Gujarat HC asks DRI not to issue final orders while adjudicating show cause notices

In a relief to India Inc, Gujarat High Court on Wednesday has issued interim orders asking Directorate of Revenue Intelligence (DRI) to not to issue any final orders while adjudicating show cause notices.

Gujarat HC was hearing a matter of Cosmo Films, where Justice BD Karia and Justice Niral Mehta ordered the interim relief for industry.

The relief comes in wake of the fact that the industry has been approaching several state High Courts seeking relief on adjudication of Show Cause Notices issued by DRI in 2018 and 2019.

Industry has been citing Supreme Court (SC) order in the matter of canon India that DRI officers are not customs officers thus not authorised to issue SCN, hence all proceedings in consequence to such SCNs are invalid.

Industry says, since government has filed Revision in SC on the orders and is still pending, DRI has been adjudicating the cases, which is incorrect.

Supreme Court, however, is yet to hear the revision plea by government.

Also post SC order, to ensure powers of DRI, a retrospective amendment was carried out in the Finance Bill stating that DRI officers are customs officers and were always customs officers having all powers under customs act.

However, this amendment is currently being challenged by industry.

“The interesting part is that in most of the cases the tax is not applicable either due to legal provisions or computational aspects, but this has not been appropriately represented in many cases, thereby leading to apprehension of interest as well. However, the interest gets addressed by applicability of different legal provisions such as revenue neutrality, and the objectives of the scheme, in light of several decisions of the apex court”, said Abhishek A Rastogi, founder of Rastogi Chambers, who had argued these matters before various high courts and Supreme Court.

“The adjudication for pre-import condition as an aftermath of Supreme Court order can happen only in light of whether the SCN has been issued by the proper officer”, argued Rastogi, before the Gujarat High Court today.

“This order will substantially help the Indian exporters as the root cause of the problem will first be addressed, thereby reducing the litigation”, he said.

Rastogi is arguing for a large number of Indian exporters.