SEIZURE AND CONFISCATION

SEIZURE AND CONFISCATION

                                                  

After investigation if the goods are found liable for confiscation, the taking of its possession from the owner by the empowered authority is termed as seizure. Confiscation meaning losing of ownership as well after proper adjudication. In other words, confiscation is the lawful taking of the goods whose import is prohibited in India. Seizure always precedes confiscation. The Customs Act 1962, (hereinafter will be referred as “Act”) regulates the procedure of Seizure and Confiscation in India.

Seizure under the Customs Act

Section 110 of the Act lays down the procedure of seizure of goods, documents and things. Sub- section (1) of the provision States that-

“If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods: Provided that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.”

Further if the goods are of perishable or hazardous nature in such cases the officer “shall prepare an inventory of such goods containing such details relating to their description, quality, quantity, mark, numbers, country of origin and other particulars as the proper officer may consider relevant to the identity of the goods in any proceedings under this Act and shall make an application to a Magistrate for the purpose of— (a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate, photographs of such goods, and certifying such photographs as true; or (c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn.”

Further Section 110(2) lays down the rule responsibility to send a notice under section 124 of the act within six months of the seizure to the owner. If this requirement is not met the goods are to be returned after 6 months. However, “Principal Commissioner of Customs or Commissioner of Customs may, for reasons to be recorded in writing, extend such period to a further period not exceeding six months and inform the person from whom such goods were seized before the expiry of the period so specified.”

Sub-section (3) grants power to the proper officer to seize any relevant documents and thinks which he thinks to be useful for the further proceedings. Whereas, sub- section (4) states that “The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extracts therefrom in the presence of an officer of customs.”

Section 110A provides for the provisional release of goods it states that “Any goods, documents or things seized under section 110, may, pending the order of the [adjudicating authority], be released to the owner on taking a bond from him in the proper form with such security and conditions as the [adjudicating authority] may require.]”

In the case of S. B. International v. Asst. Director DRI, 2018  the words “reason to believe” in Section 110(1) is material and the proper officer cannot seize the goods on the basis of mere suspicion.

Principal Commissioner of Customs (Import), ICD v. Santhosh Handloom, 2016,  relying on the judgement of Harbans Lal v. Collector, 1993 the court held that Section 110 is the only provision that deals with seizure under the custom act. Further it talks about the issuance of show cause notice failing which goods are to be returned to the owner as well as the penal nature of the confiscation process makes it necessary that the notice is served to the owner of the goods only or the other person specially authorised by the owner for this purpose.

Confiscation under the Customs Act

  1. Section 111 provides for the confiscation of improperly imported goods and lays down the list of goods that can be confiscated under this provision when brought from outside of India and Section 112 provides penalties for the same.
  2. Section 113 provides for the confiscation of improperly exported goods and lays down the list of goods that can be confiscated under this provision when brought from outside of India and Section 114 provides penalties for the same.
  3. Section 115 provides for conveyances that are  liable for the confiscation.
  4. Section 118 grants the authority to confiscate packages due to their content. It states as follows:-

(a) Where any goods imported in a package are liable to confiscation, the package and any other goods imported in that package shall also be liable to confiscation.

(b) Where any goods are brought in a package within the limits of a customs area for the purpose of exportation and are liable to confiscation, the package and any other goods contained therein shall also be liable to confiscation.

  1. Section 119 grants the authority to confiscate goods used to conceal smuggled goods with the smuggled goods.
  2. Section 120 grants the authority to confiscate smuggled goods in case their shape has been changed. Further if smuggled goods are mixed with the other goods in a way that they cannot be separated, the whole is liable for confiscation. However if “the owner of such goods proves that he had no knowledge or reason to believe that they included any smuggled goods, only such part of the goods the value of which is equal to the value of the smuggled goods shall be liable to confiscation.”
  3. Section 121 provides for the confiscation of the sale proceeds of the smuggled goods in case goods are sold by a person having knowledge or reason to believe that the goods are smuggled goods.
  4. Section 122 provides that when  “anything is liable to confiscation or any person is liable to a penalty, such confiscation or penalty may be adjudged”.  Further Section 122A states that a “(1) The adjudicating authority shall, in any proceeding under this Chapter or any other provision of this Act, give an opportunity of being heard to a party in a proceeding, if the party so desires. (2) The adjudicating authority may, if sufficient cause is shown at any stage of proceeding referred to in sub-section (1), grant time, from time to time, to the parties or any of them and adjourn the hearing for reasons to be recorded in writing: 

Provided that no such adjournment shall be granted more than three times to a party during the proceeding

  1. Section 123 provides for the burden of proof in certain cases. It states that “(1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be— 

(a) in a case where such seizure is made from the possession of any person,— (i) on the person from whose possession the goods were seized; and (ii) if any person, other than the person from whose possession the goods were seized, claims to be the owner thereof, also on such other person; 

(b) in any other case, on the person, if any, who claims to be the owner of the goods so seized.”

(2) This section shall apply to gold, [and manufactures thereof], watches, and any other class of goods which the Central Government may by notification in the Official Gazette specify. 

  1. Section 124 mandates  for the issue of show cause notice before confiscation of the goods.
  2. Section 125 gives the option to pay fine instead of confiscation and states the conditions for the same. 
  3. Section 126 states that confiscated  goods vest in the government after confiscation.
  4. Lastly  Section 127 states that “The award of any confiscation or penalty under this Act by an officer of customs shall not prevent the infliction of any punishment to which the person affected thereby is liable under the provisions of Chapter XVI of this Act or under any other law.

Conclusion

In the present blog we briefly discussed the procedure of seizure and confiscation in India as prescribed by  the Customs Act, 1965. The act very elaborately explains the procedures related to seizure and confiscation of illegally exported and imported goods  and also provides for the fines and penalties for the same.

References 

  1. Jena, R.C. (2018, August 28). Complete Provisions of Seizure and Confiscation under Customs Act, 1962. TaxGuru. https://taxguru.in/custom-duty/seizure-confiscation-customs-act-1962.html 
  2. The Custom Act,1962.
  3. S. B. International v. Asst. Director DRI, 2018 (361) E.L.T. 305 (Del.)
  4. Principal Commissioner of Customs (Import), ICD v. Santhosh Handloom, 2016 (337) E.L.T.44 (Delhi High Court)
  5. Harbans Lal Vs. Collector of Central Excise And Customs Chandigarh, AIR 1993 SC 2487.

 

By- Indira Yadav

Electricity Act,2003: Critical Analysis

Electricity Act,2003: Critical Analysis

Introduction

The technology revolution has brought electricity to the forefront. To regulate the generation, supply and use of electricity, the first legislation was the Electricity Act of 1887 which provided for the protection of person and property, from injury and risks, attendant to the supply and use of electricity for lighting and other purposes. This Act was repealed and replaced by the Indian Electricity Act, 1903 (3 of 1903). Many practical, electro technical and commercial difficulties were realised during the period of 1903 to 1909. To deal with these difficulties a bill viz. The Indian Electricity Bill was introduced in the Central legislation to amend the law relating to the supply and use of electrical energy.

Power shortage may very well be one of the major bottlenecks threatening the economic growth of India. Thus power, and particularly electricity, assumes top priority in maintaining a stable growth rate and ensuring energy security. 

For the purpose of distancing state governments from tariff determination, The Electricity Regulatory Commissions Act was enacted in 1998. So as to reform the electricity sector further by participation of the private sector and to bring in competition, the Electricity Act was enacted in 2003. 

Electricity Act 2020: Analysis and Perspectives - The Daily Guardian

Role and purpose of  State authority

The Central government, on its part, has formed a central authority with responsibility to develop a national power policy and coordinate activities of various agencies or state electricity boards. The authority advises the Department of Power on technical, financial and economic matters. The country has been demarcated into five regions – North, West, South, East and North-east. Regional electricity boards were set up in 1964-65 in each of these regions.

  1. The Northern Region covers Haryana, Himachal Pradesh, Jammu & Kashmir, Punjab, Rajasthan, Uttar Pradesh, Chandigarh and Delhi.
  2. Western Region covers Gujarat, Madhya Pradesh, Maharashtra, Goa, Daman and Diu and Dadra and Nagar Haveli.
  3.  The Southern Region covers Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Pondicherry.
  4. Eastern Region covers Bihar, Orissa, West Bengal and Sikkim.
  5. North-Eastern Region covers Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura.

These boards are merely advisory bodies. They review the progress of power development schemes in the region; plan and ensure integrated operation of all the power systems in the region; prepare a coordinated overhaul and maintenance programme for the generating plants in the region; determine the operation schedules to be followed by all the plants in the region; determine the amount of surplus power available for exchange between the states; and determine tariff struc­tures governing exchange of power within the region. No single state can possibly solve the problem of energy deficiency and hence has arisen the need for the formation of regional power grids.

Development and growth

Significant progress has been made in the expansion of transmission and distribution facilities in the country. Fairly well interconnected systems are presently available in all regions of the country except the north-eastern region. Inter-state and inter-regional transmission lines would form part of the national power grid. It will promote integrated operation and transfer of power from one system to another with the ultimate objective of ensuring optimum utilisation of resources.

Every successive Five-Year Plan has added to the energy capability of the nation and the national and regional power grids have resolved the power shortage crisis in underdeveloped states. Moreover it has helped in rapid and uniform industrial development of the country. The states feel reassured of their energy requirements and are inviting global investments on the basis of this infrastructural facility of the grids.

The functioning of electricity before and after the introduction of the Privatisation sector in the Power sector.

ProcessThenNow
GenerationSlow growth in capacity addition. Difficulties in coal availability.Phenomenal growth in capacity addition. Surplus electricity. Renewables have grown. Declining PLF’s(Plant load factor) however.
TransmissionMonopoly.

 Regional grids 

Competition. National grid implemented
DistributionAlarming losses Restructuring. Losses minimised

 

Regulatory framework

The Constitution of India places electricity on the concurrent list, that is, both the centre and state legislatures are authorised to enact law and make policies to promote the electricity sector.

The Electricity Act 2003 (Electricity Act) framed by the central legislature covers major issues involving generation, distribution, transmission and trading of power.

The main regulatory authorities that regulate the tariff of generating companies are CERC and SERC.

CERC is responsible for:

  • Determining and regulating tariffs for generating companies owned or controlled by the central government.
  • Generating companies other than those owned or controlled by the central government, if those companies have entered into a composite scheme for generation and sale of electricity in more than one state.

SERCs determine and regulate tariffs for intra-state generation, supply, transmission and wheeling of electricity in the relevant states. The Electricity Act governs the following, among other things:

  • Generation. Licensing requirements were removed for the generation of electricity (except for permission for certain hydro projects) (Electricity Act). Anyone can therefore develop a generating station in accordance with the applicable Indian laws. Generating companies are now permitted to sell electricity to any trading and distribution licensee and to consumers directly (subject to getting open access approvals).
  • Transmission. Transmission is a regulated activity that requires a licence from the appropriate regulatory commission (CERC or SERC), unless exempted in accordance with the Electricity Act or if deemed a licensee under the Electricity Act. The Central Government must designate one government company as the central transmission utility (CTU), which would be deemed a transmission licensee (Electricity Act). Similarly, each state government designates one government company as a state transmission utility (STU), which would also be deemed as a transmission licensee. CERC and SERC are the regulators and licensors for anyone seeking to undertake transmission activities. CTUs are prohibited from generating electricity or trading in electricity (Section 38, Electricity Act). The prohibition on STUs, however, is only for engaging in trading in electricity. Transmission licensees can also engage in any other business in addition to transmission (except trading), provided prior notice is given to the appropriate regulatory commission (Section 41, Electricity Act).
  • Trading. Trading of electricity is a licensed activity, which is defined as the purchase of electricity for resale to any person (Electricity Act), which can involve either:
    • wholesale supply (that is, purchasing power from generators and selling to the distribution licensees); or
    • retail supply (that is, purchasing from generators or distribution licensees for sale to end consumers).

 

  • The regulatory authorities responsible for granting a trading licence are CERC (if the trading is proposed to be inter-state) and SERC (if the trading is proposed to be intra-state). A trading licensee must keep the accounts of the trading business separate from any other business carried out by it.
  • Distribution and retail supply. The Electricity Act does not make any distinction between distribution and retail supply of electricity. Distribution is a licensed activity and distribution licensees are allowed to undertake trading without any separate licence. A distribution licensee can engage in any other business with prior notice to the appropriate commission (Section 51, Electricity Act).

 

   Regulatory authorities

 Companies involved in the four main functions of Electricity 

 

  • Generation: The main companies involved in electricity generation are the National Thermal Power Corporation, National Hydro Power Corporation, Damodar Valley Corporation, GMR Energy, Torrent Power, Essar Power, Tata Power, Reliance Power, Adani Power, Lanco Power and Jaypee Power Ventures.
  • Transmission: The main companies involved in transmission are the Power Grid Corporation of India (CTU), STUs (such as Delhi Transco), Powerlinks Transmission Pvt, Kalpataru Power Transmission, Sterlite Technologies and Isolux Infrastructures.

  • Distribution and supply: The main distribution and supply companies include Tata Power, BSES Rajdhani Power and BSES Yamuna Power.

 

Insolvency under power sector

The Insolvency and Bankruptcy Code 2016 (IBC) consolidated the law in relation to insolvency and reorganisation of (among others) companies. The IBC also applies to the insolvency framework with respect to the electricity sector.

 

Unlike other infrastructure sectors such as highways, airports, metro railways etc., where the revenue collection risk is dispersed amongst a multitude of users, in the power generation sector, the entire offtake and revenue risk is concentrated on single buyers that are state-owned monopolies.

