SC Boosts Revenue Dept’s Customs Duty Recovery Efforts | Fusion - WeRIndia

The Supreme Court has given a major win to the Union Revenue Department by allowing the Central Board of Indirect Taxes and Customs (CBIC) to revive certain customs duty notices.

These notices, related to short levy, non-levy, or refund errors, amount to about Rs 20,000 crore.

This decision reverses a 2021 judgment by the Supreme Court that had previously quashed these notices, stating that Department of Revenue Intelligence (DRI) officers were not “proper officers” under the Customs Act, 1962.

In 2021, the Court ruled that only officers directly part of Customs could issue these notices, which made the DRI notices invalid. The Union Revenue Department, however, filed a review petition, which was accepted for an open hearing by a Supreme Court bench in 2022, led by then Chief Justice N V Ramana.

On Thursday, a new bench, including Chief Justice D Y Chandrachud and Justices J B Pardiwala and Manoj Misra, supported the government’s view.

They agreed with Additional Solicitor General N Venkataraman, who argued that the DRI officers were rightfully designated as “proper officers” and thus had the authority to issue the notices.

The Court found the 2021 decision incorrect because it had not considered a 2011 notification that assigned “proper officer” functions to DRI officers.

Justice Pardiwala, who wrote the 162-page judgment, clarified that the 2021 ruling missed this key detail. He explained that the previous decision wrongly assumed that DRI officers lacked the jurisdiction to issue show cause notices under Section 28 of the Customs Act.

The current judgment states that DRI officers do indeed have the authority to handle these duties, as the 2011 notification allowed them to act as “proper officers” under the law.

Justice Pardiwala also mentioned the Finance Act, 2022, which validated all show-cause notices issued by DRI officers under Section 28, even retroactively.

He concluded that this section of the Finance Act was not unconstitutional, meaning these notices were lawful even for cases issued before the 2022 Act came into effect.

This judgment is significant because it allows the revenue department to pursue cases that had been put on hold due to the 2021 decision.

With this reversal, the government can now continue its efforts to recover the substantial customs duty amounts that were previously challenged in court.

This decision reinforces the government’s stance on tax collection and the role of DRI officers in customs enforcement.

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