Preliminary revenue investigation into SEIS scrips not quashed, while protection from coercive action continued during inquiry.

Challenge to the Directorate of Revenue Intelligence's initiation of investigation into the issuance and classification of Service Exports from India Scrips was not quashed at the threshold, because the inquiry was still at a preliminary stage and no final finding had been recorded. The Court accepted that the agency was only examining the material furnished and that the dispute could not be terminated before completion of that process. However, the protection against coercive action was continued during the pendency of the investigation in view of the allegations raised about the manner in which the inquiry had proceeded.

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Issues: Whether the challenge to the initiation of investigation by the Directorate of Revenue Intelligence into the issuance and classification of the Service Exports from India Scrips warranted quashing at the threshold, and whether coercive action should remain restrained during the investigation.

Analysis: The petitioners questioned the authority of the investigating agency to enquire into the propriety of the scrips and asserted that the subject matter lay within the domain of the licensing authority under the Foreign Trade regime. The Court noted that the investigation was still at a preliminary stage and that the respondent was only examining the material furnished, without recording any final finding. At the same time, the earlier protection against coercive steps was maintained in view of the allegations raised regarding the manner in which the investigation had proceeded.

Conclusion: The request to quash the investigation was not accepted, but the restraint against coercive action during the pendency of the investigation was continued.

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