 

IBC, however, is prescriptive in nature and mandates a certain course of action without making any distinction between sectors or indeed the causes leading to the financial situation. If corporate insolvency resolution process under Chapter II of Part II of the IBC is initiated against a company or the company initiates voluntary liquidation proceedings under the IBC, the most desirable outcome is that the debts of the creditors are satisfied and there is a change in the management of the company so that after resolution, the company does not go back into the hands of the promoters or directors who have led to its downfall in the first place.

 

Given the sectoral inefficiencies that can directly be attributed to the state, and are responsible for the sectoral stress in private power production, there is an urgent need for creating a special dispensation for the power sector within the IBC framework.In light of this, it would seem that applying a purely commercial framework for resolving stress in the power sector seems inequitable at the very least and, in fact, presents a compelling argument as to why there should be reconsideration on the blanket applicability of the IBC on the power sector.

 

In this context, it also relevant to note that, in addition to IBC, there are other pieces of legislation that are perhaps more suited to this sector such as the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 which enables lenders to enforce the security interest put forward by the borrowers in order to recover their loan amounts, without necessarily derailing the management and essentially bringing the entire company to the ground. This also provides a chance to the company to revive itself, base the remaining assets and continue its business operations as a going concern, which, in the context of the power sector, would be in the best interest of the economy of the consumers.

Conclusion

There is little doubt that the power sector has come a long way in the last two decades. The power sector has opened doors to private participation, increasing competition and transparency in the process and greater certainties in the policy-level interventions today. While the power demand is expected to slowly limp back to high-single digits in tandem with GDP growth, several overarching fundamental trends are expected to drive the sector transformation in 2021.

The sector has grown and developed itself in several segments and with the introduction of Privatisation in the sector, it has changed drastically and in an unimaginable way. While the sector has been undergoing an overhaul over the last few years, the coronavirus pandemic underscored the need for accelerated technological upgradation. Going forward, the focus on implementation of smart technologies like an evolved grid system, smart metering, digital asset management will help transform the seemingly traditional, manpower-heavy sector into a smarter, more efficient power system with each element in the value chain re-imagining their processes and streamlining infrastructure. 

Author: Pooja Shukla

EditorAdv. Aditya Bhatt & Adv. Chandni Joshi

PROHIBITED AND RESTRICTED GOODS

PROHIBITED AND RESTRICTED GOODS

INTRODUCTION

Import and export are important contributors to any country’s Gross Domestic Product (GDP), which is a measure of the economy’s health and advancement. It is impossible for any country to establish a closed economy because no country is resource self-sufficient. Whether it’s due to unequal distribution of natural resources or territorial division of labor and specialisation, people’s desire to improve their quality of living eventually leads to overseas commerce. As a result, imports assist in alleviating shortages of vital consumer products, capital goods, and numerous inputs that are not readily available in the country. Sugar, ores and minerals, petroleum and crude products, chemical and allied products, and so on are examples of such things.

If any items are restricted from entering the country, the government takes down import obstacles that must be overcome by the importer. To import such restricted products, certain procedures must be followed. Most prohibited items can be imported if the government of the importing country lifts the limitations by following the relevant processes and formalities. Prohibited items, on the other hand, are not permitted to be imported into such a country. While prohibited and restricted items may sound the same, there is an actual difference – prohibited items must never be sent in the post, while restricted items may be sent in the post, but restrictions will apply.

Ultimate List Of Prohibited Items For International Shipping -Shiprocket

REASONS FOR IMPOSING RESTRICTIONS

One of the main goals of imposing import restrictions or prohibitions on commodities is to ensure that the importing country’s economic situation is not weakened. Import restrictions do not imply that imports are prohibited. If a product’s import has a negative impact on the health of humans, animals, plants, or other species, the importing country’s government may limit its import. Import restrictions are determined by the government of the importing country’s foreign trade policy, which may be altered from time to time if necessary. The government of the importing country publishes a list of such prohibited products for import, which is updated on a regular basis. The importer may obtain information from authorities about their importing products, such as if they are subject to the importing nation’s limitation list.

Restricted in the context of shipping can signify one of two things:

  1.   It’s possible that an item is permitted, but only in a limited number.
  2.   A specific object can be mailed, but only if it fits certain requirements.

Sending batteries, for example, is restricted by kind (car batteries are prohibited), and the quantity must fall below a particular threshold for quality check. This means that batteries that are broken or malfunctioning are not allowed. Furthermore, lithium ion batteries may only be sent with an electronic device, but not linked to it.

Restriction can also mean that an item can only be sent if the competent authority has granted a license or authorization, however this usually applies to overseas shipping because rules and procedures differ from nation to country, it’s critical to check limits for the country you’re shipping to ahead of time, as well as apply for any necessary permissions. If you send a restricted material without a license, customs will confiscate your delivery. Due to import and safety rules, restrictions might vary greatly from country to country. Other explanations could include:

  •       Economics: Countries create trade barriers to protect their economy from the risks of international trading.
  •         Religious Values: Some countries with a strong faith have very strict rules on which texts are allowed to enter the country.
  •         The Environment: To protect the native ecosystem from alien pests or disease, hence why many countries carry restrictions on things like seeds and dried fruit.

IMPORT/EXPORT RESTRICTIONS AND PROHIBITIONS IN INDIA

Deliberate evasion of duty or breach of a prohibition or limitation imposed on the import or export of specific products is punishable under the Customs Act, 1962, or any of the associated laws executed by the Customs under the said Act. Thus, importers and exporters, as well as others involved in international trade, must be familiar with the provisions of the Customs Act of 1962, the Foreign Trade Policy, and other relevant allied Acts, and ensure that, before any imports or exports are carried out, they are aware of any prohibitions, restrictions, or requirements that must be met.

The term “Prohibited Goods” is defined as “any goods the import or export of which is subject to any prohibition under the Customs Act or any other law for the time being in force” under Section 2(33) of the Customs Act, 1962. As a result, the Customs Act of 1962 can be used to enforce a restriction under any other legislation. For example, the Central Government can make provisions for prohibiting, restricting, or otherwise regulating the import or export of goods under Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992, which is reflected in the DGFT, Department of Commerce’s Foreign Trade Policy.

Some of the goods are absolutely prohibited for import and export whereas some goods can be imported or exported against a licence and/or subject to certain restrictions. An example is that certain products must conform to mandatory Indian Quality Standards (IQS), and exporters of certain products to India must register with the Bureau of Indian Standards for this reason (BIS). Importation of such products will be forbidden if the following criteria are met. If any of the standards are not met, the import of packaged products will be considered forbidden, and the commodities would be confiscated.

The Central Government has the authority to issue notifications under Section 11 of the Customs Act, 1962, declaring the export or import of any items as forbidden. The prohibition can be unconditional or conditional. A notification under Section 11 can be issued for a variety of reasons, including maintaining India’s security, preventing a shortage of goods in the country, conservation of foreign exchange, safeguarding balance of payments etc. The Customs Act of 1962, Sections 111(d) and 113(d), specify that any items that are imported or attempted to be imported, and exported or attempted to be exported, in violation of any ban imposed by or under the said Act or any other legislation in force, are subject to forfeiture. Improper importation is punishable under Section 112 of the Customs Act of 1962, and attempting to export goods improperly is punishable under Section 114 of the same Act. The adjudicating officer may impose a penalty of up to five times the value of the commodities in the case of restricted goods. It is, therefore, absolutely necessary for the trade to know what are the prohibitions or restrictions in force before they contemplate importing or exporting any goods.

Apart from customs act there are some other acts and rules that come into play for imposing restrictions or prohibitions among which some are:

  1.       The Prevention of Food Adulteration Act, 1954 and Food Safety and Standards Authority Act, 2006

Any product that does not meet the legislative requirements is not authorized to be imported into the country, according to the Prevention of Food Adulteration Act of 1954 (PFA). Similarly, the government has produced a number of laws, regulations, orders, notifications, and other documents outlining the procedures for dealing with imports of the aforementioned products. In addition, the Food Safety and Standards Authority Act of 2006 (FSSA) aims to replace a number of existing laws, notably the PFA Act, which governs the import of edible goods. The FSSAI was formed to set standards and regulate/monitor food manufacturing, import, processing, distribution, and sale.

  1.       Labelling of the goods imported into India:

A government notification of year 2000 mandates the labeling of commodities imported into India that fall under the scope of the 1977 Standards of Weights and Measures (Packaged Commodities) Rules. Before an import consignment of such items is cleared by Customs for home consumption, compliance with labeling standards must be confirmed, according to this Notification.

  1.       The Livestock Importation Act, 1898:

The Livestock Importation Act of 1898 governs the import of livestock and livestock products. The purpose of this Act, as well as the notifications/orders issued under it, is to restrict the import of livestock products in such a way that they do not have a negative impact on the country’s human and animal health populations.

  1.       Standards of Weights and Measures (Packaged Commodities) Rules, 1977:

When imported into India, all packaged products that are subject to the terms of the Standards of Weights and Measures (Packaged Commodities Rules, 1977) when made, packed, or marketed in the domestic market must comply with all provisions of the said rules. Before the import consignment of such commodities is cleared by Customs for domestic consumption, compliance must be ensured.

  1.       Drugs and Cosmetics Act, 1940 and Drugs and Cosmetics Rules, 1945:

According to Rule 133 of the Drugs and Cosmetics Rules, 1945, cosmetics may only be imported into India through the points of entry listed in Rule 43A of the Rules. Furthermore, certain categories of drugs are exempt from the limits imposed by Chapter III of the Drugs and Cosmetics Act, 1940, under Schedule “D” of the aforementioned Rules, read in accordance with Rule 43.

  1.       Import of Hazardous Substances:

Hazardous waste imports into India are governed by the Hazardous Wastes (Management and Handling) Amendment Rules, 1989. Furthermore, despite anything in the ITC (HS) Classifications of Export and Import Items, the import of hazardous waste or substances containing or contaminated with hazardous wastes as defined in Schedule 8 of the act is forbidden.

 

LIST OF SOME MAJOR PROHIBITED/RESTRICTED GOODS IN INDIA

 

  PROHIBITED GOODS                                 RESTRICTED GOODS   

Narcotic drugs and psychotropic substancesFirearms and ammunition
Pornographic and obscene materialLive birds and animals including pets
Counterfeit and pirated goods and goods infringing any of the legally enforceable intellectual property rightsPlants and their produce e g fruits, seeds
AntiquitiesEndangered species of plants and animals, whether alive or dead
Aero models (such as remote-controlled toy helicopters) that operate on high radio bandwidthsAny goods for commercial purposes for profit, gain, or commercial usage
Indian coins which are covered by the Antique and Art Treasure Act, 1972Radio transmitters not approved for normal usage
Maps and literature where Indian external boundaries have been shown incorrectly, in view of the Government of IndiaImporting Gold and Silver, other than ornaments
Chemicals mentioned in Schedule 1 to the Chemical Weapons Convention of U.N. 1993.Currency in excess of prescribed limits
Wildlife products;

·         Human skeleton

·         Specified sea-shells

·         Beef, tallow, fat/oil of animal origin

·         Exotic birds except for a few specified ones

·          Wild animals, their parts and products

·         Specified Live birds and animals

Telephone and telephony equipment of restricted frequencies

 

Author: Aditya Sharma

Editor: Adv. Aditya Bhatt & Adv. Chandni Joshi

 

PROCEDURE OF CUSTOMS UNDER CUSTOMS ACT, 1962

PROCEDURE OF CUSTOMS UNDER CUSTOMS ACT, 1962

INTRODUCTION:

Customs is an authority or tax collection wing appointed by the Government in every country for controlling and for collecting of tax on the flow of goods into and out of a country. ‘Customs Duty’ refers to the tax imposed on the goods when they are transported across the international borders. Custom Duty is an indirect tax, imposed under the Customs Act formulated in 1962. Following are the types of customs duty in India, 

  • Basic Customs Duty (BCD)
  • Countervailing Duty (CVD)
  • Additional Customs Duty or Special CVD
  • Protective Duty,
  • Anti-dumping Duty

The power to enact the law is provided under the Constitution of India under the Article 265, which states that ―no tax shall be levied or collected except by authority of law. Entry No. 83 of List I to Schedule VII of the Constitution empowers the Union Government to legislate and collect duties on import and exports.

The primary objective behind levying customs duty is to safeguard each nation’s economy, jobs, environment, residents, etc., by regulating the movement of goods in and out of any country. It is also to minimise the smuggling of demerit goods such as cigarettes and alcoholic beverages across borders since these items are usually highly taxed and their tax rates may also vary significantly across borders. The Quantum of Customs duty in India depends upon the provisions of Customs Act, 1962 and Customs Tariff Act, 1975 and related Customs Rules, Notifications, Circulars, case Laws and Annual Union Finance Acts. The Customs Act, 1962 is the principal act which governs entry or exit of different categories of vessels, aircrafts, goods, passengers etc., into or outside the country. The Act extends to the whole of India.

Indian Government Planning To Hike Customs Duties On Electronics - Gizbot News 

All goods imported into India have to pass through the procedure of customs for proper examination, appraisal, assessment and evaluation. This helps the custom authorities to charge the proper tax and also check the goods against the illegal import. Import and export of goods into and outside a country should undergo a customs clearance process. The importer and exporter of the goods should submit valid documents to clear this process. In this article, we look at some of the major steps and processes in clearing customs in India. Goods are imported in India or exported from India through sea, air or land. Goods can come through post parcels or as baggage with passengers. Procedures naturally vary depending on mode of import or export. Procedures discussed in this are applicable for imports by sea, air or land.

