2022 (8) TMI 725 - HC - Customs

Violation of principles of natural justice - withdrawal of immunity, granted under Section 127H of the Customs Act, 1962, from petitioner without serving any prior notice - HELD THAT - Evidently, no notice has been issued to the petitioner prior to withdrawal of the immunity and the order is unilateral, merely referring to the fresh evidences brought out by the investigating agency. What the evidences are, is also unknown and do not appear to have been put to the petitioner - There has been no representation on behalf of the respondent though a learned Standing Counsel had, at the time of admission, accepted notice on their behalf. Thereafter, on account of a change in panel, the present learned Senior Standing Counsel was requested to take instructions, but states that she has also been unable to obtain instructions. It was held in that matter that the forum/Court before which the order of the Settlement Commission must be challenged is that where the Assessing Officer concerned is located. However, in the present case, it is not the substantive order which is under challenge but a subsequent order, which is patently in violation of the principles of natural justice - the order is set aside, as being contrary to the principles of natural justice. Petition allowed.

Summary

Issues:
1. Withdrawal of immunity granted by the Settlement Commission.
2. Lack of notice prior to withdrawal of immunity.
3. Jurisdictional aspect of challenging the Settlement Commission's order.
4. Violation of principles of natural justice in unilateral withdrawal of immunity.

Analysis:
1. The petitioners challenged the orders passed by the Customs, Central Excise and Service Tax Settlement Commission, where immunity granted under Section 127H of the Customs Act, 1962 was unilaterally withdrawn through impugned orders dated 31.01.2019. The withdrawal was based on fresh evidence provided by the investigating agency, indicating concealment of material evidence and false documents to evade Customs duty.

2. The withdrawal of immunity was done without issuing any prior notice to the petitioners, and the order was unilateral, failing to disclose the specific evidence presented by the investigating agency. This lack of transparency raised concerns regarding due process and the petitioners' right to be heard before such a significant decision.

3. An important issue raised was the jurisdictional aspect of challenging the Settlement Commission's order, given that the petitioners were assessed in Karnataka, while the Commission was located in Chennai for administrative convenience. The Court referred to a previous case to highlight that the proper forum to challenge the Commission's order should align with the location of the Assessing Officer concerned.

4. The Court found the withdrawal of immunity to be in violation of the principles of natural justice due to the absence of notice and opportunity for the petitioners to respond to the fresh evidence. Consequently, the Court set aside the order dated 31.01.2019 and directed the respondent to issue notice to the petitioners, provide the evidences relied upon, conduct a hearing, and pass appropriate orders in accordance with the law, emphasizing the importance of procedural fairness.

5. The judgment clarified that its decision was specific to the circumstances of this case and should not serve as a precedent in matters challenging the substantive orders of the Settlement Commission. Ultimately, the writ petitions were allowed, and unnecessary impleadment applications were closed without costs, ensuring a fair and just resolution in light of the principles of natural justice.