1996 (5) TMI 87 - SC - Customs

Order preventing Customs from rejecting time-barred refund claims unlawful; Section 27 controls; Article 226/227 can't delegate judicial powers

The SC held that High Court direction preventing Customs from rejecting refund applications as time-barred was unlawful because authorities under the ... Claim for refund - Whether the direction given by the High Court that the Customs Authorities 'shall not reject the refund application on the ground that it is time barred', is valid in law? Held that:- The power conferred by Article 226/227 is designed to effectuate the law, to enforce the Rule of law and to ensure that the several authorities and organs of the State act in accordance with law. It cannot be invoked for directing the authorities to act contrary to law. In particular, the Customs authorities, who are the creatures of the Customs Act, cannot be directed to ignore or act contrary to Section 27, whether before or after amendment. May be the High Court or a Civil Court is not bound by the said provisions but the authorities under the Act are. Nor can there be any question of the High Court clothing the authorities with its power under Article 226 or the power of a civil court. No such delegation or conferment can ever be conceived. We are, therefore, of the opinion that the direction contained in clause (3) of the impugned order is unsustainable in law. When we expressed this view during the hearing Mr. Hidayatullah requested that in such a case the matter be remitted to the High Court and the High Court be left free to dispose of the writ petition according to law. The appeal is accordingly allowed, the order under appeal is set aside in its entirety and the matter is remitted to the High Court for disposal in accordance with law Issues:Validity of the direction given by the High Court regarding rejection of refund application on the ground of being time-barred.Analysis:The appeal in question challenged the validity of a direction by the Bombay High Court regarding the rejection of a refund application on the grounds of being time-barred. The respondent had imported goods between 1983 and 1985, leading to a dispute with Customs Authorities over duty classification. The respondent filed a refund application, which the appellant contested. The High Court directed the Customs Authorities not to reject the refund application as time-barred and to decide on its merits. The main issue was whether this direction was legally valid.The Supreme Court referred to a previous case where it was established that claims for refund must adhere to the statutory limitations provided by the Customs Act. The Court highlighted the importance of following the provisions of the Act, especially regarding time limitations for refund claims. The Court emphasized that the Customs Authorities are bound by the Act's provisions and cannot be directed to act contrary to them, even under Article 226 of the Constitution. The power of the High Court does not extend to directing authorities to act against the law, particularly in matters related to Customs regulations.The Court examined Section 27 of the Customs Act, which outlines the procedure for refund claims. The section, both before and after amendment, specifies the time frame within which refund applications must be filed. The Court rejected the argument that the time limitations prescribed by Section 27 do not apply to suits or writ petitions, emphasizing that all claims for refund must comply with the statutory provisions, including time limitations. The Court concluded that the direction given by the High Court in the impugned order was unsustainable in law.The Supreme Court allowed the appeal, set aside the High Court's order, and remitted the matter back to the High Court for disposal in accordance with the law. The Court clarified that it was not expressing an opinion on the maintainability or merits of the writ petition, leaving those considerations to the High Court. The decision emphasized the importance of upholding statutory provisions and ensuring that authorities act in accordance with the law, particularly in matters concerning Customs regulations.