TaxTMI 
TaxTMI 
2025 (11) TMI 213
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.... the respondents to place on record the LOC against the petitioner. The relevant portion of the order dated 11.08.2025 reads as under - "Let the existing LOC against the petitioner be also placed on record by the respondent before the next date of hearing." 3. In compliance with the aforesaid directions, respondent no. 1 filed an Additional Affidavit dated 28.08.2025, wherein it was disclosed that a Look Out Circular was first issued against the petitioner on 06.11.2015, which had been renewed or amended from time to time. It was further stated that "Ultimately on 28.05.2025 the said LOC was further opened." 4. However, during the subsequent hearing on 15.10.2025, Mr. Ripudaman Bhardwaj, learned CGSC for respondent no. 2 clarified that the initial LOC issued in 2015 had in fact lapsed in 2018, and that a fresh LOC had been issued only on 28.05.2025. 5. The petitioner has approached this Court challenging the said LOC. The petitioner is a foreign national of Indian origin holding an OCI Card. He resides in Hong Kong and is the sole shareholder and director of Century Exports Limited (CEL), a company registered in Hong Kong, involved in the business of international....
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....of Section 14 of the Customs Act, 1962, read with Rule 3(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007; (c) Coal consignments covered under Annexure-A' to this Notice, with the aggregate declared CIF value of Rs. 860,46,25,154/- and actual determined CIF Value of Rs. 715,44,68,198/-, should not be held liable to confiscation under Section 111(m) of the Customs Act, 1962. However, the Coal is not physically available having been consumed in their coal based thermal power plant at Dahanu; (d) Penalty under Section 112 (a) & (b) read with Section 112(iii) of the Customs Act, 1962 should not be imposed on them in relation to the above goods; and (e) Penalty under Section 114 AA of the Customs Act, 1962 should not be imposed on them in relation to the above goods. 37.1.1 S/Shri Mahesh Chand, Vibhav Agarwal and Sandeeep Kumar Dhanuka are required to show cause to the Adjudicating Authority i.e. the Principal Commissioner/Commissioner of Customs (Preventive), Mumbai, having his office at New Custom House, Ballard Estate, Mumbai - 400 001, as to why:- (a) Penalty under Section 112 (a) read with Section 112(ii....
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....be determined as in Column 5 of the 'Table-38' above, as Rs. 1445,70,49,073/- and Rs. 1204,59,95,127/-, respectively, should not be held liable to confiscation under Section 111(m) of the Customs Act, 1962. However, the Coal is not physically available having been consumed in their coal based thermal power plant at Rosa Village; (d) Penalty under Section 112 (a) & (b) read with Section 112(ili) of the Customs Act, 1962, should not be imposed on them in relation to the above goods; and (e) Penalty under Section 114 AA of the Customs Act, 1962 should not be imposed on them in relation to the above goods. 37.2.1 S/Shri Vibhav Agarwal and Sandeep Kumar Dhanuka are required to show cause to the Adjudicating Authorities, as mentioned in Column 7 of 'Table-38' above for respective imports mentioned against each, as to why:- (a) Penalty under Section 112 (a) read with Section 112(iii) of the Customs Act, 1962 should not be imposed on each one of them in relation to the goods mentioned in 'Table-38' above; and (b) Penalty under Section 114 AA of the Customs Act, 1962 should not be imposed on each one of them in relation to the goods mentioned in ....
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....t accept the contention that, the declared value does not appear to satisfy the requirements of the Transaction Value under Section 14 of the Customs Act, 1962 read with Rule 3(1) and 2(2) (vi) of the CVR 2007 and needs to be arrived at in accordance with the provisions of sub-section (1) of Section 14 of the Customs Act, 1962 read with sub-rule (1) of Rule 3 of the CVR 2007. 4.34 Show Cause Notices proposes penalty under section 112 and 114 AA of Customs Act 1962 against all the noticees, which are discussed here. Penalty under section 112 of customs Act 1962 is imposable on a person- a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or (b) who acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under section 111, I have already held that goods are not liable for confiscation. Therefore issue o....
