2019 (7) TMI 591 - HC - Customs

Challenge against the order passed by the Settlement Commission - legitimate sales or not - HELD THAT - Both the Assessee and the Revenue were equal parties and had an opportunity to place their respective case before the Settlement Commission. The reason behind the creation of Settlement Commission is to give a quietus to the dispute between the two parties viz., Revenue and the Assessee. Without any allegation of fraud played by any party upon such authority viz., the Settlement Commission, the orders passed by the Settlement Commission is final as per Section 127J of the Customs Act, 1962. The present appeal has no merits and it is liable to be dismissed - We express our anguish on the Revenue Departments of the Central Government in filing such petitions before the High Court, without really examining the merit and worth of their petitions before hand - On the other hand, the recent litigation policies issued to such Revenue Departments, compels the Revenue Departments to withdraw the cases where the Revenue stakes are less than ₹ 50 Lakhs and such circulars have been issued from time to time earlier also to reduce the burden of the Courts by withdrawal of such cases, even if they have some arguable points, where the Revenue stake are less than the monetary limits prescribed. Appeal dismissed.

Summary

Issues:
1. Upholding Settlement Commission's order by Single Judge.
2. Finality of Settlement Commission's order under Customs Act.
3. Dismissal of writ petition by Division Bench.
4. Imposition of costs on Revenue authorities for frivolous litigation.

Issue 1: Upholding Settlement Commission's order by Single Judge
The Single Judge upheld the Settlement Commission's order and dismissed the Revenue Department's writ petition challenging it. The Single Judge found that the respondent company had complied with requirements and provided evidence to support their case. The audit department did not find any defects in the records kept by the duty-free shop. The Settlement Commission held the total liability of the respondents to be the admitted amount, awarding simple interest. The Single Judge cited Division Bench decisions emphasizing the discretionary powers of the Settlement Commission and the limited scope for interference by the writ Court.

Issue 2: Finality of Settlement Commission's order under Customs Act
The Division Bench reiterated the finality of Settlement Commission orders under Section 127J of the Customs Act, 1962. The purpose of the Settlement Commission is to resolve disputes between the Revenue and the Assessee without fraud allegations. The order passed by the Settlement Commission is conclusive as per the Act, preventing any reopening of matters covered in the order under any other law. The Division Bench highlighted that the intention behind the provision is to bind both parties to the Settlement Commission's orders, ensuring disputes are settled without subsequent challenges or modifications.

Issue 3: Dismissal of writ petition by Division Bench
The Division Bench dismissed the writ appeal by the Revenue Department against the Settlement Commission's order. The Bench found no merit in entertaining the appeal, emphasizing that both parties had presented their cases before the Settlement Commission. The Bench criticized the Revenue Department for filing frivolous petitions without proper examination of merits, highlighting circulars directing withdrawal of cases with lower stakes to reduce court burden. Despite the dismissal, the Revenue Department pursued the appeal, occupying judicial time. The Division Bench refrained from imposing costs but warned against future frivolous litigations.

Issue 4: Imposition of costs on Revenue authorities for frivolous litigation
Although the Division Bench refrained from imposing costs on the Revenue authorities in this case, it expressed displeasure at the frivolous nature of the litigation. The Bench highlighted the burden on the judiciary caused by such cases and warned that responsibility would be fixed on officers sanctioning such filings in the future. The Bench emphasized the need to avoid frivolous litigations to reduce judicial workload and ensure cases are filed based on merit rather than arbitrary reasons.

This judgment underscores the significance of Settlement Commission orders under the Customs Act, the finality of such orders, and the need to discourage frivolous litigations to streamline judicial processes and reduce unnecessary burden on the courts.