2017 (12) TMI 1040 - HC - Customs

Principles of Natural Justice - Breach of Regulations 11 and 17 of the said CBLR, 2013 - Held that - this order appears to have been passed without giving any prior notice and opportunity of hearing to the petitioner, but a perusal of different Regulations particularly, Regulation Nos.18, 19, 20, 22 and 23 indicates that various kinds of penalties and actions are envisaged under these Regulations to be taken against the erring Customs Broker - petitioner not only has an opportunity to show-cause and establish its innocence and compliance with the Regulations before the concerned authority itself even now, but has equal, adequate and efficacious remedy by way of appeal against the impugned order even before the CESTAT under Regulation 21. A lenient and conveniently held out tool of ground of natural justice cannot be used to protect those who have indulged in gross violation of Regulations and Rules and which has resulted in evasion of tax and duties and has caused revenue loss. On the face of it, this ground invoked in the writ jurisdiction, may appear to be attractive to exercise the discretion under Article 226 of the Constitution of India but the malaise in such cases is indeed deep-rooted, where the Courts in its extraordinary jurisdiction, on the basis of the Affidavits only cannot even easily reach into. This Court would not like to comment upon the facts of the present case, as the matter appears to be still pending under investigation and the appellate order, the petitioner may have his own opportunity to lead his evidence in the matter at this stage, but prima- facie reading of the order, shocks the conscience of this Court - the alleged ground of breach of principles of natural justice need not prompt this Court to immediately interfere in such cases at such premature stage of the matter. Petition dismissed.

Summary

Issues:
Violation of principles of natural justice in passing the order without notice and hearing, Alleged breach of Regulations 11 and 17 of Customs Brokers Licensing Regulations, 2013, Invocation of Regulation 23 to prohibit Customs Broker's operations, Availability of alternative remedy through appeal to CESTAT, Consideration of principles of natural justice in appellate forums, Balance between natural justice and preventing tax evasion.

Violation of Principles of Natural Justice:
The petitioner challenged the order passed by the Commissioner of Customs without prior notice or hearing, citing a Madras High Court decision emphasizing natural justice principles. The Court acknowledged the lack of notice but highlighted various penalties and actions envisaged under Regulations 18, 19, 20, 22, and 23 for Customs Brokers' violations. The immediate action under Regulation 23 was justified to prevent illegal activities, with the petitioner having the opportunity to appeal to CESTAT under Regulation 21.

Alleged Breach of Regulations 11 and 17:
The impugned order cited violations of Regulations 11 and 17 of the Customs Brokers Licensing Regulations, 2013 by the Customs Broker. The Commissioner of Customs invoked Regulation 23 to prohibit the Broker's operations due to grave contraventions. The petitioner's failure to comply with obligations under these regulations led to the immediate action taken by the Commissioner.

Invocation of Regulation 23:
Regulation 23 empowered the Commissioner to prohibit a Customs Broker from working in specific sections if obligations under Regulations 11 or 17 were not fulfilled. The order prohibiting the Broker's operations within the jurisdiction was based on investigations and reports forwarded by the Directorate of Revenue Intelligence, indicating serious contraventions justifying the immediate action.

Availability of Alternative Remedy through Appeal:
The petitioner had the option to appeal the order to CESTAT under Section 129A of the Customs Act, as provided in Regulation 21. The Court emphasized the importance of utilizing the appellate process for addressing grievances related to natural justice, penalties, and regulatory breaches, rather than seeking immediate intervention through writ jurisdiction.

Consideration of Principles of Natural Justice in Appellate Forums:
The Court highlighted that grounds of natural justice could be raised before appellate forums like CESTAT, ensuring a fair opportunity for the petitioner to establish compliance with regulations and innocence. Upholding natural justice principles was deemed essential, but the Court emphasized the need for thorough scrutiny by departmental authorities before seeking intervention from Constitutional Courts.

Balance between Natural Justice and Preventing Tax Evasion:
The Court cautioned against using natural justice as a lenient tool to protect entities involved in gross violations leading to tax evasion and revenue loss. Immediate bans on Customs Brokers involved in fraudulent activities were deemed necessary to prevent further harm to public funds. The Court dismissed the writ petition, emphasizing the importance of allowing investigative and appellate processes to address regulatory breaches effectively.