PROCEDURES FOR IMPORT:

Bill of entry:

Goods imported into the country attract Customs duty and are also required to confirm relevant and corresponding legal requirements. Thus, unless the imported goods are not meant for Customs clearance at the port/airport of arrival such as those intended for transit by the same vessel/aircraft or transshipment to another Customs station or to any place outside India, detailed Customs clearance formalities have to be followed by the importers. In contrast, in terms of Section 52 to 56 of the Customs Act, 1962, the goods mentioned in the IGMor Import Report for transit to any place outside India or meant for transshipment to another Customs station in India are allowed transit without payment of duty. In case of goods meant for transshipment to another Customs station, simple transshipment procedure has to be followed by the carrier and the concerned agencies at the first port/ airport of landing and the Customs clearance formalities have to be complied with by the importer after arrival of the goods at the other Customs station where goods are intended to be delivered to the importer. There could also be cases of transshipment of the goods after unloading to a port outside India. For this purpose, a simple procedure is prescribed and no duty is required to be paid. 

Self-assessment of imported and export goods: 

Section 17 of the Customs Act, 1962 provides that an importer entering any imported goods under section 46 or an exporter entering any export goods under section 50 shall self-assess the duty. Thus, under self-assessment, it is the importer or exporter who will ensure that he declares the correct classification, applicable rate of duty, value, benefit of exemption notifications claimed, if any, etc. in respect of the imported / export goods while presenting Bill of Entry or Shipping Bill. In cases, where the importer or exporter is not able to determine the duty liability or make self assessment for any reason, except in cases where examination is requested by the importer under proviso to Section 46(1), a request shall be made to the proper officer for provisional assessment of duty under Section 18 (1)(a) of the Customs Act, 1962. In such a situation an option is available to the proper officer to resort to provisional assessment of duty by asking the importer / exporter to furnish security as deemed fit for payment of the deficiency, if any, between the duty as may be finally assessed or reassessed, as the case may be, and the duty provisionally assessed.

Examination of Goods:

All imported goods are required to be examined for verification of correctness of description given in the bill of entry. However, a part of the consignment is selected on a random selection basis and is examined. In case the importer does not have complete information with him at the time of import, he may request for examination of the goods before assessing the duty liability or, if the Customs Appraiser/Assistant Commissioner feels the goods are required to be examined before assessment, the goods are examined prior to assessment. The importer has to request for a first check examination at the time of filing the bill of entry or at data entry stage. The reason for seeking First Appraisement is also required to be given. On the original copy of the bill of entry, the Customs Appraiser records the examination order and returns the bill of entry to the importer/CHA with the direction for examination, who is to take it to the import shed for examination of the goods in the shed. Shed Appraiser/Dock examiner examines the goods as per examination order and records his findings. 

After assessment by the appraising group or for cases where examination is carried out before assessment, a bill of entry needs to be presented for registration for examination of imported goods in the import shed. The proper officer of customs examines the goods along with requisite documents. The shipments, found in order are given clearance order by the proper officer of customs in the Import Shed.

Execution of Bonds:

Wherever necessary, for availing duty free assessment or concessional assessment under different schemes and notifications, execution of end use bonds with Bank Guarantee or other surety is required to be furnished. These have to be executed in prescribed forms before the assessing Appraiser.

Payment of duty:

The duty can be paid in the designated banks or through TR-6 challans. Different Custom Houses have authorised different banks for payment of duty. It is necessary to check the name of the bank and the branch before depositing the duty. Bank endorses the payment particulars in challan which is submitted to the Customs.

Amendment of Bill of Entry: 

Bonafide mistakes noticed after submission of documents, may be rectified by way of amendment to the Bill of Entry with the approval of Deputy/Assistant Commissioner. The request for amendment may be submitted with the supporting documents. 

Prior Entry for Bill of Entry:  

For faster clearance of the goods, provision has been made in section 46 of the Act, to allow filing of bills of entry prior to arrival of goods. This bill of entry is valid if a vessel/aircraft carrying the goods arrives within 30 days from the date of presentation of the bill of entry. The importer is to file 5 copies of the bill of entry and the fifth copy is called Advance Noting copy. The importer has to declare that the vessel/aircraft is due within 30 days and they have to present the bill of entry for final noting as soon as the IGM is filed. Advance noting is available to all imports except for into the bond bill of entry and also during the special period.

Bill of Entry for bond/warehousing:

A separate form of Bill of Entry is used for clearance of goods for warehousing. All documents, as are required to be filed with a Bill of Entry for home consumption are also required with the Bill of Entry for Warehousing which is assessed in the same manner and duty payable is determined. However, since duty is not required to be paid at the time of warehousing, the purpose of assessing the duty at this stage is only to secure the duty by way of execution of Bond. The duty is paid at the time of ex-bond clearance of goods for which an Ex-Bond Bill of Entry is filed. In terms of Section 15 of the Customs Act, 1962, the rate of duty applicable to imported goods cleared from a warehouse is the rate in- force on the date of filing of the Ex-Bond Bill of Entry. 

 

PROCEDURE FOR EXPORTS:

Shipping bill: 

For clearance of export goods, the exporter has to obtain an Importer- Export Code (IEC) number from the DGFT prior to filing of Shipping Bill. Under the EDI System, IEC number is received online by the Customs System from the DGFT. The exporter is also required to register authorized foreign exchange dealer code (through which export proceeds are expected to be realized) and open a current account in the designated bank for credit of Drawback incentive, if any. All the exporters intending to export under the export promotion scheme need to get their licenses etc. registered at the Customs Station. For such registration, original documents are required. 

Waiver of GR form: 

Generally the processing of Shipping Bills requires the production of a GR form that is used to monitor the foreign exchange remittance in respect of the export goods. However, there are few exceptions when the GR form is not required. These exceptions include export of goods valued not more than US $25,000/- and export of gifts valued upto Rs.5 lakhs. 

Arrival of goods to the dock:

The goods brought for the purpose of examination and subsequent ‘let export’ are allowed entry to the Dock on the strength of the checklist and other declarations filed by the exporter in the Service Center. The Port authorities have to endorse the quantity of goods actually received on the reverse of the Checklist.

Customs examination of export goods:

After the receipt of the goods in the dock, the exporter/CHA may contact the Customs Officer designated for the purpose present the check list with the endorsement of Port Authority and other declarations as aforesaid along with all original documents such as, Invoice and Packing list, AR-4, etc. Customs Officer may verify the quantity of the goods actually received and enter into the system and thereafter mark the Electronic Shipping Bill and also hand over all original documents to the Dock Appraiser of the Dock who many assign a Customs Officer for the examination and intimate the officers’ name and the packages to be examined, if any, on the check list and return it to the exporter or his agent. The Customs Officer may inspect/examine the shipment along with the Dock Appraiser. The Customs Officer enters the examination report in the system. He then marks the Electronic Bill along with all original documents and checklist to the Dock Appraiser. If the Dock Appraiser is satisfied that the particulars entered in the system conform to the description given in the original documents and as seen in the physical examination, he may proceed to allow “let export” for the shipment and inform the exporter or his agent.

Drawl of samples:

Where the Appraiser Dock (export) orders for samples to be drawn and tested, the Customs Officer may proceed to draw two samples from the consignment and enter the particulars thereof along with details of the testing agency. There is no separate register for recording dates of samples drawn. Three copies of the test memo are prepared by the Customs Officer and are signed by the Customs Officer and Appraising Officer on behalf of Customs and the exporter or his agent.

Stuffing / loading of goods in containers: 

In case of container cargo the stuffing of containers at Dock is done under Preventive supervision. Further, loading of both containerized and bulk cargo is to be done under Preventive supervision. The Customs Preventive Officer supervising the loading of container and general cargo into the vessel may give “Shipped on Board” endorsement on the Exporters copy of the Shipping Bill.  

Amendments: 

Any correction/amendment in the check list generated after filing of declaration can be made at the Service Centre provided the documents have not yet been submitted in the EDI system and the Shipping Bill number has not been generated. Where corrections are required to be made after the generation of the Shipping Bill number or after the goods have been brought into the Export Dock, the amendments will be carried out in the following manner: 

(i) If the goods have not yet been allowed to “Let Export” the amendments may be permitted by the Assistant / Deputy Commissioner (Exports). 

(ii) Where the “Let Export” order has already been given, amendments may be permitted only by the Additional/Joint Commissioner in charge of Export. 

Drawback claim:  

After actual export of the goods, the Drawback claim is processed through the EDI system by the officers of the Drawback Branch on a first come first served basis. There is no need for filing separate drawback claims. The status of the shipping bills and sanction of DBK claim can be ascertained from the query counter set up at the service center. If any query has been raised or deficiency noticed, the same is shown on the terminal. A print out of the query/deficiency may be obtained by the authorized person of the exporter from the service center. The exporters are required to reply to such queries through the service center. The claim will come in the queue of the EDI system only after reply to queries/deficiencies are entered by the Service Center.

Export General Manifest(EGM):

All the shipping lines/agents need to furnish the Export General Manifests, Shipping Bill wise, to the Customs electronically within 7 days from the date of sailing of the vessel. Apart from lodging the EGM electronically the shipping lines need to continue to file manual EGMs along with the exporter copy of the shipping bills as per the present practice in the export department. The manual EGMs need to be entered in the register at the Export Department and the Shipping lines may obtain acknowledgements indicating the date and time at which the EGMs were received by the Export Department. The above is the general procedure for export under EDI Systems. However special procedures exist for specified schemes, details of which may be obtained from the Public Notice/Standing Orders issued by the respective Commissionerates.

Facility 24×7 Customs Clearance:  

In order to faster Customs clearance of imported and export goods to reduce dwell time and lower the transaction cost, CBE & C, vide Circular No. 19/2014-Customs, dated 31.12.2014 has made facility of 24×7 Customs Clearance for specified imports, namely, goods under ‘facilitated “Bills of Entry and specified exports, namely factory stuffed containers and goods exported under free shipping Bills have made available in 18 sea ports. Similarly, facility of 24×7 Customs clearance for specified imports, namely, goods covered by facilities Bills of Entry and all exports viz. goods covered by all shipping Bills has been extended at 17 air cargo complexes.

Sealing of Export Goods: electronic sealing facility:

Board has laid down a simplified procedure for stuffing and sealing of export goods by introducing self-sealing subject to certain conditions.

CONCLUSION:

In line with Government’s policy “Ease of Doing Business “ the Central Board of Excise and Customs  has taken-up the various measures to facilitate trade and commerce to bring hassle free working environment as well as  reduction of transaction costs of goods and services to make them competitive in the domestic and international market.  The various initiatives taken by the Board are welcome steps and this will reduce the prices of Goods and services in the GST regime. The initiatives for “ease of doing of business certainly will boost the economic growth of the country in the coming days.

INTRODUCTION OF CUSTOMS DUTIES IN INDIA

INTRODUCTION OF CUSTOMS DUTIES IN INDIA

Introduction:

Customs is an authority or tax collection wing appointed by the Government in every country for controlling and for collecting of tax on the flow of goods into and out of a country. ‘Customs Duty’ refers to the tax imposed on the goods when they are transported across the international borders. Custom Duty is an indirect tax, imposed under the Customs Act formulated in 1962. Following are the types of customs duty in India, 

  • Basic Customs Duty (BCD)
  • Countervailing Duty (CVD)
  • Additional Customs Duty or Special CVD
  • Protective Duty,
  • Anti-dumping Duty Us import duty: India again extends deadline to impose high import duties  on 29 US products till April 1, Auto News, ET Auto

The power to enact the law is provided under the Constitution of India under the Article 265, which states that ―no tax shall be levied or collected except by authority of law. Entry No. 83 of List I to Schedule VII of the Constitution empowers the Union Government to legislate and collect duties on import and exports.

The primary objective behind levying customs duty is to safeguard each nation’s economy, jobs, environment, residents, etc., by regulating the movement of goods in and out of any country. It is also to minimise the smuggling of demerit goods such as cigarettes and alcoholic beverages across borders since these items are usually highly taxed and their tax rates may also vary significantly across borders. The Quantum of Customs duty in India depends upon the provisions of Customs Act, 1962 and Customs Tariff Act, 1975 and related Customs Rules, Notifications, Circulars, case Laws and Annual Union Finance Acts. The Customs Act, 1962 is the principal act which governs entry or exit of different categories of vessels, aircrafts, goods, passengers etc., into or outside the country. The Act extends to the whole of India.

Brief Legal History:

Taxes on goods were levied on various goods right from the Veda period. Customs Duty as we understand it today has its origin in British period. British established its first Board of Revenue in 1786 at Calcutta. New Board of Trade was established in 1808. A uniform Tariff Act was introduced in 1859 all over India. General rate of import duty was 10%, which was reduced to 7.5% in 1864. Customs duty in India is linked with the history of the textile industry. British manufacturers wanted to export their products to India and due to their pressure, duty on coarser varieties of cotton goods was abolished in 1877. Meanwhile, the Sea Customs Act was passed in 1878. In 1882, all import duties were abolished, but re-introduced in 1894 at a general rate of 5%. Indian Tariff Act was passed in 1894. Import duty on cotton goods @ 5% was introduced in 1894. At the same time, excise duty on Indian cotton goods was imposed, which was bitterly resented in India and it was finally abolished in 1925. General rate of customs duty was later increased to 7.5%. The Land Customs Act was passed in 1924. Air Customs was covered by making some rules under Indian Aircraft Act, 1911. After independence, the manufacturing industry grew and trade expanded. Customs Act, 1962 was passed to consolidate Sea Customs Act, Land Customs Act and provisions for air customs. On the basis of the world customs organization guidelines and principles, the Customs Act, 1962 and the Customs Tariff, 1975 has been framed to regulate the movement of imported goods into India and exported goods out of India.

