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TMI Blog2025 (3) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... goods and for that reason alone would not satisfy the mandate of Section 67 (7) of the CGST Act. Clearly, the shoddy performance by the concerned officers in valuing the goods despite the complete cooperation of the Assessee cannot be "sufficient cause" - In any event, when the relevant documents themselves were not made available completely, it is difficult to accept the contention that the same could have formed "sufficient cause" for the purpose of extending the period of seizure. The confiscation is the result of an investigation that establishes that there has been a contravention of the provisions of the Act. The same cannot be equated to the power of seizure under Section 67 which pertains to the power of the Officer to seize based on a "reason to believe". A notice under Section 130 cannot be equated to the mandate under Section 67 (7). It is directed that the seized goods as per the stock summary annexed to the letter dated 17.06.2021 (Annexure P-6) be released upon the Petitioner making a deposit of the amount as per the valuation annexed to the letter dated 17.06.2021, with the Respondents. Conclusion - The "sufficient cause" must be shown to the affected person, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with a notice stated to be dated 20 October 2021, calling upon it to show cause why the seized articles not be confiscated in terms contemplated under Section 130 of the Act. The challenge which stands mounted in the writ petition proceeds on the following lines. 3. Our attention is firstly drawn to Section 67 (7) of the Act and which reads as follows: - "67. Power of inspection, search and seizure ⃰ ⃰ ⃰ (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized: Provided that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months. PROVIDED that the period of six months may, on sufficient cause being shown, be extended by the proper officer for a further period not exceeding six months." 4. It is submitted that goods which are seized under the Act are liable to be returned to the person from whose possession they were taken within six months of seizure. It becomes pertinent to note that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from whom the goods were seized. The proviso to Section 110 (2) of the Act allows the period of six months to be extended by the Collector of Customs for a period not exceeding six months on sufficient cause being shown to him in that behalf. 10. The Appellate Bench of the High Court is of opinion that the decision of the High Court in Asst. Collector of Customs v. Charan Das Malhotra lays down the correct law and applies to the facts of this case, that there is a duty on the part of the Collector of Customs to act judicially in exercising the power conferred under the proviso to Section 110 (2) of the Act and that, therefore, notice should have gone to the owner of the goods before the extension was ordered under the proviso. It has been held further that the order of extension should have been communicated to the owner and as that was not done the order was ineffective. xxxx xxxx xxxx 12. In Charan Das Malhotra [(1971) 1 SCC 697 : 1971 SCC (Cri) 321 : (1971) 3 SCR 802] the court referred to the consideration that seizure was authorised under Section 110 (1) on the mere "reasonable belief" of the officer concerned, that it was an extraordinary power and that therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime. The court did not specifically give the stamp of approval to the law laid down in Charan Das Malhotra. 13. There is no doubt that the words "on sufficient cause being shown" in the proviso to Section 110 (2) of the Act indicates that the Collector of Customs must apply his mind to the point whether a case for extending the period of six months is made out. What is envisaged is an objective consideration of the case and a decision to be rendered after considering the material placed before him to justify the request for extension. The Customs Officer concerned who seeks the extension must show good reason for seeking the extension, and in this behalf he would probably want to establish that the investigation is not complete and it cannot yet be said whether a final order confiscating the goods should be made or not. As more time is required for investigation, he applies for extension of time. The Collector must be satisfied that the investigation is being pursued seriously and that there is need for more time for taking it to its conclusion. The question is whether the person claiming restoration of goods is entitled to notice before time is extended. The right to notice flow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll for an extension of time. It is impossible to conceive that a person from whose possession the goods have been seized with a view to confiscation should be entitled to know and to monitor, how the investigation against him is proceeding, the material collected against him at that stage, and what is the utility of pursuing the investigation further. These are matters of a confidential nature, knowledge of which such person is entitled to only upon the investigation being completed and a decision being taken to issue notice to show cause why the goods should not be confiscated. There can be no right in any person to be informed