2024 (4) TMI 250 - HC - Customs

Maintainability of petition challenging show-cause notice and lack of hearing in diversion of diamonds; petition dismissed, appeal allowed.

Challenge to validity of show-cause notices and alleged denial of personal hearing in diversion of cut and polished diamonds is dismissed for forum ... Maintainability of petition - alternative remedy of appeal - Validity Of show-cause notice - No opportunity of personal hearing - violation of principles of natural justice - diverting cut and polished diamonds - without following the procedure prescribed under the Special Economic Zone Act, 2005 (‘the SEZ Act’) - HELD THAT:- We are of the opinion that though the petition is maintainable under Article 226 of the Constitution of India, the petitioner is unable to point out as to whether the notices were served upon him by the respondent-Assessing Officer. In the impugned order, it is categorically mentioned that though the notices were served upon the petitioner, the petitioner neither attended the hearing nor submitted any request letter for adjournments on four occasions whereas, in the memo of the petition, it is stated that no such notices were served upon the petitioner. Thus, it involves disputed questions of facts as to whether the notices were served upon the petitioner or not by the respondent-authority which can be considered by the appellate authority while examining the record. We would therefore not like to entertain this petition on ground of not providing opportunity of hearing to the petitioner. We therefore do not entertain this petition as there is alternative efficacious remedy available under the provisions of the Customs Act to be availed by the petitioner and accordingly, without entering into the merits of the matter, the petitioner is relegated to avail such alternative efficacious remedy with a liberty to raise all the contentions which are raised in this petition before the appellate authority. We make is clear that the time spent by the petitioner before this Court in pursuing this petition may be considered as bona fide by the appellate authority in case of any delay which may be considered by the appellate authority to condone the delay, if any, in preferring the appeal by the petitioner within a reasonable time from today. The petition is accordingly dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the writ petition under Article 226 is maintainable in view of the existence of an alternative efficacious remedy under the Customs Act. 2. Whether the impugned show-cause notice and order are vitiated for breach of principles of natural justice for not granting personal hearing. 3. Whether the authority that issued the show-cause notice and passed the order had jurisdiction to do so, having regard to notifications under the Special Economic Zone Act delegating enforcement powers for offences under the Customs Act. 4. Whether disputed questions of fact (specifically service of statutory notices) are appropriate for resolution in writ proceedings or should be left to the appellate/tribunal forum. ISSUE-WISE DETAILED ANALYSIS Issue 1: Maintainability of Article 226 petition where alternative efficacious remedy exists Legal framework: The constitutional writ jurisdiction under Article 226 is discretionary and may be declined where an alternative efficacious statutory remedy is available which can adequately and effectively redress the grievance. Precedent Treatment: The Court referred to authority applying the principle that availability of an alternative efficacious remedy ordinarily disentitles a petitioner to discretionary relief in writ jurisdiction (Whirlpool principle relied upon by petitioner's counsel). Interpretation and reasoning: The Court found that an alternative efficacious remedy exists under the Customs Act (appeal/proceedings before the appellate authority) and that the petitioner had not demonstrated that such remedy would be ineffective. The Court emphasized that issues of jurisdiction and service can be examined by the appellate authority in the statutory forum. Ratio vs. Obiter: Ratio - where an efficacious statutory remedy exists, the High Court may decline to entertain a writ petition and direct the petitioner to pursue the statutory appellate remedy. Conclusion: The Court declined to exercise Article 226 jurisdiction and relegated the petitioner to the alternative remedy under the Customs Act, while granting liberty to raise all contentions before the appellate authority. Issue 2: Alleged breach of principles of natural justice (no personal hearing) Legal framework: Principles of natural justice require that a person affected by a quasi-judicial order must be given an opportunity of hearing before adverse action is taken; statutory provisions and departmental circulars (e.g., Master Circular) guide the procedure for personal hearings. Precedent Treatment: Petition relied on decisions holding lack of personal