Overview of customs law in India:

The Customs Act is used to (a) regulate imports and exports (b) protect Indian industry from dumping (c) collect revenue of customs duty. In addition, provisions of Customs Act are used for other Acts like Foreign Trade (Development and Regulation) Act, Foreign Exchange Management Act (FEMA) etc. Customs Law is covered under various Acts, rules, regulations and notifications, as follows :

Customs Act, 1962: This is the main Act, which provides for levy and collection of duty, import/export procedures, prohibitions on importation and exportation of goods, penalties, offences etc.

Customs Tariff Act, 1975:– The Act contains two schedules – Schedule 1 gives classification and rate of duties for imports, while Schedule 2 gives classification and rates of duties for exports. In addition, the CTA (Customs Tariff Act) makes provisions for duties like additional duty (CVD), preferential duty, anti-dumping duty, protective duties etc.

Rules under Customs Act – Under section 156 of Customs Act, 1962, Central Government has been empowered to make rules, consistent with provisions of the Act, to carry out the purposes of the Act. Various rules have been framed under these powers.

Regulations under Customs Act– Under section 157 of Customs Act, 1962, the Board has been empowered to make regulations, consistent with provisions of the Act, to carry out the purposes of the Act. Various regulations have been framed under these powers. In Sukhdev Singh v. Bhagatram Sardar Singh, it was held that regulations framed under statutory provisions would have the force of law.

Notifications under Customs Act– Various sections authorise the Central Government to issue notifications. The main are section 25(1) to grant partial or full exemption from duty and section 11 to prohibit import or export of goods. 

Board circulars – The Board is empowered u/s 151A of Customs Act to issue, for purpose of uniformity in classification of goods or with respect to the levy of duty thereon, issue such instructions and directions to officers of customs and they are required to observe and follow such orders, instructions and directions of Board. CBI&C issues circulars giving various instructions/prescribing various procedures etc. Normally, these instructions should be followed.

Recent changes:

In 2021, Certain significant changes were made in the Customs Act, 1962 (“the Customs Act”). Mostly, these are for enhanced trade facilitation. A definite period of two year, extendable by one year is being prescribed for completion of investigation. Also, it is being prescribed that conditional exemption shall have validity of two years unless specifically provided otherwise or varied or rescinded earlier. IGCR (Import Goods Concessional Rate) Rules have been amended to allow job work on imported goods and also to allow disposal of goods at payment of duty on depreciated value. A few changes are made for improving compliance.

In 2021, Certain changes have also been made in the Customs Tariff Act, 1975 (“the Customs Tariff Act”) and Rules made thereunder in the provisions relating to trade remedial measures. Besides other changes, these changes introduce the provisions for anti-absorption investigation, bringing in uniformity in the provisions. Certain changes have also been made in the corresponding Rules.

Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 [“IGCR Rules”] are being amended to provide the following facilities: 

  • to allow job-work of the materials (except gold and jewellery and other precious metals) imported under concessional rate of duty 
  • to allow 100% out-sourcing for manufacture of goods on job-work 
  • to allow imported capital goods that have been used for the specified purpose to be cleared on payment of differential duty, along with interest, on the depreciated value. The depreciation norms would be the same as applied to EOUs, as per Foreign Trade Policy.

Important judgements:

In the case of New Video Ltd. v. CC, it has been held that Customs duty is payable on replacement of parts provided free of cost during warranty period even if duty was paid on parts originally supplied. In the case of CC v. Aban Loyd Chiles Offshore Ltd, it has been viewed that import should be for ‘home consumption’, if goods imported for repairs and return, customs duty not payable, as import is not for home consumption. 

Goods become liable to import duty or export duty when there is ‘import into, or export from India’. As per section 2(18), ‘export’ with its grammatical variations and cognate expressions, means taking out of India to a place outside India. As per section 2(23) of Customs Act, ‘import’ with its grammatical variations and cognate expressions, means bringing into India from a place outside India. In Gramophone Company of India v. Birendra Bahadur Pandey, it was held that ‘import’ included goods imported for transit across to Nepal.

In Indian Airlines v. CC, Indian Airlines had international flights. After returning from an international flight, the fuel was used for domestic run. It was held that fuel left in the fuel tank after termination of international run is ‘import’ and liable to customs duty.

Section 2(27) of Customs Act defines ‘India’ as inclusive of territorial waters. Hence, it was thought that ‘import’ is complete as soon as goods enter territorial water. Similarly, export is complete only when goods cross territorial waters. There were conflicting judgments of the High Courts. Finally, in Kiran Spinning Mills v. CC , it has been held that import is completed only when goods cross the customs barrier. The taxable event is the day of crossing of customs barriers and not on the date when goods landed in India or had entered territorial waters. In the case of goods which are in the warehouse the customs barrier would be crossed when they are sought to be taken out of the customs and brought to the mass of goods in the country. 

In Garden Silk Mills Ltd. v. UOI, the same 3 member bench passed judgment in Kiran Spinning Mills, it was held that import of goods in India commences when they enter into territorial waters but continues and is completed when the goods become part of the mass of goods within the country. The taxable event is reached at the time when the goods reach the customs barrier and a bill of entry for home consumption is filed. Though there is slight contradiction between the SC judgments, it can be said that ‘mixing up with mass of goods in the country’ after crossing customs barriers is the ‘taxable event’ for customs duty on imports.

In case of warehoused goods, the goods continue to be in customs bond. Hence, ‘import’ takes place only when goods are cleared from the warehouse which has been confirmed in the case of  UOI v. Apar P Ltd. and in Kiran Spinning Mills v. CC , where it was held that taxable events occur when goods cross customs barriers and not when goods land in India or enter territorial waters. 

International Organisations:

The establishment and functioning of multilateral customs organisations have had a restraining and smoothening effect on the stresses and strains that can and do erupt in international trade relations. Therefore, the examination of such a role is important.

    1. World Customs Organization (WCO): The WCO is an independent intergovernmental body whose mission is to enhance the effectiveness and efficiency of member customs administrations. The WCO was originally established as the Customs Cooperation Council (CCC) in 1952. The CCC adopted the name ‘World Customs Organization’ in 1994 in order to reflect its transition to a truly global intergovernmental institution. It has two wings, valuation and classification. It is headquartered in Brussels. With its worldwide membership, the WCO is recognised as the voice of the global customs community. It is particularly noted for its work in areas covering the development of international conventions, instruments, and tools on topics such as commodity classification, valuation, rules of origin, collection of customs revenue, international trade facilitation, customs enforcement activities, combating counterfeiting in support of Intellectual Property Rights (IPR), and so on.
    2. World Trade Organization (WTO): The WTO is responsible for a large part of work pertaining to Customs. This organisation keeps a check on the activity of Customs in individual countries in case they go beyond international interests. In this capacity, it does not allow countries to impose very high protective customs duty or anti-dumping duty when there is no justification for them. It prevents trade wars arising from customs duty or quantitative restrictions on imports or exports.

 

  • European Customs Union (ECU): The ECU, as a part of the EU, performs the job of consistent customs regulations within the EU. That the EU has a separate organisation within its fold exclusively for the purpose of customs activities, underlines the importance that Customs plays in international trade and economic relations within the EU in particular, and with the global economic community in general. 

 

Conclusion:

Custom duty has existed since time immemorial in India. And every year the laws related to Customs duty were evolving. There are various laws, rules, regulations, notifications and circulars that govern the custom duties in India as seen above. Also, there are some international organisations in existence with certain objectives especially to monitor the countries with respect to the customs duty. 

Available remedies for reporting Tax Evasion in India : A comparative analysis

Available remedies for reporting Tax Evasion in India : A comparative analysis

Introduction 

The growing instances of tax evasion has created a huge nuisance for the revenue and treasury of India, causing a deficit for the government in spending into much needed portfolios such as infrastructure and education. Keeping these problems in mind, the government has time and again brought in force multiple schemes in order to curb such menace, creating an opportunity for individuals to come forward and disclose such wrongful evasions. In 2018, one such scheme was brought by the finance ministry, by enticing informants with a reward upto 5 Crores when the disclosures are related to foreign assets and upto 1 crore, when the disclosures are related to income tax and benami assets. Additionally the department of Income tax also maintains a e-portal for reporting such evasions in form of a tax Evasion Petition. Detailed analysis of the procedure is dealt into this article. What Is Tax Evasion? | The Motley Fool

 

Informant Reward Scheme 2018. 

‘Guidelines for grant of rewards to Informants, 2007’, as was issued in 2007 vide Board’s letter referred above, has been revised and “Income Tax Informants Rewards Scheme, 2018” has been issued in supersession of it with effect from date of issue. 

 

Informant under this scheme

A person will be considered an informant for the purposes of this Scheme only if he has furnished specific information of substantial tax evasion in a written statement in the prescribed form (Annexure – A to this Scheme) and, based upon which, an Informant Code has been allotted to him by the prescribed authority. No claim for reward shall be entertained from a person who is not an informant under this Scheme, even if such person has furnished some information in any manner.

“Explanation: A person cannot claim any reward under the scheme if he is not an informant under the scheme, even if such person has furnished specific information of income or assets in any other manner, e.g., through letter, e-mail, CD, WhatsApp, SMS, phone, posting in social networking site or publishing letter in newspaper or any other media.“

Procedure of furnishing information by Informant 

How application to be filed  

  • A person who wants to give information of substantial tax evasion in expectation of reward under this scheme may contact the DGIT (Inv.) (Directorate General of Income Tax Investigation )/PDIT (Inv.) ( Principal Director of Income Tax) /JDIT (Inv.) concerned. 
  • If he appears before DGIT (Inv.)/PDIT (Inv.), they will direct him to appear before JDIT (Inv.) concerned to furnish the information in the prescribed form (Annexure-A). If the jurisdictional JDIT (Inv) considers the information prima facie actionable, the person shall have to submit the information in prescribed format in Annexure – A by appearing in person before the JDIT (Inv), when called. In case of any difficulty, the person desirous of giving specific information may contact the PDIT (Inv) of the area. 
  • Where a person gives information to an Income Tax Authority other than DGIT (Inv.)/PDIT (Inv.)/JDIT (Inv.), such person should be asked to contact the DGIT (Inv.)/PDIT (Inv.)/JDIT (Inv.) concerned, and thereafter, the aforesaid procedure, as the case may be, for receiving the information is to be followed by these authorities. 

Finality of Decision

The decision of PDIT (Inv) will be final in the matter of allotment of Informant Code under this Scheme. 

For foreign persons

Where a foreign person wants to give information of undisclosed foreign income/assets of a person liable to tax in India, he may contact the Member (Investigation), CBDT, North Block, New Delhi-110001 either in person or by post or by a communication at email id memher.inv@incometax.gov.in with a copy to citinv-cbdt@nic.in for further action. 

Group Informants

If the information is furnished by a group of informants (more than one informant working together), the prescribed form, statements, etc. must be filled and signed by all such informants, jointly and Informant code will be allotted to each of them separately. The reward payable in such cases shall be disbursed in equal proportion, unless specified otherwise by such informants at the time of furnishing information in the prescribed form (Annexure-A). 

If an informant furnishes information in respect of more than one group of cases, the prescribed form at Annexure-A shall be filled and signed separately for each such group. However, in such a situation the Informant Code for such informant shall remain one and the same. 

The informant shall be liable to render assistance as may be required by the JDIT (Inv.) or any other investigating officer to whom the JDIT (Inv.) concerned may assign the investigation in the matter of information given by the informant. 

DsIT (Inv) are presently posted at Ahmedabad Name and address of offices from where contact details of JDsIT (Inv) can be obtained are given in Annexure B

The informant shall be given a unique Informant Code and the person will always be identified on the basis of that Informant Code. 

Liability for false evidence

It should be noted that furnishing false information/evidence is an offence and a person giving false information/evidence/statement will be liable to be prosecuted for such offence. 

Reward

 

Reward under this scheme can be granted in two stages : 

 

 

  • Interim Reward

 

 

 

  • Under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 

 

  • Interim reward up to 3% of the additional taxes levied (which is directly attributable to the information furnished by him), under the Black Money (Undisclosed Foreign Income and Assets), Act, 2015, may be granted on statutory determination of undisclosed foreign asset/income following completion of assessment proceedings under sub-section (3) or (4) of section 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, subject to a ceiling of the Indian Rupees 50,00,000 (Rupees Fifty Lakh or five million) to an informant for the information given at a time in a single Annexure – A form when the authority competent is satisfied that assessment made is likely to be sustained in appeal and taxes levied are likely to be recovered. 

 

 

  • Under the Income Tax Act, 1961 ( fixed rate 1%, variable ceiling limit depending upon amt of cash seized)

 

  • Interim reward up to 1% of the additional taxes realizable, which is directly attributable to the information furnished by the informant, on the undisclosed income detected by the Investigation Directorate under the Income-tax Act, 1961, may be granted subject to a ceiling of Indian Rupees 10,00,000 (Rupees Ten Lakh or one million) to an informant for the information given at a time in a single Annexure – A form when the competent authority is satisfied that the additional taxes on the income detected are likely to be recovered. 
  • Where specific information of unaccounted/undisclosed cash is given by informant which leads to seizure of the cash exceeding Rupees 1,00,00,000 (Rupees one crore or Ten million) as undisclosed income/asset during search & seizure action u/s 132 of the Income-tax Act, 1961, the ceiling of interim reward shall be Indian Rupees 15,00,000 (Rupees Fifteen Lakh or One and half million) even though the rate will be same at 1% as above. 

