TaxTMI 
TaxTMI 
2025 (12) TMI 1024
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....it of the Office Memorandum issued by the Ministry of Home Affairs governing the LOC. The Petitions seek a writ of mandamus for quashing and setting aside/withdrawal of the said LOC, including any subsequent renewals thereof. 2. We have heard learned senior counsel Mr. Darius Shroff alongwith Dr. Sujay Kantawala for the Petitioners in both the Petitions. Respondent Nos. 1 and 2 are represented by learned counsel Mr. Jitendra Mishra, whereas Respondent No. 3-Bureau of Immigration is represented by learned counsel Ms. Shennaz Bharucha. 3. Intelligence developed by Directorate of Revenue Intelligence, Mumbai, Zonal Unit, Mumbai suggested that some of the related exporters, namely, M/s. Kaka Overseas Ltd., M/s. Rugsotic Private Ltd. and M/s Shobha Woolens Pvt. Ltd. had indulged in the export of goods declared as carpets and fabrics of silk and other yarns to United States of America, by way of mis-declaring the value and other particulars of the same, to fraudulently avail ineligible higher rate of duty drawback and other export incentives. As per the intelligence, the said goods were majorly destined to USA and the consignees of such exports were identified entities and the buye....
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....port of the goods and submission of a Bond equivalent to the declared value of goods or on submission of the bank guarantee to the extent of 20% of the drawback payable. While the investigation was on-going, the Petitioners rendered their co-operation and even after completion of investigation, the statements of the Petitioners were once again recorded. It is in these background, an LOC was issued on the basis of the intelligence received that the exporters controlled by Kaka Group of Companies continued to indulge in fraudulent availment of duty drawback and other export incentives. 6. While the investigation was in progress, the summons were issued to the respective companies, including M/s Kaka Overseas as well as the Director of M/s Rugsotic Pvt. Ltd and also to other several entities of the connected companies. According to the Petitioners, though LOC was issued against them, but the copy of the same was never made available and it is the case of the Petitioners that they always rendered their cooperation in investigation. 7. Learned senior counsel Mr.Shroff would urge before us that the investigation initiated by Respondent No. 3 never resulted into registration of a....
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....edings are either initiated or pending against the Petitioners, this Court permitted them to travel. It is in these circumstances, it is urged before us that the LOC issued in the year 2022 cannot remain active after three years, specially when the investigation having already been completed, show causes notices issued and adjudicated upon and particularly when the Petitioners have rendered their cooperation in the investigation. Relying upon the decision of Delhi High Court in Sumer Singh Salkan vs. Asstt. Director & Ors. 2010 SCC OnLine Del 2699, Mr.Shroff had submitted that LOC can be issued only in cognizable offences under the Indian Penal Code or other criminal laws where the accused is avoiding arrest or not appearing. However, in the present case, since no criminal case has been filed against the Petitioners, there is no justification for taking out LOC, particularly when the Petitioners have regularly responded to the summons issued by the authorities and handed over approximately 8000 documents and the investigating agencies have cloned the Petitioners' hard disks and phones and issued four show cause notices, two of which are already adjudicated and other two are p....
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.... submitted that merely being present in the DRI office does not amount to co-operation. Giving vague and evasive answers to the questions asked, despite having knowledge, with an intent to hoodwink the authorities and cause dent in the investigation amounts to clear non-cooperation; (c) It is submitted that there is a strong prima facie case against the Petitioner. His role is spelt out as per material gathered so far during the investigations, i.e. the admissible statements of his employee and Senior Manager, Shri Vikram Singh Baghel who was handling the USA operations for the Petitioner. The statements of the said persons clearly point out the role, involvement and knowledge of the said Petitioner in illegally availment of the duty drawback and thereby causing huge economic loss to exchequer; (d) It needs no reiteration that economic offences affect the financial stability of the country. Economic offences attempting to defraud the public exchequer during one of the worst pandemics in centuries, where there is severe stress on the economy while the Government is taking all efforts to resuscitate the economy, are especially heinous and deserve to be condemned eve....
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....ext date, if any recovery notice or coercive steps are proposed to be taken by the Respondents then ten days notice to be given to the Petitioners." The noting reflect that it is in this background, it was advised that LOC being coercive measure, the same may not be issued and only summons were directed to be issued. We, therefore, do not find any specific order directing issuance of LOC in the file placed before us, but the noting dated 11/05/2022 is only as regards issuance of summons to the Petitioners in terms of the High Court order. 13. The purport of a Look Out Circular is well chartered through various circulars/memorandums issued by the Home Ministry and as indicated in the guidelines, the recourse to LOC is to be taken in cognizable offences under IPC or other criminal laws. The said circular also contemplate recording of 'reason for opening LOC', which must be invariably provided without which, the subject of an LOC will not be arrested/detained. The LOC is thus permitted to be issued only on justiciable reasons and, particularly when the accused is deliberately evading arrest or not appearing before the trial Court, despite non-bailable warrants or other coerci....
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....ed without which the subject of an LOC will not be arrested/detained. (I) In cases, where there is no cognizable offence under IPC and other penal laws, the LOC subject cannot be detained/arrested or prevented from leaving the country. The Originating Agency can only request that they be informed about the arrival/departure of the subject in such cases. (J) The LOC opened shall remain in force until and unless a deletion request is received by BoI from the Originator itself. No LOC shall be deleted automatically. Originating Agency must keep reviewing the LOCs opened at its behest on quarterly and annual basis and submit the proposals to delete the LOC, if any, immediately after such a review. The BOI should contact the LOC Originators through normal channels as well as through the online portal. In all cases where the person against whom LOC has been opened is no longer Wanted by the Originating Agency or by Competent Court, the LOC deletion request must be conveyed to BoI immediately so that liberty of the individual is not jeopardized." 15. An another relevant clause of the guidelines in form of clause (L) reads thus :- "(L) In exceptional cases, LO....
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....a justification for issuance of LOC, as during the course of investigation, if the Department is desirous of securing any documents from the Petitioners, there are ways and means to do so, but LOC, which is a coercive measure, definitely cannot be invoked as it has trammeled upon the right to travel, which is recognized as fundamental right under Article 21 of the Constitution of India. In fact, the Revenue attempted to secure this information by filing an interim application before this Court in past. Upon an Interim Application taken out by Union of India for issuance of direction to furnish the documents within the knowledge and domain of the Petitioners pertaining to transaction carried out it United States of America, it came to be rejected by the Division Bench of this Court on 22/08/2025, by holding that the Revenue is at liberty to exercise the power conferred under the statute, so as to secure the custody of the document, if any, for completing the investigation. In our considered view, the Petitioners have participated in the inquiry/investigation and we find that the continuation of the LOC issued in the year 2022, without a review being undertaken and when Mr. Mis....