hearing vitiates orders (cited Gorkha Security Services, Metal Forgings, CCE v. Shital International). The Court considered those precedents but did not treat them as automatically dispositive in the face of disputed factual assertions about service and attendance. Interpretation and reasoning: The Court observed a factual conflict: the impugned order records that notices were served and the petitioner did not attend, whereas the petition asserts non-service. Because service and attendance are disputed facts, the Court held these are matters for the appellate authority to determine, rather than grounds for immediate writ relief. The Court therefore declined to quash the order solely on the basis of asserted denial of hearing without resolving the factual dispute. Ratio vs. Obiter: Ratio - allegations of denial of hearing that rest on disputed facts (e.g., service) should ordinarily be resolved in the statutory appellate forum rather than by entertaining a writ petition; Obiter - reference to Master Circular procedure as guidance for providing reasonable notice. Conclusion: The Court refused to quash the impugned order on natural-justice grounds at the writ stage because service/attendance were disputed questions of fact to be adjudicated in appeal; the petitioner may raise the natural-justice contention before the appellate authority. Issue 3: Jurisdiction of the officer issuing show-cause notice in light of SEZ Act notifications and delegation Legal framework: The SEZ Act enables the Central Government to make offences under other statutes (e.g., Customs Act) applicable and to authorize officers for enforcement within SEZs; delegation of power to subordinate officers depends on statutory notifications and any subsequent internal delegations by designated authorities (e.g., Commissioner). Precedent Treatment: The petition invoked the 5 August 2016 notifications which specify which officers are empowered for offences in SEZs; petitioner contended the Additional Commissioner lacked authority. The Court required proof of delegation to the Additional Commissioner by the Commissioner where the notifications specify empowered posts but not necessarily every subordinate officer. Interpretation and reasoning: The Court noted that it was not placed on record whether the Additional Commissioner who issued the notice had been delegated the relevant powers by the Commissioner of Customs under the Customs Act. The question of delegation and thus competence to issue the show-cause notice involves examination of records and delegation orders, which the appellate authority is competent to consider. Therefore, in absence of a clear demonstration that the officer acted without any delegated authority, the Court would not adjudicate jurisdiction at the writ stage. Ratio vs. Obiter: Ratio - challenge to jurisdiction based on delegated powers where factual record about delegation is lacking should be addressed in the statutory appellate forum; Obiter - the Court's observation that the notifications empower certain offices but internal delegation must be shown. Conclusion: The Court did not decide the jurisdictional challenge on merits; it held that delegation/authority issues can and should be examined by the appellate authority and therefore declined writ relief on this ground. Issue 4: Appropriate forum for disputed questions of fact (service, delegation, and related factual inquiries) Legal framework: Writ jurisdiction is generally not a substitute for statutory appeals and is inappropriate where the controversy turns on disputed questions of fact that can be effectively determined in an alternative forum. Precedent Treatment: The Court applied settled principles distinguishing cases suitable for writ relief (pure questions of law, egregious illegality, breach of fundamental rights) from those requiring fact-finding in the statutory appellate process. Interpretation and reasoning: The Court found that central issues raised by the petitioner - whether notices were served, whether delegation existed, and whether procedural requirements were followed - are factual in nature or depend on departmental records. These matters can be effectively ventilated and adjudicated by the appellate authority under the Customs Act. Consequently, the writ petition was not an appropriate vehicle to resolve such disputes. Ratio vs. Obiter: Ratio - disputed factual questions and record-dependent issues should be decided in the statutory appellate forum and are not ordinarily grounds for Article 226 intervention; Obiter - guidance that appellate authority may consider bona fide time spent in pursuing writ when considering condonation of delay. Conclusion: The Court dismissed the writ petition without entering into merits and directed the petitioner to pursue statutory remedies, while noting that any delay caused by pursuing the writ may be considered bona fide by the appellate authority for condonation purposes.