Case BriefsHigh Courts

Allahabad High Court: A Division Bench of Pankaj Kumar Jaiswal and Rajnish Kumar, JJ. dismissed a PIL seeking to ensure that the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act), Uttar Pradesh Goods and Services Tax Act, 2017 (UP GST Act) and Integrated Goods and Services Tax Act, 2017 (IGST Act) were implemented in proper manner qua the duty free shops.

The contention of the petitioner was that the respondent 3 was liable to pay IGST on the goods imported into the territory of India, which it was not doing. Though the Duty-Free Shops (DFS) operated by respondent 3 were in the State of Uttar Pradesh, the goods were sold to international passengers without charging the applicable taxes under CGST and SGST Acts. The petitioner further contended that the respondent was incorrectly permitted to claim a refund of an accumulated input tax credit of GST paid on service of renting of immovable property by AAI (Airports Authority of India) and procurement of domestic goods and services.

The petitioner submitted that a transaction must suffer GST the moment the supply of goods crossed the territorial waters of India. Therefore, the supply of imported goods to respondent 3 needed to be subjected to tax under Section 5 of the IGST Act. The petitioner further submitted that from the standpoint of Section 8 (1) of the IGST Act, the sale made to International passengers at the arrival terminal DFS of the respondent should have been considered as intra-state supply of goods and such sale should have attracted applicable CGST and SGST under Section 9(1) of the CGST Act and SGST Act and that the activity undertaken from the departure terminal DFS operated by the respondent was not an export of goods under GST Act as the essential ingredients to qualify for export were not being satisfied by the respondent.

The learned counsel for the respondent, Sheeran Mohiuddin Alavi, submitted that supply of goods to and from the DFS was before the clearance of imported goods for home consumption/export and the supply of goods from DFS at International Airports were considered as export of goods. He contended that as per Section 7(2) of the IGST Act, the supply of goods imported into the territory of India was considered as Inter-State Supply till they cross customs frontiers.

The Court held that the supply of imported goods to and from the DFS did not cross the customs frontier and hence these supplies were an inter-state supply in accordance to Section 7 (2) of the IGST Act. Consequently, the supply wasn’t liable to CGST and SGST under Section 9 of the CGST and SGST Act. It further observed that Section 7(2) read with proviso to Section 5(1) of the IGST Act stated that integrated tax on “goods imported into India” would be levied “at the point” when the duties of customs were levied on the said goods under Section 12 of the Customs Act, 1962 and at no other point. According to Section 12 of the Customs Act, duties of customs were levied on imported goods only when such goods were cleared for home consumption.

The Court relied on Kiran Spinning Mills v. Collector of Customs, (2000) 10 SCC 228 in which the Supreme Court had held, the taxable event occurs when the customs barriers are crossed. In the case of goods which are in the warehouse, the customs barriers would be crossed when they are sought to be taken out of the customs and brought to the mass of goods in the country.”

It was held that when the goods were imported from outside India and kept in a customs warehouse and exported therefrom, the stage for payment of customs duty under Customs Act, 1962 did not arise. Hence neither Custom duty nor IGST was payable.

In view of the above, the petition was dismissed and it was held that the exemption under GST on goods supplied to and from the DFS was rightly conferred and the claims of any accumulated unutilized ITC were refundable to respondent 3.[Atin Krishna v. Union of India, PIL Civil No. 12929 of 2019, decided on 03-05-2019]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Rekha Palli, J. while disposing of a petition, waived of the sentence awarded to the petitioner on grounds of parity with the co-accused.

The petitioner was convicted by the Magistrate under Section 132 and 135(1) (a) of the Customs Act for evading customs duties payable at the airport on the import of certain household items. He was sentenced to undergo imprisonment for a period of 6 months along with a fine of Rs 50,000 on each count. The petitioner did not challenge his conviction but sought suspension of sentence. it was submitted that he had already paid the fine and undergone 2 months of imprisonment.

The High Court perused the record and noted that the petitioner was working as an authorised representative of the co-accused and smuggled certain goods by misdeclaring the same before customs authorities. On facts, it was proved that both the accused were equally culpable. It was also noted that the remaining sentence of the co-accused had already been waived off. The Court was of the opinion that the petitioner was entitled to the same benefits as that of the co-accused. Accordingly, his sentence was reduced to the period already undergone subject to the petitioner depositing an additional fine of Rs 25,000. [R.K. Anand v. Commr. of Customs,2018 SCC OnLine Del 12593, decided on 27-11-2018]

Case BriefsHigh Courts

Calcutta High Court: The Division Bench comprising of Joymalya Bagchi and Ravi Krishan Kapur JJ., while setting aside the conviction and sentence imposed upon the appellant, stated that the evidence placed are too flimsy and contradictory to inspire confidence.