Timeline for payment of interim reward

 

  • Under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 

 

Within four months of completion of the relevant assessments under sub section (3) or (4) of Section 10 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 

  1. Under the Income Tax Act, 1961

Within four months of forwarding of final investigation report by the Investigation Directorate concerned to the Assessing Officer in cases where information of undisclosed income/assets liable under the Income-tax Act.

  1. Final reward 

For information of undisclosed income/assets liable under the Income Tax Act, 1961

(i)  The maximum amount of reward payable to an informant shall not exceed 5% of the additional taxes levied and realized, which are directly attributable to the information furnished by him, under the Income-tax Act, 1961 subject to a ceiling of Indian Rupees 50,00,000 (Rupees Fifty Lakh or Five nullum) after the assessment has become final on the issues relevant for determination of reward by appeals, revision etc. .

(ii)  If the informant has claimed reward for giving information of evasion of tax payable under Income Tax Act, 1961, as well as benami properties based upon substantially the same facts and has been found eligible for grant of reward under the Benami Transactions Informants Reward Scheme, 2018 as also the Income Tax Informants Reward Scheme, 2018, the total amount of reward under both the schemes taken together shall not exceed Rupees 1,00,00,000 (Rupees one crore or Ten million)

Timeline for final reward

All reward granting authorities shall endeavor to pay final reward to an informant eligible for such reward, within six months of fulfillment of the conditions mentioned in this scheme.

Factors relevant for determination of interim or final reward

The following factors may be considered for grant and payment of interim or final reward:

(i)  Fulfillment of conditions for grant of interim or final reward, as the case may be, mentioned in this scheme.
(ii)  Accuracy and precision of the information furnished by the informant.
(iii)  Extent of usefulness of information including supporting documents etc. provided by the informant.
(iv)  Extent and nature of assistance rendered by the informant in detection of undisclosed income/asset.,
(v)  In case of final reward, the amount of additional taxes levied and realised on the undisclosed income/asset detected, which is directly attributable to the information received from the informant.
(vi)  Risk and trouble undertaken and expenses incurred by the informant in securing and furnishing the information

Circumstances under which an informant will not be eligible to get any reward

No reward shall be granted to an informant under certain circumstances which may include the following:
(i)  Where the information is not provided in accordance with the Scheme
(ii)  If terms and conditions of the scheme are not fulfilled; or
(iii)  Where the information given is not of substantial tax evasion; or
(iv)  Where the information given is vague/non-specific and/or of general nature; or
(v)  Where the information given is already available with the Income Tax Department; or
(vi)  Where the information is not received directly from the informant but through any organization other than Income Tax Department; or
(vii)  Where additional taxes on the undisclosed income detected are not directly attributable to the information given by the informant; or
(viii)  Where Income Tax Department has evidence that the information given by the Informant has been shared by him or any other person authorized by him, with any other entity/agency including media; or
(ix)  In respect of incidental or collateral benefit which may arise to revenue in any other case as a result of the information furnished by the informant.

Nature of reward and prohibition on litigation/representation

Reward in accordance with this scheme shall be ex-gratia payment, which subject to this scheme, may be granted in the absolute discretion of the authority competent to grant reward. The decision of the authority shall be final and it shall not be subject to any litigation, appeal, adjudication and arbitration except review as provided below in this Schem 

  1. Tax Evasion Petition- to be filed under the E-Portal

Brief Introduction

The Central Board of Direct Taxes has launched an automated dedicated e-portal on the e-filing website of the Department to receive and process complaints of tax evasion, foreign undisclosed assets as well as complaints regarding benami properties.

Procedure for filing a tax evasion petition.

File complaint under the ‘Submit Tax Evasion Petition or Benami Property holding’ through a link on the e-filing website of the Department https://www.incometaxindiaefiling.gov.in/  under the head “Submit Tax Evasion Petition or Benami Property holding “. 

The complainants are required to choose whether:

(i) If they want to file a simple complaint regarding tax evasion, foreign undisclosed income/asset, benami property without claim for reward or

(ii) If they want to become informer and claim reward

The facility allows for filing of complaints by persons who are existing PAN/Aadhaar holders as well as for persons having no PAN /Aadhaar.

 

After an OTP based validation process (mobile and/or email), the complainant can file complaints in respect of violations of :

(i) the Income- tax Act, 1961,

(ii) Black Money (Undisclosed Foreign Assets and Income) Imposition of Tax Act, 1961 and

(iii) Prevention of Benami Transactions Act (as amended)

 

There are three separate forms designed for the above purpose”

(i) Form-1 Complaint regarding Tax Evasion

(ii) Form-2 Complaint regarding Undisclosed Foreign Assets, and

(iii) Form-3 Complaint regarding Benami Properties/Transactions

 

Upon successful filing of the complaint, the Department will allot a unique number to each complaint and the complainant would be able to view the status of the complaint on the Department’s website.

Note – The existing portal of the Department at www.incometaxindiaefiling.gov.in would not be available to taxpayers as well as other external stakeholders for a brief period of 6 days i.e. from 1st June, 2021 to 6th June, 2021.

Analysis

Upon a stark analysis of the various formats of disclosing tax evasion. The above mentioned two broad procedure formulates the exhaustive list.

  1. Tax evasion petition filed through the e-portal of the Income tax department
  2. Submission of complaint under the INCOME TAX INFORMANTS REWARDS SCHEME, 2018.

Procedural explanation

For ease and convenience the tax evasion petition is filed in the income tax e-portal. Where the option is availed to the informer, whether he/she wants to get rewarded for the information they are providing. Following few other procedural steps such as providing PAN/Aadhar details. The informer is then asked to fill Form 1 ‘Complaint Regarding Tax Evasion’. Upon successful filing of the complaint, the Department will allot a unique number to each complaint and the complainant would be able to view the status of the complaint on the Department’s website.

 

However in the case of the Informant Reward Scheme 2018. The procedure is described as above, the relevant difference between the scheme and petition is that the disclosure is made to the JDIT/DGIT/PDIT(Investigating) of the Income tax and the matter is then referred to the JDIT(inv) who inturn would admit the matter or reject the matter. The decision of PDIT (Inv) will be final in the matter of allotment of Informant Code under this Scheme.

 

Applicability of RTI on scheme and petition

Information in respect of investigation carried out by office of Directorate General of Income Tax (Investigation) in respect of TEP is not required to be intimated to complainant as said office is outside purview of RTI Act, 2005; only broad outcomes after completion of investigation could be communicated only when directed by High Court[1]

 

Even in the case of Shri Brij Ballabh Singh vs. DGIT (Investigation), Lucknow that complete disclosure of the outcome of a certain TEP can be misused and thus only a broad outcome can be provided as information to the initiator of the TEP. Thus, in case of information requested on the status of a TEP, the broad outcome can be provided without disclosing the details of the investigation and any other data that could hamper the process of investigation.

 

Therefore whether RTI can be filed for seeking status of Tax Evasion petition – Yes. Whether the RTI can be filed for seeking the status of the reward amount.[2]

 

However the same is not the case with the Informant Rewards Scheme 2018. The Central Board of Direct Taxes or the Income Tax Department does not provide feedback and/or update on the information received or subsequent actions taken thereon. Disclosure of information regarding specific taxpayers is prohibited except as provided under Section 138 of the Income-tax Act, 1961 and under Section 84 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, read with Section 138 of the Income-tax Act 1961 Directorates General of Income Tax (Investigation) are exempt from providing information under Section 24 of the Right to Information Act, 2005 read with Second Schedule thereof.

Efficiency of the systems? Possibility of willfully sitting on Information by authorities

In case of any grievance in the Informant Rewards Scheme 2018, the informant may contact the PDI1 (Inv) concerned who shall take necessary steps to redress the grievance expeditiously.

“In case it is found that the antecedents of the informant, nature of the information furnished by him in past and his conduct justify not taking cognizance of the information furnished by him, the matter shall be referred by the JDIT (Inv) to the PDIT (Inv) concerned and, if approved by the PDIT (Inv), it would be open to the JDIT (Inv) to ignore the information furnished by the informant.”[3]

Therefore it can be said that there lies a certain amount of discretion with the PDIT to sit on the information and not take any actions upon the said information to reopen the assessment or conduct any raid or search & seizure against the assessee in question, which may cause imparity to justice. Furthermore on non-application of the RTI act, the same cannot be brought in check by the informant and the tax evader can be left untaxed.

Thus on a comparative note, the Tax Evasion petition stands as a more proactive and vigilant form of mechanism in order to curb the tax evasion practises.

[1] Principal Director, Income Tax, v. Rajiv Yaduvansh [2021] 125 taxmann.com 100 (Delhi)/[2020] 429 ITR 369 

[2]https://itatonline.org/articles_new/wp-content/files/How_To_Use_The_RTI_Act_For_Maximum_Benefit_In_Income_Tax_Matters.pdf

[3] INCOME TAX INFORMANTS REWARDS SCHEME, 2018, LETTER [F.NO.292/62/2012-IT (INV.III)/26]., DATED 23-4-2018 

Author: Dhruv Chhajed

EditorAdv. Aditya Bhatt & Adv. Chandni Joshi

What are Small and Commercial Quantity of Narcotic Drugs under NDPS Act?

What are Small and Commercial Quantity of Narcotic Drugs under NDPS Act?

What is the Narcotic Drugs and Psychotropic Substances Act (NDPS) Act of 1985?

According to Section 2 of NDPS Act:

‘Commercial quantity’, in relation to narcotic drugs and psychotropic substances, means any quantity greater than the quantity specified by the Central Government by notification in the official gazette.

‘Small quantity’, in relation to Narcotic Drugs and Psychotropic Substances, means  any  quantity lesser than the quantity specified by the central government by notification in the Official Gazette.

Intermediate Quantity: that although the terminology “Intermediate Quantity”, is nowhere defined in the Act in definition part, but the terminology used is “lesser than commercial quantity but greater than small quantity”, when it comes to stipulating the punishment for the offences. 

Offences  under commercial quantities are non-bailable  U/S 37 NDPS Act 1985. However,  if  the court finds that the accused is not guilty of offence or is not likely to indulge in sale/  purchase of narcotic drugs, bail can be granted.

The punishment for many offences  under Sections 1523 of NDPS Act depends on the type and quantity of drugs involved—with three levels of punishments for small, Intermediate Quantity, i.e. quantity more than small and lesser than commercial quantity. 

The punishment prescribed for different quantities is as follows:

Where the contravention involves small quantities, with  rigorous  imprisonment  for  a term which may extend to six months, or with fine which may extend to Rs. 10,000 or with both.

Where the contravention involves quantity lesser than commercial quantity but greater than small quantity,  with rigorous imprisonment for a term which may extend to ten  years and with fine which may extend to Rs. 1,00,000.

Where the contravention involves commercial quantity,  with rigorous imprisonment for a term which shall not be less than ten years but which may extend to twenty years  and shall also be liable to fine which shall not be less than Rs. 1,00,000 but which may extend to Rs. 2,00,000s.

Section 27 of NDPS Act: Punishment for Consumption of Any Narcotic Drug or Psychotropic Substance. 

Whoever, consumes any narcotic drug or psychotropic substance shall be punishable,- 

Where the narcotic drug or psychotropic substance consumed is cocaine, morphine, diacetyl-morphine or any other narcotic drug or any psychotropic substance as may be specified in this behalf by the central government by notification in  the  Official  Gazette, with rigorous imprisonment for a term which may extend to one year, or with fine which may extend to Rs. 20,000; or with both.

Where the narcotic drug or psychotropic substance consumed is other than those specified in or under clause (a), with imprisonment for a term which may extend to six months, or with fine which may extend to Rs. 10,000 or with both.

Brief legislative history

Vidhi Centre for Legal Policy issued a report entitled: ‘From Addict to Convict’: Working of the NDPS Act in Punjab’. The Report, which is based on a review of 13,350 cases from Courts trying NDPS cases in Punjab from 2013 to 2015, concludes that the Narcotic Drugs and Psychotropic Substances Act, 1985 (“NDPS Act”) has not deterred drug use or drug trafficking and is in need of reform.

Possession for personal use v/s small quantity

The Report examines the law in relation to ‘small quantity’ and possession of drugs for personal use without appreciating the legislative history of section 27 of the NDPS Act.

The NDPS Act, as it stood in 1985, prescribed a minimum punishment of rigorous imprisonment for 10 years along with a fine of Rs 1 lakh for most offences with the exception of offences involving ganja and the cultivation of the cannabis plant, which attracted punishment upto 5 years imprisonment and fine of upto Rs 50,000.

The other exception was contained in section 27, which prescribed punishment of a maximum term of 6 months/1 year imprisonment (depending on the drug) or fine or both for consumption or illegal possession of any narcotic drug or psychotropic substance in ‘small quantity’, if the drug was proved to have been intended for personal consumption and not for sale or distribution. ‘Small quantity’ meant “such quantity as may be specified by the Central Government by notification in the Official Gazette.” The onus of proving that the drug was intended for personal consumption and not for sale or distribution lay on the accused person.

After the amendment in 1989, the Central Government issued fresh Notifications specifying the ‘small quantity’ of 220 narcotic drugs and psychotropic substances for the purposes of imposing lesser penalty under section 27 of the NDPS Act. The Report contains the recommendations of the Committee constituted by the Ministry of Health and Family Welfare for this purpose.

Though beneficent, section 27 was not used  

In several such cases, it was the Supreme Court that ultimately provided relief to the accused appellant by invoking the provision on small quantities. Despite the possibility of imposing a lesser sentence under section 27 of the NDPS Act, persons caught with small quantities of drugs were still sentenced to 10 years imprisonment and hefty fines, as most of the time; the accused  the person was unable to prove that the drug was meant for personal consumption and not for sale.

