2024 (7) TMI 1367 - HC - Customs

Challenge to Tax Assessment Overturned: Procedural Errors Invalidate Commissioner's Orders Under Section 264 Challenging Arbitrary Administrative Actions

M/s. JSW Steel Ltd., Maharashtra Versus Assistant Commissioner, Gopalpur, Ganjam & Anr.

The HC found merit in the petitioner's challenge against the Assistant Commissioner's assessment orders. The court ruled that the orders were passed ... Challenge to final assessment orders - Jurisdiction of the Assistant Commissioner in passing final assessment orders - no opportunity of hearing was given to the petitioner - non-compliance with the principles of natural justice - HELD THAT:- This Court finds that the petitioner was provisionally assessed under PD Bond No.77/2023 dated 02.06.2023 for an amount of Rs. 30,79,13,411/- executed by the exporter. As per the contract reference dated 18.05.2023, the overseas buyer was M/s. Caravel Metallurgical Limited, Hong Kong. The price of Iron Ore Calibrated Lumps was USD 82.00 per DMKT CFR FO One Main Port North China based on 56.50% Fe fraction prorate. As per the Fixture Note dated 26.05.2023, the Freight rate was USD 10.70. On the relevant date the exchange rate of USD 1.00 was Rs.81.70. The aforesaid Shipping Bill was assessed provisionally under Section 18 of the Customs Act, 1962 under cover of P.D. Bond No.77/2023 dated 02.06.2023, for an amount of Rs.30,79,13,411/- executed by the exporter, for want of Final Invoice, Test analysis Reports, e-BRC etc. Paragraph 5.0-Test Reports of the impugned assessment order dated 24.04.2024 under Annexure-1 shows that CRCL Re-Test Report at Sl. No.4 in respect of CRCL, Pusa, New Delhi has been accepted and other four test reports in respect of SGS India Pvt. Ltd., SGS India Pvt. Ltd., CRCL, Visakhapatnam and CCIC have been rejected without assigning any reasons. Therefore, it is contended that acceptance and rejection of such reports, without assigning any reason, cannot be sustained in the eye of law. The impugned assessment orders dated 24.04.2024 and 18.05.2024 passed by opposite party no. 1-Assistant Commissioner, Gopalpur Customs Division, Ganjam under Annexures-1 & 2 respectively are quashed - matter is remitted to the authority concerned with a direction to hear it afresh and pass appropriate order in accordance with law. Petition allowed by way of remand. Issues:1. Jurisdiction of the Assistant Commissioner in passing final assessment orders.2. Compliance with principles of natural justice in the assessment process.3. Acceptance and rejection of test reports without assigning reasons.4. Maintainability of the writ petition directly to the High Court without availing the appeal process.Jurisdiction of the Assistant Commissioner:The petitioner challenged final assessment orders passed by the Assistant Commissioner, alleging lack of jurisdiction and influence by senior authority. The petitioner contended that the orders were passed without proper application of mind and without providing an opportunity for a hearing. The Court noted the provisional assessment under a PD Bond executed by the exporter and detailed the assessment process. The Court found merit in the petitioner's argument regarding jurisdiction and lack of application of mind by the Assistant Commissioner.Compliance with Principles of Natural Justice:The petitioner argued that the Assistant Commissioner did not provide an opportunity for a hearing, thus violating the principles of natural justice. The Court considered this contention along with the lack of reasons provided for the acceptance and rejection of test reports. The Court agreed that the Assistant Commissioner's actions did not comply with the principles of natural justice, emphasizing the importance of providing reasons for decisions in such matters.Acceptance and Rejection of Test Reports:The Court scrutinized the acceptance and rejection of test reports without reasons by the Assistant Commissioner. The petitioner raised concerns about the lack of justification for these actions, which the Court found to be a valid point. The Court emphasized the necessity of providing clear reasons for accepting or rejecting crucial documents in the assessment process to ensure transparency and fairness.Maintainability of the Writ Petition:The respondent argued that the writ petition was not maintainable as the final assessment orders were appealable, and the petitioner should have pursued the appeal process instead of approaching the High Court directly. The Court deliberated on this argument but ultimately decided in favor of the petitioner, stating that the lack of jurisdiction and violation of natural justice principles warranted the High Court's intervention. The Court quashed the impugned assessment orders and remitted the matter for a fresh hearing in accordance with the law.