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....ct finalization or capacity to invest in such ventures as to allow our judgement of what business should be permitted to be clouded by the inferences of the investigation into what they believe to be public interest. To even suggest that public interest should prevail over private business that is not at the receiving end of any exemptions or privileges is perverse. We have not been informed of any valid or logical reason to discredit the details of price determination narrated by Learned Counsel or that the employment of M/s Century Exports Ltd, and other intermediaries for a time, justified by reasons was not acceptable as explanation. An observation about commercial prudence, emanating from an investigation agency of the State, is not of adequate credence to be adjudged otherwise Likewise, the critique of adoption of index value of 'Richards Bay' or of 'Newcastle', merely for not adopting the Indonesian index, is nowhere near oracular as to permit tax intrusion into business expediency. We may conclude that the price negotiation leading to 'letters of award' in favour of the intermediaries have not been evidenced as contrived except through unconnected dots that, like the conste....
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....10. Ex facie, we have no hesitation in holding that charges could not have been framed under section 124 against the respondent. We have perused the show cause notice as well as the review order leading to this appeal; nowhere is it to be found that the respondent was responsible personally, or that the company that he, purportedly, was an official in were, for any act in the territory of India in connection with the goods or any declaration/submission in relation to the impugned goods. Not only is it accepted law that offences or contraventions cannot be retrospectively legislated but also that, in such circumstances of extension of jurisdiction beyond the territory of India, arrogating of jurisdiction cannot be in breach of legislative restraint conditioned by the Constitution in Article 37 read with Article 51. The circumstances of the legislated incorporation and the consequences of executive action, insofar as adherence to mutual acknowledgement of sovereignty is concerned, must guide its application. 11. Outrightly, we see that such extension of jurisdiction does not attend upon goods but only on persons. It is no less evident that such extension is limited to offenc....
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....dia. That leaves just section 117 and section 114AA of Customs Act, 1962 which, at best, may be contraventions for which extra-territorial authority is assumed. Here, too, there is need for caution as the consequence of any penalty, that remains unacknowledged and unpaid, is recovery without which the jurisdiction is left incomplete. In such instances, recovery from contravener based on foreign soil requires assistance from another sovereign government. Such assistance may flow from treaty obligations or from domestic law of the State concerned. At all events, the contravention will have to be established beyond reasonable doubt for assurance of such assistance and not preponderance of probability that prevails in adjudicatory competence. Our purpose in expounding at such length on this aspect is to demonstrate that mere provisioning in section 1 of Customs Act, 1962 is not sufficient to acknowledge such recourse in a show cause notice. Mere provisioning is not authority under law because unimplementability, by jurisdictional conflict, reduces dignity of a law that tax authorities are bound to execute to its logical conclusion; anything less would be travesty. 13. Having d....
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....the petitioner appeared before the respondent no.1 on 13.06.2025. 18. Subsequently, the respondent no.1 served another summons on the petitioner, directing him to appear on 19.06.2025 to tender oral evidence and provide documents. 19. The petitioner by his email dated 17.06.2025 requested the respondent no.1 to permit him to appear on 18.06.2025 instead of 19.06.2025. It is submitted that on 18.06.2025, the petitioner appeared before the respondent no.1 and submitted the relevant documents. 20. The case of the petitioner is that the LOC ought to be quashed since (a) at present there are no proceedings or investigation pending against the petitioner; (b) issuance of the LOC is contrary to the Office Memorandum dated 22.02.2021; (c) the petitioner has complied with the summons; and (d) the petitioner is not a flight risk. 21. It is averred that the impugned LOC was issued in connection with the alleged proceedings arising out of the aforementioned SCN. However, the proceedings under the SCN have been conclusively adjudicated in favour of the petitioner. It is averred that since no proceedings are pending against the petitioner, there ex....
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....as further been emphasised that the petitioner has deep and continuing connections with India, having travelled to India 22 times in the past four years. His immediate family, including his mother and brother, reside in India. Therefore, there is no rational basis to apprehend that the petitioner poses any flight risk. 29. It is submitted that this Court has territorial jurisdiction to entertain and adjudicate the present petition as the cause of action arose within the territorial jurisdiction of this Court, the petitioner was detained in Delhi, his statement was recorded in Delhi and summons were also issued in Delhi. Further, respondent no. 1's head office is in New Delhi, where officers are reportedly investigating the petitioner, as indicated by summons dated 31.05.2025. 30. Reliance is placed on Jayaswals Neco Limited v. Union of India, 2007 SCC OnLine Del 2094. 31. Learned counsel for the respondent no. 1 on the other hand has made the following submissions - a. The present petition is not maintainable before this Court as the impugned Look Out Circular (LOC) was issued by the Directorate of Revenue Intelligence (DRI), Mumbai Zonal Unit (MZU), in relation t....
