Phrase “has reasons to believe” is very important and its significance is well known under various laws and concerns working of authorities in legal and proper manner.

[DEV KUMAR KOTHARI]

Phrase “has reasons to believe” is very important and its significance is well known under various laws and concerns working of authorities in legal and proper manner.

 Unfortunately authorities take it casually and also indulge into unnecessary litigation.

This is causing loss of valuable time and brain drain of highly qualified, experienced, important and highly paid people including judges.

Incidentally author came across short comings about the portal of the Supreme Court, in finding orders and judgments.

Judgment under study:

2023 (3) TMI 251 - SC ORDER - UNION OF INDIA & ORS. ETC. VERSUS M/S. MAGNUM STEEL LTD. ETC.

Expression “has reasons to believe”

In the Customs Act itself the expression is used 11 times in section 100, 101, 103,104,105,109,110,112,135 (twice) which are within the following chapters:

CHAPTER XIII SEARCHES, SEIZURE AND ARREST –S. 100, 101, 103,104,105,109,110.

CHAPTER XIV CONFISCATION OF GOODS AND CONVEYANCES AND IMPOSITION OF PENALTIES – S. 112. Penalty for improper importation of goods, etc.—

CHAPTER XVI OFFENCES AND PROSECUTIONS – S. 135. Evasion of duty or prohibitions.

There are likely some more use of same or similar expression in Act and Rules etc. Similar expressions are also found in various other direct and indirect tax laws. This expression concerns about seriousness, sincerity, honest and diligent attitude of concerned officers. A slight lacking can cause hamper of the case.

About the case:

The case concerns Search and seizure that took place on 20.08.2009 under Customs Act. The same were declared void long ago vide order dt. (could not be ascertained) of High Court against which appeal was filed in year 2011 as per Civil Appeals numbers in the Supreme Court.

Considering urgency and importance, the Writ Petition before High Court must have been filed soon after the search. Therefore, it is a case of justice delayed that means justice denied because it took at least 11 years in disposal of case by the Supreme Court.

Orders on the portal of Supreme Court:

On https://main.sci.gov.in/judgments with search for free text with Magnum Steels for period 01.01.2011 to 12.03.2023 we find that there have been orders starting from 22.07.2011 and are visible till 04.11.2011 and not thereafter. On 02.03.2023 final order is found.

With search criteria respondent Magnum Steels for the above period also no record was found.

This is indicative of reasons for large number of cases piling and pending before various courts including the Supreme Court.

Provisions considered / mentioned by the Supreme Court:

The Central Excise Act, 1944 and The Customs Act, 1962

From The Customs Act, 1962 – section 105, 123 with highlights added for easy understanding , catch words, and analysis

SECTION 105.

Power to search premises. - (1) If the Assistant Commissioner of Customs or Deputy Commissioner of Customs, or in any area adjoining the land frontier or the coast of India an officer of customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act, are secreted in any place, he may authorise any officer of customs to search or may himself search for such goods, documents or things.

(2) The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the words ¹[Principal Commissioner of Customs or] Commissioner of Customs were substituted.

 SECTION 123. Burden of proof in certain cases. - (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be -

(a) in a case where such seizure is made from the possession of any person, -

(i) on the person from whose possession the goods were seized; and

(ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person;

(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.

(2) This section shall apply to gold, and manufactures thereof, watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify.

In the judgment there is reference of The Central Excise Act, 1944 for section 110 thereof.

In paragraph 1:

“The assessee had impugned the action contending that there were “no reasons to believe” in terms of Section 110 of the Central Excise Act, 1944 read with Section 123 of the Customs Act, 1962”.

As we find that S. 110 of The Central Excise Act, 1944 is not found on this and other websites and author could notice sections up to section 40 and thereafter Schedules to the CE Act are found.

Therefore, with respect, author feels that the counsels of assessee has wrongly mentioned about S.110 of the Central Excise Act, 1944. As we find its mention in the order / judgment:

 Secretaries and other officers of honorable judges of the Supreme Court might have adopted cut/ paste, copy paste approach without due care.

On search on https://main.sci.gov.in/judgments with CIVIL APPEAL NOS. 9597, 9598 and -9599 OF 2011 no record was found on 12.03.2023

Search with Magnum Steel as respondent and order dates range 01.03.23 to 12.03.23 also no record was found.

In free search with text magnum steel author found the judgment. It is observed that in the judgment on the website of SC also the same expression is found. That means there is no mistake in reported judgment on this website.

There should have been correction by counsels of Assessee , but as per recording in judgment, it seems that no correction was made and surprisingly their lordships also over looked it.

There can be a mistake in the judgment also. When author with a little bit knowledge about the Customs Act, was not comfortable while reading about S.110 of CE Act, it cannot be that their lordships could not detect the same if the judgment was signed by them.

This may be due to reason that orders is signed digitally by

(NEETA SAPRA) and (MATHEW ABRAHAM)

COURT MASTER (SH) COURT MASTER (NSH)

The above search facility and results and signature of Orders of the Supreme Court by Court officers indicate that we all including their lordships of the Supreme Court need to be more attentive.

Correct section:

As per author the correct section relevant to the case is S.110 of the Customs Act, it self and not S.110 of CE Act.

Relevant portion of section 110 of the Customs Act about seizure is reproduced below with history of amendments and highlights added:

Customs Act, 1962

SECTION 110. Seizure of goods, documents and things. -

(1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods :

 (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act.

 Note other provisions concerning about holding of seized goods and related matters are not relevant in context of discussion in this article.

The phrase “has reason to believe” is still in the Act and with the same intent and force.

About hearing and Judgment:

The judgment has been passed by bench of two honorable judges of the Supreme Court

There were seven Advocates who appeared on behalf of Petitioner/ appellant the UOI

On behalf of respondent assessee only one advocate of record appeared.

Hearings noted as found on portal started on 04.11.2011.

This is indicative of slow speed of progress of cases which are on almost settled issues. In this case , which is covered in favor of assessee on principals and facts also there should not be so much delay. It may be that counsels of UOI has found a big source of earnings which they kept alive for a long period of more than 11 years.

Relevant portion from the judgment are reproduced with highlights added for easy understanding , catch words, and analysis

2023 (3) TMI 251 - SC ORDER UNION OF INDIA & ORS. ETC. VERSUS M/S. MAGNUM STEEL LTD. ETC.

Unquote – authors views:

Although judgment of the High Court could not be found, however, there is sufficient discussion about reasoning, process of reasoning and records called by High Court and examined for consideration and conclusions drawn by the High Court.

This clearly shows that in spite of so many rulings and clear provisions authorities are working in casual manner in the matter of prerequisites for initiation of many type of proceeding, and also in execution of proceedings. The same situation is found in relation to many other laws for taxation, penalties, prosecutions etc.

In the case of penalty proceedings under tax laws and in Criminal Law also there is more stringent requirement about reasonable cause or reasonable belief or even reasonable doubt. Carelessness can cause even relief for hard core criminals.

Therefore, public servants (officers) who unfortunately consider themselves as masters of public must do their work more diligently.