in this matter. The Government is sure to take the matter to the Supreme Court and/or try another hand at retrospective litigation. Undoing a Supreme Court order requires deft drafting skills, which bureaucrats are not fortunately endowed with.

As expected, the Department took the matter in SLP to the Supreme Court. In one of the SLPs, the Supreme Court on 7.10.2016, stayed the Delhi High Court Order. The Supreme Court ordered,

Delay condoned.

Leave granted.

There shall be a stay of operation of the impugned judgment and order passed by the High Court of Delhi.

2016-TIOL-173-SC-CUS

Service Tax - Services provided by Rajasthan Police - Appeal Before CESTAT and Suit Before Supreme Court - No Two Remedies

THE State of Rajasthan filed a Suit in the Supreme Court praying for a declaration that the levy of service tax on the plaintiff in relation to the activities of providing/deploying additional police force at various Banks/Institutions/Organisations or at various events and the work of character verification for the purpose of maintaining law and order situation as per the provisions of Section 11 and 46 of the Rajasthan Police Act, 2007 is violative of Article 289 of the Constitution of India and therefore without authority of law and declare that the adjudication orders passed levying service tax on the plaintiff and the action of collection/recovery of service tax from the plaintiff is without jurisdiction.

In nutshell, the case of the plaintiff, State of Rajasthan is that no service tax is payable on the activity of the Rajasthan Police in providing/deploying additional police force at various Banks/Institutions/Organisations etc.

The Union of India apart from contesting the suit on merit raised a preliminary objection to the maintainability of the suit.

The Union of India stated that:

1. a show cause notice was issued to the plaintiff by the Adjudicating Authority and after the plaintiff filed its reply, the Adjudicating Authority held that service tax was payable on the aforesaid services rendered by the plaintiff.

2. Against the order passed by the Assessing Officer, the plaintiff had even preferred an appeal before the Commissioner, Central Excise, Jaipur, which appeal was dismissed by the Commissioner.

3. Not only this, against the order of the Commissioner, the plaintiff has filed statutory appeal before the Customs Excise & Service Tax Appellate Tribunal (CESTAT), which is pending consideration by the CESTAT.

4. Since the statutory remedy under the Finance Act has been availed by the plaintiff seeking the same relief, the present suit, therefore, would not be maintainable as the plaintiff cannot invoke two remedies for one cause of action.

The Supreme Court held,

"Even if it is presumed that the suit was maintainable, at the same time the plaintiff also had remedy of filing the statutory appeals etc. by agitating the matter under the Finance Act. It chose to avail the remedy under the Finance Act. The Doctrine of Election would, therefore, become applicable in a case like this. After choosing one particular remedy the plaintiff cannot avail the other remedy as well, in respect of the same relief founded on same cause of action."

Please also see 2016-TIOL-2251-HC-MUM-ST

2016-TIOL-171-SC-ST

High Court is required to give some reasons indicating that no substantial question of law is involved - Supreme Court

IN the Revenue SLP, the Additional Solicitor General submitted that the High Court while dismissing the appeal has not ascribed any reasons whatsoever, except stating that no substantial question of law arises for consideration. The Supreme Court held that the High Court is required to give some reasons indicating that no substantial question of law is involved.In the absence of the reasons, the Supreme Court set aside the High Court order and remanded the matter to the High Court for fresh consideration.

2016-TIOL-172-SC-CX

Designating Ports for Imports of un-shredded metallic Scrap

DGFT has prescribed procedure for designating ports for imports of un-shredded metallic scrap and handling of un-shredded scrap by ICDs is prescribed.

Any sea port to be designated for import of un-shredded metallic scrap will be required to install Radiation Portal Monitors and Container Scanner with adequate security. The sea port having completed the above shall approach jurisdictional Customs for inspection and certification. Customs may give necessary clearance on receipt a port as designated port for import of un-shredded scrap.

The existing designated sea ports namely Chennai, Cochin, Ennore, JNPT, Kandla, Mormugao, Mumbai, New Mangalore, Paradip, Tuticorin, Vishakhapatnam, Pipava, Mundra and Kolkata will be allowed to import un-shredded scrap till 31st March, 2017 by which time they are required to install and operationalize Radiation Portal Monitors and Container Scanner.

Public Notice No 38/(2015-2020), Dated: October 6, 2016

Uploading of RTI replies on respective websites of Ministries/Departments

AS per the RTI guidelines,

All Public Authorities shall proactively disclose RTI applications and appeals received and their responses, on the websites maintained by Public Authorities with search facility based on key words. RTI applications and appeals received and their responses relating to the personal information of an individual may not be disclosed, as they do not serve any public interest.

DoPT has now clarified that while proactively disclosing RTI applications and appeals received and responses thereto, on their website, the personal details of RTI applicant/appellant should not be disclosed as they do not serve any public interest. It is further clarified that the personal details would include name, designation, address, e-mail id and telephone no. including mobile no. of the applicant.

But do those guidelines not apply to the Revenue Boards as we never find the CBEC or CBDT disclosing any RTI applications or their replies. In fact, it is very difficult to get any reply from both the Boards as they will circulate your query to various sections and each section will tell you that the answer is not with that section. I asked the Revenue Department more than two months ago details of officers who have been compulsorily retired. They have sent the query to 27 sections and I am yet to get a complete answer. The Prime Minister had said that he had sent home more than 30 Revenue Officers. I don't know how the Prime Minister got this information.

DoPT F. No. 1/1/2013-IR., Dated: October 07, 2016

The Next two days are holidays - Dussehra and Muharram

Until Thursday with more DDT

Have a nice day.

Mail your comments to vijaywrite@tiol.in