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.... has not attained finality. g. Investigations concerning the 44 vessels as well as overseas enquiry in respect of 55 Vessels issued through Letter Rogatory (LR) dated 07.08.2015 has been issued by Additional Chief Metropolitan Magistrate, 19th Court, Esplanade, Mumbai to Hong Kong are still underway. h. It is further averred that the petitioner's interpretation that the OM permits issuance of LOC only in cases of cognisable offences is erroneous. Paragraph 6(L) of OM-2021 authorises issuance of LOC where the departure of a person would be detrimental to economic interests or economic interest of nation. i. The petitioner's claim of compliance with summons is false. Until his apprehension under the LOC, he has chosen to remain absent, no summons for present investigation was complied with. j. The petitioner is a proven flight risk, his frequent travels despite LOCs in operation has perfected his flight risk. k. The Directorate of Revenue Intelligence, Mumbai, initiated investigations based on intelligence inputs revealing that certain companies within the Reliance ADA Group, namely, Reliance Infrastructure Ltd. and Rosa Power Ltd., had im....
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....merit. 32. The preliminary contention of the respondent is that the present petition is not maintainable before this Court for want of territorial jurisdiction and on the principle of forum conveniens. This Court, however, finds no merit in the said objection. 33. The petitioner has rightly pointed out that a significant part of the cause of action has arisen within the territorial jurisdiction of this Court. The petitioner was detained within the NCT of Delhi, his statement was recorded in Delhi, and the summons dated 31.05.2025 is also issued and served upon him at Delhi. Furthermore, Respondent No. 1's Head Office is located in New Delhi, where the concerned officers of the Directorate of Revenue Intelligence are conducting the investigation, as is evident from the summons dated 31.05.2025. Summons dated 31.05.2025 is reproduced as under - "SUMMONS [under Section 108 of the Customs Act, 1962(52 of 1902)] To Sh Sandeep Kumar Dhanuka 11/C, Windsor Mansion, 29, Chatham Road, T.S.T., Kowloon, Hong Kong WHEREAS, I, Kuldeep Singh am making inquiry in connection with import of coal under the Customs Act, 1962. ....
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.... constitute any cause of action. [See Kusum Ingots (supra) : para 26]. (3) The High Court within whose jurisdiction a legislation is passed, would not have the sole territorial jurisdiction but all the High Courts where cause of action arises, will have jurisdiction. [See : Mosaraf Hossain Khan (supra) : para 26]. (4) The question as to whether the court has a territorial jurisdiction to entertain a writ petition, must be arrived at on the basis of averments made in the petition, the truth or otherwise thereof being immaterial. [See : Kusum Ingots (supra) : para 12 with reference to ONGC v. Utpal Kumar Basu, (1994) 4 SCC 711]. (5) When a part of the cause of action arises within one or the other High Court, it will be for the petitioner to choose his forum. [See : Kusum Ingots (supra) : para 25]. (6) In appropriate cases, the court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens. [See : Kusum Ingots (supra) : para 30]. xxx xxx xxx 54. It must also be kept in mind that the doctrine of forum non conveniens is essentially a common law doctrine originating from admiralty cases have ....
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....ernal Affairs, the Customs Department, the Income Tax Department, the Directorate of Revenue Intelligence (DRI), the Central Bureau of Investigation (CBI), Interpol, Regional Passport Officers, and State Police authorities, to monitor the arrival and departure of both Indian citizens and foreigners. 41. Thereafter, a more structured framework was introduced through the Office Memorandum dated 27 December 2000, which specifically dealt with Indian citizens. 42. Subsequently, judicial intervention in Vikram Sharma v. Union of India, 2010 SCC OnLine Delhi 2475 and Sumer Singh Salkan v. Asst. Director, 2010 SCC OnLine Delhi 2699 brought further clarity to the regime. These pronouncements prompted the Ministry of Home Affairs to issue a comprehensive Office Memorandum dated 27 October 2010, which laid down detailed guidelines for issuance of LOCs against both Indian citizens and foreigners. Paragraph 8(g) and (h) of the said OM are relevant and are set out below:- "8. In accordance with the order dated 26.7.2010 of the High Court of Delhi, the matter has been discussed with the concerned agencies and the following guidelines are hereby laid down regarding issu....