The factual matrix of the case was that the appellant was detained by the Air Intelligence Unit (AIU) at the NSCBI Airport while he was proceeding towards immigration and subsequently on interrogation and suspicion of possession of contraband a complaint was filed under Sections 21(b) and 23(b) of the NDPS Act. An X-Ray was conducted of the abdomen of the appellant further on being detained under surveillance at the AIU office, 49 pieces of bullet shaped capsules were allegedly recovered from the appellant’s stool. The contents which were recovered consisted of ‘Hashish’.

The appellant had denied all the charges by stating that the procedure to recover contraband was in violation of Section 103 of the Customs Act, also no order of the Magistrate in terms of Section 103(6) of the mentioned Act was obtained.

Therefore, the Court denying the contentions of the respondents and giving due consideration to the circumstances and facts of the case, stated that the appellant was kept under surveillance at the AIU office until the time he defecated ejecting the contraband from his body. The said move by the authorities was said to be a violation of the statutory scheme but also an infringement of the fundamental right under Article 21 of the Constitution of India, especially on no permission been taken from the magistrate for the same.

“Procedure entailing recovery of Narcotics/contraband from the body of the suspect requires invasion into the physical body of the suspect and an encroachment into his privacy such exercise should be in strict compliance with statutory safeguards”. [Mursaleen Mohammad v. Union of India,2018 SCC OnLine Cal 4885, dated 19-06-2018]

Case BriefsSupreme Court

Supreme Court: Explaining the scope of the appellate power of the Supreme Court under Section 130E(b)of the Customs Act, 1962, the Bench of Ranjan Gogoi and Ashok Bhushan, JJ enumerated certain conditions that need to be fulfilled before admitting any case under the said provision.

The Conditions are as follows:

  • It is a sine qua non for the admission of the appeal before this Court under Section 130E(b) of the Act that the question raised or arising must have a direct and/or proximate nexus to the question of determination of the applicable rate of duty or to the determination of the value of the goods for the purposes of assessment of duty.
  • The question raised must involve a substantial question of law which has not been answered or, on which, there is a conflict of decisions necessitating a resolution.
  • If the tribunal, on consideration of the material and relevant facts, had arrived at a conclusion which is a possible conclusion, the same must be allowed to rest even if this Court is inclined to take another view of the matter.
  • The tribunal had acted in gross violation of the procedure or principles of natural justice occasioning a failure of justice.

Stating that the above-mentioned list should not be treated to be exhaustive, the Court said that Section 130E(b) of the Act provides for a direct appeal to the Supreme Court against an Order of the appellate tribunal, broadly speaking, on a question involving government revenue. This seems to be in view of the fact that the order that would be under appeal may go beyond the inter se dispute between the parties and effect upon a large number of assessees. The issue, in such an event, surely will be one of general/public importance.

Noticing that Chapter IV of Part V of the Constitution expressly limits the appellate jurisdiction of the Supreme Court to (i) a substantial question of law as to the interpretation of the Constitution, (ii) a substantial question of law of general importance, the Court said that while construing the extent of the appellate jurisdiction to be exercised by the Supreme Court under a statutory enactment, the role of the Supreme Court as envisaged by the Constitution cannot altogether be lost sight of. Hence, the jurisdiction of the Supreme Court under Section 130E(b) of the Act or the pari materia provisions of any other Statute would be in harmony with those contained in Chapter IV of Part V of the Constitution. [Steel Authority of India v. Designated Authority, Directorate General Of Anti-Dumping & Allied Duties, 2017 SCC OnLine SC 409, decided on 17.04.2017]


Case BriefsHigh Courts

Delhi High Court: While allowing a petition seeking return of a bracelet seized by the Custom Officers, the Single Bench of Sanjeev Sachdeva, J. held that where goods are seized under Section 110 of the Customs Act, 1962 and no notice thereof is given under Section 124(a) within six months of the seizure, the goods are liable to be returned to the person from whose possession they were seized.
In the instant case, the petitioner, on arriving from Dubai, was intercepted at the airport by the Custom authorities. A gold bracelet, owned by him, was seized on the ground that it was imported from Dubai. Petitioner contended that since the Custom Authorities have not issued any notice within six months of the seizure, as mandated by Section 110(2), they ought to return the bracelet. Respondents, however, contended that the bracelet had not been seized, but merely been detained for clearance. Therefore, Section 110(2) had no applicability as the said section applies only in cases of seizure.
The Court noted that there is no provision for detention of goods in the Act, and the Custom Department, under the garb of detention, could not avoid the consequences flowing from seizure of goods. Since the petitioner’s bracelet had been under Custom Department’s seizure for nearly one year and ten months, and no show-cause notice under Section 124(a) of the Act had been issued, the bracelet was liable to be returned to the petitioner. The Court also clarified that the release of the bracelet would not debar the respondents from taking appropriate action in accordance with law. [Jitendra Kumar Sachdeva v. Union of India, Writ Petition No. 1492 of 2016, decided on December 08, 2016]