midway, during an investigation, of the material collected in the case against him. Consequently, while notice may be necessary to such person to show why time should not be extended he is not entitled to information as to the investigation which is in process. In such circumstances, the right of a person, from whose possession the goods have been seized, to notice of the proposed extension must be conceded, but the opportunity open to him on such notice cannot extend to information concerning the nature and course of the investigation. In that sense, the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention to the provisions comprised in Section 169 of the Act and submitted that affixation is a mode which can be resorted to only if the other modes of service as contemplated in clauses (a) to (e) of that provision were not possible. Viewed in that light, the petitioner would contend that the confiscation notice would be deemed to have been made only in 2022 and thus clearly beyond the maximum period of 12 months as contemplated under Section 67 (7). 11. In order to enable Ms. Narain, learned counsel representing the respondents to address submissions in the aforesaid light, let the writ petition be called again on 20.01.2025." 4. On 29.01.2025, Ms. Narain, learned Senior Standing Counsel appearing for the Respondents, while replying to the queries raised by this Court and responding to the contentions of the Petitioner, had sought to defend the actions of the Department by submitting that the provisions of Section 110 of the Customs Act, 1962 (hereinafter referred to as "the Customs Act") are different from the provisions of Section 67 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as "the CGST Act") and that, the said two provisions are opera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eted in any place, he may authorise in writing any other officer of central tax to search and seize or may himself search and seize such goods, documents or books or things: Provided that where it is not practicable to seize any such goods, the proper officer, or any officer authorised by him, may serve on the owner or the custodian of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer: Provided further that the documents or books or things so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceedings under this Act. ..... (6) The goods so seized under sub-section (2) shall be released, on a provisional basis, upon execution of a bond and furnishing of a security, in such manner and of such quantum, respectively, as may be prescribed or on payment of applicable tax, interest and penalty payable, as the case may be. (7) Where any goods are seized under sub-section (2) and no notice in respect thereof is given within six months of the seizure of the goods, the goods shall be returned to the person from whose po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized. Seizure is for the limited purpose of securing the interest of the concerned authorities to conduct their proceedings. 14. In I.J Rao, the Hon'ble Supreme Court has held that upon the expiry of six months, the person whose goods are seized becomes entitled to their return and the said right cannot be sought to be defeated unilaterally and the affected person would be entitled to a notice of the proposal for extension prior to the expiry of six months and is also entitled to be heard on the said proposal, albeit with certain restrictions keeping in mind the statutory entitlement and the larger public concerns. 15. Even assuming the two provisions were not "pari materia", the underlying logic and reasoning would clearly apply to the provisions of the CGST Act and the case in hand. 16. The further contention that under Section 67 (7) of the CGST Act, no notice of personal hearing is required to be given as the wording of Section 67 (7) of the CGST Act is unambiguous in this respect, does not seem to be borne out from the express provisions. In fact, the Section is couched in a manner such as to ensure that the "sufficient cause will have to be shown" to the affected person. " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has not recorded the description of the goods properly and that is not a fault that can be attributable to the Petitioner. 23. What is most pertinent is that the said note sheet prepared by the Inspector and the Superintendent clearly records that: "The investigation case files in respect of M/s Kashish Optics (P) Ltd. And its relevant documents have not been properly handed over by Sh. Amit Khatri, Insp. till date i.e. 13.4.2021. On going through the case file, it is found that following relevant documents are not placed opposite in this file, details are as under:-..." and goes on to record that even the panchnama was not in the file. The said Mr. Saket Agarwal has, in fact, given a complete description of the goods and it is the seizure form that was prepared by the concerned officials which does not record the details. 24. This aspect has also been noticed by the concerned senior official to whom the same was put up along with the Draft SCN and adversely commented upon. 25. The said officer also notes, inter alia, that: "However scrutiny of the file failed to show any basis of such valuation. Further description of relied upon BPE placed in file is Metal Spectacle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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