In several such cases, it was the Supreme Court that ultimately provided relief to the accused appellant by invoking the provision on small quantity. For instance in Raju v State of Kerala, the Appellant was found with possession of 100 mg heroin worth Rs. 25. The Appellant’s plea that the drug was for personal use was rejected by the lower Courts on the ground that he showed no symptoms of withdrawal while he was in custody and not using heroin. The Supreme Court expressed doubt whether such a small quantity of heroin could have been intended for sale to make profit. Ultimately, the Court invoked section 27 of the NDPS Act and modified the punishment from 10 years imprisonment to 1 year on the basis that the heroin was meant for personal use, even though the same was not ‘proved’.

Another reason why drug users did not invoke the plea of personal use under section 27 of the NDPS Act was that it would amount to an admission of being in possession of drugs and risk certain conviction.

The requirement of ‘admitting’ to illicit drug-possession and ‘proving’ personal use made section 27 of the NDPS Act inaccessible. As a result, a large number of persons including those who use drugs languished in jail without the possibility of bail and/or lenient sentences.

It was in this backdrop that the NDPS (Amendment) Bill, 1998 was introduced and passed in 2001 to introduce graded quantities

It was in this backdrop that the NDPS (Amendment) Bill, 1998 was introduced and passed in 2001 to introduce graded quantities.

Object and import of the 2001 Amendments – far reaching

The NDPS (Amendment) Act of 2001 was a watershed moment, as Parliament, in a rare occasion, acknowledged the harmful consequences of harsh provisions of the NDPS Act and sought to correct course by introducing graded penalties, on the basis of whether the offence involved drugs in ‘small’, ‘intermediate’ or ‘commercial quantity’.

Though the proposed changes were criticized in Parliament for being ‘soft on drug offenders’, Shri Yashwant Sinha, the then Finance Minister who introduced the Amendment Bill, remained firm and saw through its adoption by the House.

The Report however, faults the 2001 Amendment by stating that that it resulted in treating “anyone caught with drugs, whether for self-use or for sale, as a criminal.” This criticism is misplaced.

The NDPS Act has always criminalized consumption and possession of drugs for personal use. Drug users did not become criminals as a result of the NDPS (Amendment) Act, 2001.

Doing away with ‘personal use’, extended protection of the law. The Legislature’s decision to do away with the requirement of proving possession for personal use for imposing lesser punishment and adopting the uniform criteria of ‘small quantity’ offences must be seen in the context of non-application of section 27, discussed above.

The 2001 Amendments were far-reaching in that they extended lenient sentencing  (imprisonment upto 6 months and/or fine of Rs 10,000) and diversion (under sections 39 and 64A) to ‘anyone’ caught with a small amount of drugs, irrespective of whether the drug was meant personal use or sale. This also helped drug users who may be involved in sale or supply of small quantities to peers.

Problem is that quantity alone determines penalty

 The real drawback of the NDPS Amendment Act, 2001 is that quantity was made the sole determinant for the severity of penal measures imposed under the law including   restrictions on bail, pre-trial detention and sentencing. Other factors such as the role and involvement of the accused in the crime – whether he is a mere carrier or controls the illicit trade are rendered irrelevant.  The Report fails to examine this aspect completely.

Bail under NDPS act when small, intermediate and commercial quantities are involved

Union of India v. Shiv Shanker Kesari (2007) 7 SCC 798 

Hon’ble Supreme Court has explained the approach that a Court should adopt in an application for bail under Section 37 of the NDPS ACT:

“The Court while considering the application for bail with reference to Section 37 of the Act is not called upon to record a finding of not guilty.

It is for the limited purpose essentially confined to the question of releasing the accused on bail that the Court is called upon to see if there are reasonable grounds for believing that the accused is not guilty and records its satisfaction about the existence of such grounds.

But the Court has not to consider the matter as if it is pronouncing a judgment of acquittal and recording a finding of not guilty.

Additionally, the Court has to record a finding that while on bail the accused is not likely to commit any offence and there should also exist some materials to come to such a conclusion.”

Therefore, even in commercial quantity if the courts are satisfied of the reasonable ground for believing that the accused is not guilty of such offences ( Non compliance of mandatory provisions of the NDPS Act i.e. Section 42 or Section 50, disclosure statement of co-accused or accused is not corroborated by any independent incriminating evidence etc) along with the condition that the accused will not likely to commit offence if he was granted bail (keeping into consideration the antecedents of the accused, his propensities and the nature and the manner in which he is alleged to have committed the offence), the courts can grant regular bail even in commercial quantity cases.

Punishment for Offences

The NDPS Act views drug offences very seriously and penalties are stiff. The quantum of sentence and fine varies with the offence. For many offences, the penalty depends on the quantity of drug involved – small quantity, more than small but less than commercial quantity or commercial quantity of drugs. Small and Commercial quantities are notified for each drug.

Under NDPS Act, abetment, criminal conspiracy and even attempts to commit an offence attract the same punishment as the offence itself. Preparation to commit an offence attracts half the penalty. Repeat offences attract one and half times the penalty and in some cases death penalty. Since the penalties under this Act are very stiff, several procedural safeguards have been provided in the Act. Some immunities are also available under the Act. 

The penalties for various offences under the NDPS Act are as follows.

OFFENCES

PENALTIES

SECTIONS OF THE ACT.
Cultivation of opium, cannabis or coca plants without licenseRigorous imprisonment-up to 10 years + fine up to Rs.1 lakhOpium –  18(c) Cannabis – 20 Coca-16
Embezzlement of opium by licensed farmerRigorous imprisonment -10 to 20 years + fine Rs. 1 to 2 lakhs (regardless of the quantity)19
Production, manufacture, possession, sale, purchase, transport, import inter- state, export inter-state or use of narcotic drugs and psychotropic substancesSmall quantity – Rigorous imprisonment up to 6 months or fine up to Rs. 10,000 or both. More than small quantities but less than commercial quantities – Rigorous imprisonment. up to 10 years + fine up to Rs. 1 Lakhs. Commercial quantity – Rigorous imprisonment 10 to 20 years + fine Rs. 1 to 2 LakhsPrepared opium-17 Opium – 18 Cannabis – 20 Manufactured drugs or their preparations-21 Psychotropic substances -22
Import, export or transhipment of narcotic drugs and psychotropic substancesSame as above23
External dealings in NDPS-i.e. engaging in or controlling trade whereby drugs are obtained from outside India and supplied to a person outside IndiaRigorous imprisonment 10 to 20 years + fine of Rs. 1 to 2 lakhs (Regardless of the quantity)24
Knowingly allowing one’s premises to be used for committing an offenceSame as for the offence25
Violations pertaining to controlled substances (precursors)Rigorous imprisonment up to 10 years + fine Rs. 1 to 2 lakhs25A
Financing traffic and harboring offendersRigorous imprisonment 10 to 20 years + fine Rs. 1 to 2 lakhs27A
Attempts, abetment and criminal conspiracySame as for the offenceAttempts-28 Abetment and criminal conspiracy – 29
Preparation to commit an offenceHalf the punishment for the offence30
Repeat offenceOne and half times the punishment for the offence. Death penalty in some cases.31 Death – 31A
Consumption of drugsCocaine, morphine, heroin – Rigorous imprisonment up to 1 year or fine up to Rs. 20,000 or both. Other drugs- Imprisonment up to 6 months or fine up to Rs. 10,000 or both. Addicts volunteering for treatment enjoy immunity from prosecution27 Immunity – 64A
Punishment for violations not elsewhere specifiedImprisonment up to six months or fine or both32

 

SMALL AND COMMERCIAL QUANTITIES

For several offences under the NDPS Act, the punishment depends on whether the quantity of drug involved is small, is more than small but less than commercial or is commercial. Small and Commercial quantities for each drug have been notified.

 

The quantities for some common drugs are as follows

DrugSmall QuantityCommercial Quantity
Amphetamine2 grams50 grams
Buprenorphine1gram20 grams
Charas/HashishCharas/Hashish1 kg
Cocaine2 grams100 grams
Codeine10 grams1 kg
Diazepam20 grams500 grams
Ganja1 kg20 kg
Heroin5 grams250 grams
MDMA0.5 gram10 grams
Methamphetamine2 grams50 grams
Methaqualone20 grams500grams
Morphine5 grams250 grams
Poppy straw1 kg50 kg

 

 

Import & Export of Narcotic Drugs and Psychotropic Substances – NDPS Act

INTRODUCTION

Narcotic drugs and psychotropic substances can be imported and exported subject to the following restrictions:

Import and export of narcotic drugs and psychotropic substances listed in Schedule I to the NDPS Rules is prohibited.

Import of opium, concentrate of poppy straw, and morphine, codeine, the Baine and their salts is prohibited except by the Government Opium Factory. However, certain manufacturers who require these substances only for export, and importers of samples of these substances up to 1 kg in a year can import the substances after following the due procedure, provided they are notified by the Government to do so.

Export of some psychotropic substances is not permitted to specific countries. These substances and the countries to which each substance cannot be exported are listed in Schedule II of the NDPS Rules, 1985.

To import any narcotic drug or psychotropic substance, one should apply for and obtain an import certificate from the Narcotics Commissioner for each consignment.

To export any narcotic drug or psychotropic substance, one should apply for and obtain an export authorization from the Narcotics Commissioner for each consignment.

A Detailed Analysis of the National Drugs and Psychotropic Substances Act - iPleaders

Manufacturing of Narcotic Drugs.

Drugs whose manufacture is completely prohibited:

Crude cocaine, ecgonine and diacetylmorphine (commonly known as heroin) and their salts.

Drugs which can be manufactured only by the Government Opium and Alkaloid Works or when a license is issued if the Government determines it to be in public interest to issue a license:

Morphine, codeine, dionine, thebaine, dihydrocodeinone, dihydrocodeine, acetyldihydrocodeine, dihydromorphine, dihydromorphinone, dihydrocodeinone, pholcodine and their respective salts.

Drugs which can be manufactured after obtaining a license

Narcotic drugs other than the above can be manufactured after obtaining a license from the Narcotics Commissioner. 

The Narcotics Commissioner issues a license only if the conditions are fulfilled including producing a manufacturing license from the Drugs and Cosmetics Act/Rules from the State Drugs controller and the licenses to be obtained from the State Government under the State NDPS Rules for possession, use and sale of narcotic drugs.

 

Narcotic drugs’ and ‘pharmaceutical drugs’ – no such distinction in the NDPS Act

The Report proceeds on the basis that ‘narcotic drugs’ and ‘pharmaceutical drugs’ are two distinct categories under the NDPS Act. The data in Volume II of the Report is presented on the same premise. This categorization suggests that there are illicit drugs [narcotics] and licit drugs [pharmaceutical] under the NDPS Act.  This is simply not correct.

The NDPS Act distinguishes between ‘narcotic drugs’, ‘psychotropic substances’ and ‘controlled substances’ Narcotic drugs are further divided into plant based drugs i.e cannabis, coca and opium, each of which are defined and punished separately and their synthetic variants or derivatives, which are called ‘manufactured drugs’.The classification of drugs under the NDPS Act follows the classification under international conventions, where narcotic drugs are the subject matter of the 1961 Convention, psychotropic substances are scheduled under the 1971 Convention and controlled substances or precursors used to manufacture narcotic drugs are addressed under the 1988 Convention.

There is no separate class of ‘pharmaceutical drugs’ under the NDPS Act. Pharmaceutical drugs are ‘preparations’ and depending on their active pharmaceutical ingredient could be a ‘narcotic drug’ or a ‘psychotropic substance’ or a ‘controlled substance’.

This categorization also obfuscates the fact that most of the narcotic drugs and psychotropic substances have medicinal properties.

 

Controlled Delivery

Controlled Delivery means the technique of allowing illicit or suspect consignments of narcotic drugs, psychotropic substances, controlled substances or substances substituted for them to pass out of, or through or into the territory of India with the knowledge and under the supervision of an officer empowered on his behalf or duly authorized under Section 50-A with a view to identifying the persons involved in the commission of an offence under this Act. 

In the context of the powers of controlled delivery under Section 50A of the NDPS Act, it shall be important and relevant to discuss the provisions of Section 109 A of Customs Act which is reproduced as below:

SECTION 109A. Power to undertake controlled delivery.- 

Notwithstanding anything contained in this Act, the proper officer or any other officer authorised by him in this behalf, may undertake controlled delivery of any consignment of such goods and in such manner as may be prescribed, to—

  1.  Any destination in India.
  2. A foreign country, in consultation with the competent authority of such country to which such consignment is destined.

Explanation.—For the purposes of this section “controlled delivery” means the procedure of allowing consignment of such goods to pass out of, or into, the territory of India with the knowledge and under the supervision of proper officer for identifying the persons involved in the commission of an offence or contravention under this Act.]

Section 2 (32) of Customs Act “prescribed” means prescribed by regulations made under this Act; 

Positive Aspects of this Act.

An important feature of the act is that the method of adding and withdrawing narcotics and psychotropic substances from the lists was made quite straightforward. For this reason, no formal bill or amendment is necessary and the government has been empowered to make these changes on the basis of available information or a simple notification in the official gazette.

As regards subparagraph 3 of section 4, the Central Government created the Narcotics Control Bureau in 1986 with the specific task of coordinating drug law enforcement nationally. The NCB basically functions as the national international liaison coordinator and as the nodal point for intelligence collection and dissemination and ensures coordinated implementation within the parameters of national strategy.

