Customs Broker Licensing Regulations 2013 require mandatory 90-day limit for initiating action against brokers

The HC held that the Customs Broker Licensing Regulations, 2013, having statutory force, prescribe a mandatory 90-day period for initiating action against customs brokers. The impugned show cause notice issued beyond this period was without jurisdiction and unsustainable. The court emphasized that the time limit is mandatory, not directory, to ensure timely action and accountability. Consequently, the suspension and forfeiture proceedings initiated after the prescribed period were quashed, and the decision was set aside in favor of the appellant.

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Issues Involved:

1. Validity of the continuation of the suspension of the Customs Broker Licence.
2. Validity of the show cause notice issued under Regulation 20 of the Customs Brokers Licensing Regulations, 2013.
3. Whether the prescribed time limits under Regulation 20 are mandatory or directory.

Detailed Analysis:

1. Validity of the Continuation of the Suspension of the Customs Broker Licence:

The Petitioner was granted a Customs House Agent licence in 1999. Based on intelligence regarding under-invoicing and evasion of customs duty, the Directorate of Revenue Intelligence (DRI) conducted search operations and seized incriminating evidence. Statements from the importers' representatives and the Petitioner's Manager were recorded. Subsequently, the Petitioner's licence was suspended on 27.3.2015 under Regulation 19(1) of the Customs Brokers Licensing Regulations, 2013 (CBLR, 2013). Despite the Petitioner's denial of allegations, the Respondent ordered the continuation of the suspension on 13.7.2015 under Regulation 19(2).

2. Validity of the Show Cause Notice Issued Under Regulation 20:

The Respondent issued a show cause notice on 13.7.2015 under Regulation 20, calling upon the Petitioner to explain why their licence should not be revoked and the security deposit forfeited. The Petitioner challenged this notice and the suspension order in a single writ petition, which was dismissed as withdrawn, leading to the filing of separate writ petitions.

3. Whether the Prescribed Time Limits Under Regulation 20 are Mandatory or Directory:

The Petitioner contended that the show cause notice was issued beyond the mandatory 90-day period prescribed by Regulation 20(1), making it barred by limitation. The Respondent argued that the 90-day period is directory, not mandatory, and that the show cause notice was issued within 80 working days, excluding weekends and national holidays.

The court examined various judgments to determine whether the time limits prescribed in subordinate legislation are mandatory or directory. It was noted that the use of "shall" in Regulation 20(1) generally indicates a mandatory provision unless the context suggests otherwise. The court emphasized that the object of the legislation and the consequences of non-compliance must be considered.

Court's Observations and Conclusions:

1. Mandatory vs. Directory Provisions:
- The court referred to several judgments, including Ramchandra Keshav Adke vs. Govind Joti Chavare and Babu Verghese vs. Bar Council of Kerala, which highlight that if a statute prescribes a particular manner for performing an act, it must be done in that manner or not at all.
- The court also cited P.T. Rajan vs. TPM Sahir, which states that procedural provisions, even if using "shall," may be construed as directory if no prejudice is caused.

2. Regulation 20 of CBLR, 2013:
- The court analyzed Regulation 20, which mandates that the Commissioner of Customs shall issue a notice within 90 days from the date of receipt of an offence report.
- The court determined that the term "shall" in this context is mandatory, as the provision aims to ensure timely action against customs brokers involved in unlawful activities.

3. Exclusion of Non-Working Days:
- The court rejected the Respondent's argument to exclude weekends and national holidays from the 90-day period, stating that the statute does not prescribe such exclusions.

4. Date of Knowledge of the Offence:
- The court held that the period starts from the date of knowledge of the offence, not the date of receipt of the offence report.

Final Judgment:

The court concluded that the show cause notice issued on 13.7.2015 was beyond the 90-day period from the date of the suspension order (27.3.2015) and the investigating agency's report (17.3.2015). Therefore, the notice was barred by limitation and issued without jurisdiction. Consequently, the show cause notice and the continuation of the suspension order were quashed. The writ petitions were allowed, and no costs were imposed.

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