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....ases, look-out circulars can be issued without complete parameters and/or case details against counterintelligence suspects, terrorists, anti-national elements, etc., in the larger national interest. 45. As per the Office Memorandum of December 5, 2017, "detrimental to the economic interests of India" was added as a ground for issuance of LOC. 46. Further modifications were introduced by amendments dated 19 September 2018 and 12 October 2018. Eventually, to consolidate the entire regime, the Ministry of Home Affairs issued a comprehensive Office Memorandum on 22 February 2021, which currently governs the field. Relevant clauses of the 2021 Memorandum are reproduced as under - "6. The existing guidelines with regard to issuance of Look Out Circulars (LOC) in respect of Indian citizens and foreigners have been reviewed by this Ministry. After due deliberations in consultation with various stakeholders and in suppression of all the existing guidelines issued vide this Ministry's letters/ O.M. referred to in para 1 above, it has been decided with the approval of the competent authority that the following consolidated guidelines shall be followed henceforth by....
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.... 47. The said citation by the SFIO is not relevant in the present case. In the present case, no "trial" has started and/or any arrest has been made or sought to be made. There is no issuance of NBW at all in the present case or even warrant, for that matter. Clause 4(a) of the Office Memorandum, quoting the Delhi High Court, clearly envisages that there has to be a cognizable offence where the accused was deliberately evading arrest or not appearing in a Trial Court despite NBW and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest. None of the said criteria are met in the present case. On the contrary, Clause 6 of the Office Memorandum dated February 22, 2021 provides that the existing guidelines with regard to issuance of LOC were being superseded and it was decided as provided thereafter. The said consolidated guidelines, thus, are spelt out in Clause 6." 42. In Sumer Singh Salkan vs. Asst. Director (supra), the Court has observed as under - "The questions raised in the reference are as under: "A. What are the categories of cases in which the investigating agency can seek recourse of Look-out-Circul....
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....til the conditions in these clauses are satisfied, prima-facie an LOC cannot be opened. 19. There is no criminal case pending against the Petitioner. His role is also yet to be ascertained by the investigating authorities. Phrases such as 'economic interest' or 'larger public interest' cannot be expanded in a manner so as to include an Independent Director who was in the past associated with the company being investigated, without any specific role being attributed to him, as in the present case......" 44. Similarly in Ashutosh Sharma V. Union Of India & Anr., W.P. (C) 7769 of 2022, the Court has observed as under - "6. It is also to be noted that there are no complaint/criminal proceedings pending against the Petitioner. 7. Since 30th November 2019, the Impugned LOC against the Petitioner has been in place. The rationale behind issuing the instant LOC is to effectively monitor the entry or exit of the Petitioner from the country. 8. However, there is no material placed before the Court which can ascertain the Petitioner's liability or criminal culpability at this juncture which could indicate that he is intending to abscond. Therefore, the me....
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....lutches of law by leaving the country. However, the law is also getting crystallized that merely because there are some revenue implications, the LOC cannot be opened against a person. A Single Bench of this Court in Priya Parameswaran Pillai v. Union of India, [2015 VII AD (Delhi) 10] has held that merely because there were some revenue implications due to notices issued by the Income Tax Authorities, the violations of tax laws are not demonstrative of the fact that the Petitioner therein had acted inimical to the economic interests of the country. 46. In the present case, the conditions mentioned in clauses (H), (I) and (L) are, evidently, not satisfied. There is no cognizable offence pending against the petitioner. The proceedings arising out of the 2016 SCN have been conclusively dropped. The Order in Original in favour of the Petitioner has been upheld twice by the CESTAT. Though it is submitted that respondent no. 1 has filed a further appeal before the Supreme Court via Diary No. 47827/2025, it is undisputed that no stay has been granted on the operation of the Order in Original. 47. Although Clause (L) of the 2021 Memorandum carves out an exception permitting issuance....
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....us questions as to its necessity and proportionality. The State cannot indefinitely restrain the petitioner's liberty to travel to his country of citizenship despite the long concluded proceedings. 51. This Court also notes the petitioner's contention that it has given utmost cooperation to respondent no. 1. The petitioner has appeared before the authorities whenever summoned and has even engaged a law firm in Hong Kong to retrieve the bank records sought by the DRI. However, the concerned banks, vide letters dated 7 July 2025 and 10 July 2025, have clarified that they do not retain records older than seven years, in compliance with Section 51C of the Hong Kong Inland Revenue Ordinance. 52. With regard to the contention of the respondent that the petitioner had violated the Look Out Circular (LOC) issued in 2015 and had evaded the summons issued at that time, there is nothing on record to suggest that the petitioner was informed or made aware of the fact that any LOC had been issued against him. Moreover, the first LOC dated 06.11.2015 was issued in relation to the petitioner's Indian passport, which had already been renounced on 09.04.2013 upon his relinquishment of Indian c....