The power to issue search and arrest warrants has been vested in both the Magistrates as well as in specially appointed Central and State Governments officers as per the terms of the act. It is intended to ensure prompt and appropriate action in response to any information and to eliminate the need for judicial satisfaction if a warrant is issued. Thus, both timely and effective action is ensured in response to any information.

Criticism

It treats hard and soft drugs as the same, for this many people opposed it during the discussion of the bill in the parliament.

The act was criticized in The Times of India, because due to the law offering the same penalty for all narcotics, the paper characterized the legislation as ill-conceived and poorly thought-out, which meant that dealers turned their attention to harder drugs, where profits are much greater.

In 2015, Lok Sabha MP Tathagata Satpathy attacked cannabis prohibition as elitist, and described cannabis as the poor’s intoxicant. He also thought the ban was an overreaction to a US-made threat.

Conclusion

It is commendable that the past 27 years have seen significant growth in the fight against drug dependency in particular in the areas of policy formulation and infrastructure development. What remains to be seen now is the efficacy and effects of the various steps which have been implemented. An assessment and subsequent adjustment of strategies and policies on the basis of successful research is imperative. Plans will be just that-plans, without any formal assessment. “Vidhi Legal Centre’s Report” is certainly a step forward in the inquiry into the working of the NDPS Act. But the reasoning and analysis of the law and consequently, the findings are substantially flawed. As a result, the recommendations which otherwise have been shown to be sound in other jurisdictions, e.g. Portugal, need to be further worked upon before concrete proposals to reform the NDPS Act can be made.

 

Author: Mohit Mathur

Editor: Adv. Aditya Bhatt & Adv. Chandni Joshi

 

BAR TO WRIT PETITIONS IN CONTEXT OF AVAILABILITY OF ALTERNATE REMEDIES

BAR TO WRIT PETITIONS IN CONTEXT OF AVAILABILITY OF ALTERNATE REMEDIES

Article 226 of the Constitution of India refers to power of High Court’s to issue certain writs throughout the territory in relation to which it exercises jurisdiction. However, there are bar to writ petitions when alternative remedies are available;

Article 226 of the Constitution sub clause 1 and 2 are as below:

  1. Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government within those territories directions, orders or writs, including writs in the nature of Habeas Corpus, Mandamus, Prohibition, Quo-Warranto and Certiorari, or any of them, for the enforcement of any of the rights conferred by part – III and for any other purpose.
  2. The power conferred by Clause (1) to issue directions, orders or writs to any Government, authority or any person also be exercised by any High Court exercising jurisdiction in relating to the territories within which the cause of action, wholly or in part, arises for the exercise of the such power, notwithstanding that the seat of the such government or authority or the residence of such person is not within those territories.

Subject of discussion is confined to bar to writ petitions in context of availability of alternate remedies. Before we proceed further with the discussion, it is necessary to elaborate the concept of bar to writ petitions.

Bar to writ petitions

Article 226 of the Constitution of India reserves original jurisdiction to the High Court to issue writs. The first thought which is to be pondered is as to whether the writ petition can be barred or whether there are any circumstances in which jurisdiction of High Court to entertain a writ petition is barred. The bar of entertaining the cases as you all well know can be expressly provided or can be read by necessary implication. Can there be any circumstances in which the writ jurisdiction can be barred by any Parliamentary legislation or by any State Act is the moot question. This aspect of the matter is now well settled and it has been held by the Hon’ble Supreme Court that the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution of India cannot be barred by any Act of Parliament or even by any constitutional amendment.

The right of judicial review granted under Article 226 of the Constitution of India is a basic feature of the Constitution and cannot be amended by even a constitutional amendment. When by any constitutional amendment, remedy of writ before a High Court cannot be barred, same cannot be done by any Parliamentary legislation or by State enactment. There is one Supreme Court judgement in this context which is relevant to be referred to that is the judgement of Apex Court in 1997 (3) SCC 261., L. Chandra Kumar Vs. Union of India and Others.

The above judgement of L. Chandra Kumar (supra) has been delivered by the Constitution Bench of seven Judges. The matter arose in context of creation of Tribunal in exercise of power under Articles 323-A and 323-B of the Constitution of India, by 42nd  Amendment part XIV (a) has been added in the Constitution which provides for adjudication or trial by Administrative Tribunal created by Parliament. Article 323-A (2) (d) provides that law made by the Parliament may exclude the jurisdiction of “all courts” except the jurisdiction of the Hon’ble Supreme Court under Article 136 of the Constitution of India.

In L. Chandra Kumar (supra) the Apex Court considered the validity of the above Article by which the jurisdiction of the High Court was excluded. The Apex Court after considering the earlier judgements of the Apex Court including the celebrity judgement of Kesavananda Bharati Vs. State of Kerala, 1973 (4) SCC 225 held that the jurisdiction of the High Court under Article 226 of the Constitution of India cannot be barred and any law barring the jurisdiction of the High Court under Article 226 of the Constitution of India offends the basic structure of the Constitution and hence not permissible.

Following was laid down in paragraphs

  1. “We may first address the issue of exclusion of the power of judicial review of the High Courts. We have already held that in respect of the power of judicial review, the jurisdiction of the High Courts under Articles 226/227 cannot wholly be excluded. It has been contended before us that the Tribunals should not be allowed to adjudicate upon matters where the vires of legislations is questioned, and that they should restrict themselves to handling matters where constitutional issues are not raised. We cannot bring ourselves to agree to this proposition as that may result in splitting up proceedings and may cause avoidable delay. If such a view were to be adopted, it would be open for litigants to raise constitutional issues, many of which may be quite frivolous, to directly approach the High Courts and thus subvert the jurisdiction of the Tribunals. Moreover, even in these special branches of law, some areas do involve the consideration of constitutional questions on a regular basis; for instance, in service law matters, a large majority of cases involve an interpretation of Articles 14, 15 and 16 of the Constitution. To hold that the Tribunals have no power to handle matters involving constitutional issues would not serve the purpose for which they were constituted. On the other hand, to hold that all such decisions will be subject to the jurisdiction of the High Courts under Articles 226/227 of the Constitution before a Division Bench of the High Court within whose territorial jurisdiction the Tribunal concerned falls will serve two purposes. While saving the power of judicial review of legislative action vested in the High Courts under Articles 226/227 of the Constitution, it will ensure that frivolous claims are filtered out through the process of adjudication in the Tribunal. The High Court will also have the benefit of a reasoned decision on merits which will be of use to it in finally deciding the matter.”
  2. “It has also been contended before us that even in dealing with cases which are properly before the Tribunals, the manner in which justice is dispensed by them leaves much to be desired. Moreover, the remedy provided in the parent statutes, by way of an appeal by special leave under Article 136 of the Constitution, is too costly and inaccessible for it to be real and effective. Furthermore, the result of providing such a remedy is that the docket of the Supreme Court is crowded with decisions of Tribunals that are challenged on relatively trivial grounds and it is forced to perform the role of a first appellate court. We have already emphasized the necessity for ensuring that the High Courts are able to exercise judicial superintendence over the decisions of the Tribunals under Article 227 of the Constitution. In R.K. Jain case, after taking note of these facts, it was suggested that the  possibility of an appeal from the Tribunal on questions of law to a Division Bench of a High Court within whose territorial jurisdiction the Tribunal falls, be pursued. It appears that no follow-up action has been taken pursuant to the suggestion. Such a measure would have improved matters considerably. Having regard to both the aforestated contentions, we hold that all decisions of Tribunals, whether created pursuant to Article 323-A or Article 323-B of the Constitution, will be subject to the High Court’s writ jurisdiction under Articles 226/227 of the Constitution, before a Division Bench of the High Court within whose territorial jurisdiction the particular Tribunal falls.”

The Apex Court, however in the said judgement further laid down that against the judgement of a Tribunal writ petition under Articles 226/227 of the Constitution of India is entertainable before a Division Bench of the High Court. The Apex Court further laid down that Tribunal created under Article 323-A and 323-B however shall entertain the matters falling in their jurisdiction and it will not be open for the litigants to directly approach the High Court and the remedy is to be first availed in the Tribunal.

Following was laid down in paragraph

  1. “In view of the reasoning adopted by us, we hold that clause 2(d) of Article 323-A and clause 3(d) of Article 323-B, to the extent they exclude the jurisdiction of the High Courts and the Supreme Court under Articles 226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the Act and the “exclusion of jurisdiction” clauses in all other legislations enacted under the aegis of Articles 323-A and 323-B would, to the same extent, be unconstitutional. The jurisdiction conferred upon the High Courts under Articles 226/227 and upon the Supreme Court under Article 32 of the Constitution is a part of the inviolable basic structure of our Constitution. While this jurisdiction cannot be ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by Articles 226/227 and 32 of the Constitution. The Tribunals created under Article 323-A and Article 323-B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the Tribunal concerned falls. The Tribunals will, nevertheless, continue to act like courts of first instance in respect of the areas of law for which they have been constituted. It will not, therefore, be open for litigants to directly approach the High Courts even in cases where they question the vires of statutory legislations (except where the legislation which creates the particular Tribunal is challenged) by overlooking the jurisdiction of the Tribunal concerned. Section 5(6) of the Act is valid and constitutional and is to be interpreted in the manner we have indicated.”

Thus, from the above, it is clear that the jurisdiction under Article 226 of the Constitution of India cannot be barred by any constitutional amendment or by any Parliamentary or State Act, but while interpreting the power under Articles 226/227 of the Constitution of India the High Court and the Supreme Court have laid down a self-imposed rule of restriction i.e. jurisdiction under Articles 226/227 of the Constitution of India shall not be exercised if alternate remedy is available to a litigants. Now, it is well settled by catena of decisions that whenever there is alternate remedy available to a litigant, jurisdiction under Articles 226/227 of the Constitution of India which is a discretionary jurisdiction shall not be exercised by the High Court. The alternate remedy may be by way of normal forum of hierarchy of Courts or forum provided in a statutory provision or may otherwise exists. Various facets of this aspect has been examined time and again by the Apex Court which can be illustrated by giving reference to some decided cases of the Hon’ble Supreme Court. Various propositions have been laid by the Apex Court in this context.

AIR, 1958 SC 86, State of U.P. Vs. Mohammad Nooh.

Facts:

The matter arose before the Hon’ble Supreme Court against the judgement of the High Court passed in a writ petition quashing the departmental proceedings against a police constable. A police constable was departmentally proceeded and a dismissal order was passed. The most important feature of the case was that the Deputy Superintendent of Police who conducted the enquiry recorded his own statement in the proceeding. The High Court held that there was a violation of principle of natural justice since the Deputy Superintendent of Police who conducted the proceedings himself appeared as witness in the inquiry which makes a case of strong bias resulting in violation of principle of natural justice. Before the Supreme Court an argument was raised that there being an alternate remedy, the High Court ought not to have entertained the writ petition. In this context, the Apex Court laid down the principle which provides for exception to the rule of non-entertainability of writ petition when there is an alternate remedy.

Paragraphs 10 and 11 are relevant which are to the following effects:

  1. “In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will be only where there is no other equally effective remedy. It is well established that, provided the requisite grounds exist, certiorari will lie although a right of appeal has been conferred by statute, (Halsbury’s Laws of England, 3rd Edn., Vol. 11, P. 130 and the cases cited there). The fact that the aggrieved party has another and adequate remedy may be taken into consideration by the superior Court in arriving at a conclusion as to whether it should, in exercise of its discretion, issue a writ of certiorari to quash the proceedings and decisions of inferior courts subordinate to it and ordinarily the superior court will decline to interfere until the aggrieved party has exhausted his other statutory remedies, if any. But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies. In the King v. Postmaster-General; Ex parte Carmichael, 1928-1 KB 291 (E), a certiorari was issued although the aggrieved party had an alternative remedy by way of appeal. It has been held that the superior court will readily issue a certiorari in a case where there has been a denial of natural justice before a Court of summary jurisdiction. The case of Rex v. Wands-worth Justices; Ex parte Read, 1942-1 KB 281 (F) is an authority in point. In that case a man had been convicted in a court of summary jurisdiction without giving him an opportunity of being heard. It was held that his remedy was not by a case stated or by an appeal before the quarter sessions but by application to the High Court for an order of certiorari to remove and quash the conviction. At p. 284 Viscount Caldecote, C.J., observed:

“It remains to consider the argument that the remedy of certiorari is not open to the applicant because others were available. It would be ludicrous in such a case as the present for the convicted person to ask for a case to be stated. It would mean asking this Court to consider as a question of law whether justices were right in convicting a man without hearing his evidence. That is so extravagant an argument as not to merit a moment’s consideration. As to the right of appeal to quarter sessions, it may be that the applicant could have had his remedy if he had pursued that course, but I am not aware of any reason why, if in such circumstances as these, he preferred to apply for an order of certiorari to quash his conviction, the Court should be debarred from granting his application.”

Likewise in Khurshed Modi v. Rent Controller, Bombay; AIR 1947 Bom 46 (G), it was held that the High Court would not refuse to issue a writ of certiorari merely because there was a right of appeal. It was recognized that ordinarily the High Court would require the petitioner to have recourse to his ordinary remedies, but if it found that there had been a breach of fundamental principles of justice, the High Court would certainly not hesitate to issue the writ of certiorari. To the same effect are the following observations of Harries, C.J., in 56 Cal WN 453: (AIR 1952 Cal 656) (D) at p. 470 (of Cal WN): (at p. 665 of AIR):

“There can, I think, be no doubt that Court can refuse to issue a certiorari if the petitioner has other remedies equally convenient and effective. But it appears to me that there can be cases where the Court can and should issue a certiorari even where such alternative remedies are available. Where a Court or tribunal, which is called upon to exercise judicial or quasi-judicial functions discards all rules of natural justice and arrives at a decision contrary to all accepted principles of justice then it appears to me that the Court can and must interfere.”

