Court restrains respondents from coercive actions on license revocation under 2019 Regulations, favors petitioner pending next hearing.

The Court issued notice to the respondents and restrained them from taking coercive actions against the petitioner regarding the revocation of licenses under the 2019 Regulations. The petitioner demonstrated a prima facie case and showed compliance with regulations, including IGST deferral. The Court found in favor of the petitioner, noting that enforcing the circular would harm the petitioner's interests. Respondents were directed to file a counter-affidavit within two weeks, with the next hearing scheduled for 26.8.2022.

---

---

Issues:
Challenge to circular dated 09.07.2022 directing revocation of licenses under 2019 Regulations; Interpretation of Section 65 of the Customs Act, 1962; Alleged violation of proviso (a) to Section 151A of the Act; Availment of IGST deferral; Execution of bonds; Customs duty and IGST on import consignment; Prima facie case; Balance of convenience; Coercive measures against petitioner.

Analysis:

The judgment concerns a challenge to a circular dated 09.07.2022 directing the revocation of licenses issued under the Manufacture and Other Operations in Warehouse (no.2) Regulations, 2019. The petitioner's grievance is that the circular instructs the concerned authority to revoke the licenses, allegedly in contravention of the provisions of the Customs Act, 1962, and the 2019 Regulations. The petitioner's counsel argues that the circular, particularly paragraph 5, goes against proviso (a) to Section 151A of the Act, which mandates a review of decisions to issue licenses. The petitioner had disclosed its business of generating electricity while applying for licenses, availed IGST deferral, and executed bonds totaling around Rs. 500 crores as per license conditions.

The petitioner contends that the circular, if enforced, would subject its import consignment of solar modules to customs duty and IGST, contrary to the 2019 Regulations' provisions. The counsel asserts that customs duty and IGST on capital goods are deferred until they are removed for home consumption. Moreover, the counsel argues that electricity is not subject to duty under the Customs Act or taxes under the Central Goods and Services Tax Act, 2017, or the State Goods and Services Tax Act, 2017.

The Court finds that the petitioner has established a prima facie case, and the balance of convenience favors the petitioner, given its compliance with the 2019 Regulations and the deferral of customs duty and IGST. The Court opines that any coercive measures by the respondents at this stage, especially with the petitioner's import consignment pending, would harm the petitioner's interests. Consequently, the Court issues notice to the respondents, who accept it, and restrains them from taking coercive actions against the petitioner until the next hearing date. The respondents are directed to file a counter-affidavit within two weeks, with a rejoinder, if any, to be submitted before the subsequent hearing scheduled for 26.8.2022.

---