CHA licence cancellation fails where the underlying drawback fraud is not proved, and aiding liability cannot stand alone.

A CHA licence cancellation based on alleged facilitation of excess drawback was held unsustainable because the principal fraud attributed to the export firm had not been established. The punitive action rested on claims that the CHA prepared two sets of invoices, over-invoiced shipping bills, and thereby assisted inadmissible drawback, with additional reliance on alleged breach of Regulation 14(d) and non-maintenance of the job register. The authority found that consequential liability for aiding and abetting could not stand in the absence of proof of the underlying fraudulent act. The cancellation was set aside and the appeal was allowed.

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Issues: Whether cancellation of the CHA licence could be sustained when the alleged fraudulent procurement of excess drawback by the export firm had not been established.

Analysis: The charge against the CHA was that it had facilitated preparation of two sets of invoices and thereby assisted the export firm in obtaining inadmissible drawback by over-invoicing shipping bills. The decision turned on whether such consequential liability could survive in the absence of a finding that the principal allegation against the export firm, namely availment of excess drawback, was proved. The cancellation was founded on an alleged contravention of Regulation 14(d) of the CHALR, 1984 and on non-maintenance of the job register, but the core basis for the punitive action remained the supposed assistance in the main fraud.

Conclusion: The cancellation of the CHA licence was not sustainable and was set aside; the appeal was allowed.

Final Conclusion: Punitive action against the CHA could not be maintained when the underlying fraudulent act attributed to the export firm itself had not been established.

Ratio Decidendi: Liability for aiding and abetting a revenue fraud cannot be sustained unless the principal fraudulent act is first established.

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