2019 (11) TMI 1782 - HC - Customs

Demand on a difference of opinion between the petitioner and the respondent on the classification of Pocket Bricks Game (game) - According to the petitioner, the game is liable to be classified in terms of heading CTH 9503.20, whereas, according to the respondent, it is liable to be classified as 'hand held Brick Video Game', under CTH 9504.30 and CET 9504.90. HELD THAT - This writ petition deserves to be allowed - the fact that the issue on merits in regard to classification as hand held Brick Video Games has been confirmed by the Tribunal is admitted by the Revenue. In such a case there is some merit in the stand of the petitioner that the same rationale would and should apply in his case as well. This position does not change merely because the challenge to the assessment is belated and the assessment and consequent demand have attained finality. The Classification of the goods and the taxability thereof should be no different in the case of the petitioner and/or other similarly placed assessees. A Division Bench of this Court in the case of RAYALSEEMA CONSTRUCTIONS AND ANOTHER VERSUS DEPUTY COMMERCIAL TAX OFFICER, MANNADY DIVISION, MADRAS 1 AND OTHERS 1959 (2) TMI 23 - MADRAS HIGH COURT considered a challenge to recovery proceedings in a case where the assessment had become final and had not been carried further in Appeal. The issue in that case related to the taxability of works contract. The Division Bench states that pursuant to the framing of assessments in that assessees' case, the law had stood amended. The Division Bench was of the view that such law would apply uniformly to all similarly and identically placed assesses. Thus, notwithstanding that the assessments in that case had become final and though there were neither appeals filed or in some cases, appeals that had failed on one ground or the other, the Division Bench after a detailed exposition of law, expressed the view that the impugned recovery action would fail. Thus, where a demand emanates from an order of assessment which is without authority, as in the present case where the issue on merits has been held in favour of the assessee and such decision accepted by the Department, judicial review is permissible subject to discretion exercised by the Court. This is an appropriate case for exercise of jurisdiction in terms of Article 226 of The Constitution of India - Petition allowed.

Summary

Issues:
Classification of 'Pocket Bricks Game' under CTH 9503.20 vs. 'hand held Brick Video Game' under CTH 9504.30 and CET 9504.90, Delay in filing appeals, Challenge to recovery proceedings, Jurisdiction of the Court for judicial review.

Classification Issue:
The petitioner contested the classification of a 'Pocket Bricks Game' under CTH 9503.20, while the respondent classified it as a 'hand held Brick Video Game' under CTH 9504.30 and CET 9504.90. The Assessing Authority's decision was based on a previous order regarding a similar case. The petitioner argued that the Tribunal's decision in a related case favored their classification, which should apply uniformly to all similar cases.

Delay in Filing Appeals Issue:
The petitioner's appeal was rejected due to a significant delay of 1000 days, leading to subsequent dismissals by the first appellate authority and CESTAT. The respondent highlighted the prolonged delay in the legal proceedings, questioning the merit of the writ petition filed in 2007 challenging an order from 2001.

Challenge to Recovery Proceedings Issue:
The petitioner challenged the order-in-original passed in 2001, citing the Tribunal's decision in a related case that supported their classification. The Court discussed previous judgments emphasizing that assessments without authority could be subject to judicial review, especially when decisions favoring the assessee have been accepted by the Department.

Jurisdiction for Judicial Review Issue:
The Court referred to various judgments, including a Division Bench and a Full Bench decision, supporting the exercise of jurisdiction under Article 226 of the Constitution of India in cases where assessments lack authority or result in gross injustice. The Court concluded that in the present case, where the issue on merits favored the assessee and was accepted by the Department, judicial review was permissible.

In the final judgment, the Court allowed the writ petition, quashing the order-in-original dated 31.12.2001, based on the rationale that the classification issue had been decided in favor of the petitioner in a related case. The Court emphasized the need for uniform application of decisions across similar cases and highlighted the discretionary power of judicial review in cases of assessments without authority or resulting in gross injustice.