It has also been held that a litigant who has lost his right of appeal or has failed to perfect an appeal by no fault of his own may in a proper case obtain a review by certiorari. (See Corpus Juris Secundum Vol. 14, Art. 40, p. 189). If, therefore, the existence of other adequate legal remedies is not per se a bar to the issue of certiorari and if in a proper case it may be the duty of the superior court to issue a writ of certiorari to correct the errors of an inferior Court or tribunal called upon to exercise judicial or quasi-judicial functions and not to relegate the petitioner to other legal remedies available to him and if the superior Court can in a proper case exercise its jurisdiction in favour of a petitioner who has allowed the time to appeal to expire or has not perfected his appeal e.g., by furnishing security required by the statute, should it then be laid down as an inflexible rule of law that the superior Court must deny the writ when an inferior Court or tribunal by discarding all principles of natural justice and all accepted rules of procedure arrived at a conclusion which shocks the sense of justice and fair play merely because such decision has been upheld by another inferior Court or tribunal on appeal or revision? The case of 1889-22 QBD 345 (C) referred to in 1951 SCR 344: (AIR 1951 SC 217) (B) furnishes the answer. There the manager of a club was convicted under a certain statute for selling beer by retail without an excise retail license. Subsequently he was convicted of selling intoxicating liquor, namely, beer without a license under another statute. Upon hearing of the later charge the Magistrate treated it as a second offence and imposed a full penalty authorized in the case of a second offence by the latter statute. His appeal to the quarter sessions having been dismissed, he applied for a writ of habeas corpus and it was granted by the King’s Bench Division on the ground that the Magistrate could not treat the later offence as a second offence, because it was not a second offence under the Act under which he was convicted for the second time. Evidently the point was taken that if there had been any error, irregularity or illegality committed by the Magistrate, the quarter sessions could have on appeal corrected the same and that the quarter sessions having dismissed the appeal the Court of Queen’s Bench Division could not issue the writ of habeas corpus. This was repelled by the following observation of Hawkins, J.:

“This is true as a fact, but it puts the prosecution in no better position, for if the Magistrate had no power to give himself jurisdiction by finding that there had been a first offence where there had been none, the justices could not give it to him.”

  1. On the authorities referred to above it appears to us that there may conceivably be cases – and the instant case is in point – where the error, irregularity or illegality touching jurisdiction or procedure committed by an inferior court or tribunal of first instance is so patent and loudly obtrusive that it leaves on its decision an indelible stamp of infirmity or vice which cannot be obliterated or cured on appeal or revision. If an inferior Court or tribunal of first instance acts wholly without jurisdiction or patently in excess of jurisdiction or manifestly conducts the proceedings before it in a manner which is contrary to the rules of natural justice and all accepted rules of procedure and which offends the superior court’s sense of fair play the superior Court may, we think, quite properly exercise its power to issue the prerogative writ of certiorari to correct the error of the Court or tribunal of first instance, even if an appeal to another inferior Court or tribunal was available and recourse was not had to it or if recourse was had to it, it confirmed what ex facie was a nullity for reasons aforementioned. This would be so all the more if the tribunals holding the original trial and the tribunals hearing the appeal or revision were merely departmental tribunals composed of persons belonging to the departmental hierarchy without adequate legal training and background and whose glaring lapses occasionally come to our notice. The superior Court will ordinarily decline to interfere by issuing certiorari and all we say is that in a proper case of the kind mentioned above it has the power to do so and may and should exercise it. We say no more than that.”

Labour and Industrial Disputes

Large number of cases come to the High Court in the writ petition challenging the violation of provisions of Industrial Disputes, Act, 1947 and other statutory enactment. The Apex Court laid down the principle that whenever a writ petition is filed for enforcement of right flowing from any statutory enactment, forum of which is provided to be a specific forum, the High Court should decline to entertain the writ petition under Articles 226/227 of the Constitution of India. Some important cases of the Apex Court are:

(2004) SCC 268., U.P. State Bridge Corporation Ltd And Others. Vs. U.P. Rajya Setu Nigam S. Karamchari Sangh.

Facts:

The Corporation had undertaken a work at Betwa Bridge Jhansi. Certain workmen did not report for duty. A notice was published by the Corporation that those workmen who continuously absents for more than 10 days of their service be terminated according to certified Standing Orders of the Corporation. Services of one workman was terminated. He filed writ petition in this High Court. The writ petition was dismissed that the workman could raise an industrial dispute if he so desired.

Another writ petition was filed by the Union of the workman which was allowed by the High Court against which order the Corporation went to the Supreme Court. The Supreme Court in the said judgement again reiterated and laid down principle. It is relevant to refer to paragraphs 11 and 12 of the said judgement.

  1. “We are of the firm opinion that the High Court erred in entertaining the writ petition of the respondent Union at all. The dispute was an industrial dispute both within the meaning of the Industrial Disputes Act, 1947 as well as U.P. IDA, 1947. The rights and obligations sought to be enforced by the respondent Union in the writ petition are those created by the Industrial Disputes Act. In Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke [(1976) 1 SCC 496] it was held that when the dispute relates to the enforcement of a right or an obligation created under the Act, then the only remedy available to the claimant is to get adjudication under the Act. This was because the Industrial Disputes Act was made to provide

“a speedy, inexpensive and effective forum for resolution of disputes arising between workmen and their employers. The idea has been to ensure that the workmen do not get caught in the labyrinth of civil courts with their layers upon layers of appeals and revisions and the elaborate procedural laws, which the workmen can ill-afford. The procedurers followed by civil courts, it was thought, would not facilitate a prompt and effective disposal of these disputes. As against this, the courts and tribunals created by the Industrial Disputes Act are not shackled by these procedural laws nor is their award subject to any appeals or revisions. Because of their informality, the workmen and their representatives can themselves prosecute or defend their cases. These forums are empowered to grant such relief as they think just and appropriate. They can even substitute the punishment in many cases. They can make and remake the contracts, settlements, wage structures and what not. Their awards are no doubt amenable to jurisdiction of the High Court under Article 226 as also to the jurisdiction of this Court under Article 32, but they  are extraordinary remedies subject to several self-imposed constraints. It is, therefore, always in the interest of the workmen that disputes concerning them are adjudicated in the forums created by the Act and not in a civil court. That is the entire policy underlying the vast array of enactments concerning workmen. This legislative policy and intendment should necessarily weigh with the courts in interpreting these enactments and the disputes arising under them.”[Ed.: So held in Rajasthan SRTC v. Krishna Kant, (1995) 5 SCC 75 at p. 91 to 92b in para 28 after quoting the principles enunciated in Premier Automobiles; as explained in (2002) 2 SCC 542 at 547]

  1. Although these observations were made in the context of the jurisdiction of the civil court to entertain the proceedings relating to an industrial dispute and may not be read as a limitation on the Court’s powers under Article 226, nevertheless it would need a very strong case indeed for the High Court to deviate from the principle that where a specific remedy is given by the statute, the person who insists upon such remedy can avail of the process as provided in that statute and in no other manner.”

(2005) 6 SCC, 725., Hindustan Steel Works Construction Ltd. And Another Vs. Hindustan Steel Works Construction Ltd. Employees Union.

Facts:

Appeal was filed by the Company challenging the judgement of the Andhra Pradesh High Court by which the writ petition was allowed challenging the withdrawal of construction allowances to the workmen. The employer raised objection that the writ petition could not have been entertained, since remedy of the workmen was to raise an industrial dispute.

Following was said in paragraphs 8 and 9 of the said judgement:

  1. “In U.P. State Bridge Corpn. Ltd. v. U.P. Rajya Setu Nigam S. Karamchari Sangh [(2004) 4 SCC 268: 2004 SCC (L & S) 637] it was held that when the dispute relates to enforcement of a right or obligation under the statute and specific remedy is, therefore, provided under the statute, the High Court should not deviate from the general view and interfere under Article 226 except when a very strong case is made out for making a departure. The person who insists upon such remedy can avail of the process as provided under the statute. To same effect are the decisions in Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke [(1976) 1 SCC 496: 1976 SCC (L & S) 70], Rajasthan SRTC v. Krishna Kant [(1995) 5 SCC 75: 1995 SCC ( L & S) 1207: (1995) 31 ATC 110], Chandrakant Tukaram Nikam v. Municipal Corpn. of Ahmedabad [(2002) 2 SCC 542: 2002 SCC (L & S) 317 and in Scooters India v. Vijai E.V. Eldred [(1998) 6 SCC 549: 1998 SCC (L & S) 1611].
  2. In Rajasthan SRTC case [(1995) 5 SCC 75: 1995 SCC ( L & S) 1207: (1995) 31 ATC 110] it was observed as follows:

“[A] speedy, inexpensive and effective forum for resolution of disputes arising between workmen and their employers. The idea has been to ensure that the workmen do not get caught in the labyrinth of civil courts with their layers upon layers of appeals and revisions and the elaborate procedural laws, which the workmen can ill afford. The procedures followed by civil courts, it was thought, would not facilitate a prompt and effective disposal of these disputes. As against this, the courts and tribunals created by the Industrial Disputes Act are not shackled by these procedural laws nor is their award subject to any appeals or revisions. Because of their informality, the workmen and their representatives can themselves prosecute or defend their cases. These forums are empowered to grant such relief as they think just and appropriate. They can even substitute the punishment in many cases. They can make and remake the contracts, settlements, wage structures and what not. Their awards are no doubt amendable to jurisdiction of the High Court under Article 226 as also to the jurisdiction of this Court under Article 32, but they are extraordinary remedies subject to several self-imposed constraints. It is, therefore, always in the interest of the workmen that disputes concerning them are adjudicated in the forums created by the Act and not in a civil court. That is the entire policy underlying the vast array of enactments concerning workmen. This legislative policy and intendment should necessarily weigh with the courts in interpreting these enactments and the disputes arising under them.”

(2005) 8 SCC 264., U.P. State Spinning Company Ltd. Vs. R.S. Pandey and Another.

Facts:

A workmen filed a writ petition challenging the termination order. The writ petition was allowed on the ground that services were terminated in violation of the principles of natural justice. Before the Apex Court the Company submitted that the High Court ought not to have entertained the writ petition when there being alternate remedy available.

Following was laid down in paragraphs 16,17, and 20 of the said judgement:

  1. “If, as was noted in Ram and Shyam Co. v. State of Haryana [(1985) 3 SCC 267: AIR 1985 SC 1147] the appeal is from “Caesar to Caesar’s wife” the existence of alternative remedy would be a mirage and an exercise in futility. In the instant case the writ petitioners had indicated the reasons as to why they thought that the alternative remedy would not be efficacious. Though the High Court did not go into that plea relating to bias in detail, yet it felt that alternative remedy would not be a bar to entertain the writ petition. Since the High Court has elaborately dealt with the question as to why the statutory remedy available was not efficacious, it would not be proper for this Court to consider the question again. When the High Court had entertained a writ petition notwithstanding existence of an alternative remedy this Court while dealing with the matter in an appeal should not permit the question to be raised unless the High Court’s reasoning for entertaining the writ petition is found to be palpably unsound and irrational. Similar view was expressed by this Court in First ITO v. Short Bros. (P) Ltd. [(1966) 3 SCR 84: AIR 1967 SC 81] and State of U.P. v. Indian Hume Pipe Co. Ltd. [(1977) 2 SCC 724: 1977 SCC (Tax) 335].That being the position, we do not consider the High Court’s judgment to be vulnerable on the ground that alternative remedy was not availed. /There are two well-recognized exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their full course. Secondly, the doctrine has no application when the impugned order has been made in violation of the principles of natural justice. We may add that where the proceedings themselves are an abuse of process of law the High Court in an appropriate case can entertain a writ petition.
  2. Where under a statute there is an allegation of infringement of fundamental rights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess can be the grounds on which the writ petitions can be entertained. But normally, the High Court should not entertain writ petitions unless it is shown that there is something more in a case, something going to the root of the jurisdiction of the officer, something which would show that it would be a case of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute. It was noted by this Court in L. Hirday Narain v. ITO [(1970) 2 SCC 355: AIR 1971 SC 33] that if the High Court had entertained a petition despite availability of alternative remedy and heard the parties on merits it would be ordinarily unjustifiable for the High Court to dismiss the same on the ground of non-exhaustion of statutory remedies, unless the High Court finds that factual disputes are involved and it would not desirable to deal with them in a writ petition.
  3. In a catena of decisions it has been held that writ petition under Article 226 of the Constitution should not be entertained when the statutory remedy is available under the Act, unless exceptional circumstances are made out.”

Cases pertaining to election.

With regard to cases pertaining to election, the Apex Court has clearly laid down that when the remedy of challenging an election is provided in an enactment, the writ petition challenging an election of an office be not entertained.

In Harnek Singh Vs. Charanjit Singh and Others, (2005) 8 SCC 383.

Facts:

In the election for the post of Chairman, Panchayat Samiti the Returning Officer adjourned the poll and thereafter a date was fixed and election was completed. The High Court entertained the writ petition under Article 226 of the Constitution of India and set-aside the election.

Relevant paragraphs are 15, 16 and 18.

  1. “Prayers (b) and (c) aforementioned, evidently, could not have been granted in favoaur of the petitioner by the High Court in exercise of its jurisdiction under Article 226 of the Constitution. It is true that the High Court exercises a plenary jurisdiction under Article 226 of the Constitution. Such jurisdiction being discretionary in nature may not be exercised inter alia keeping in view the fact that an efficacious alternative remedy is available therefore. (See Sanjana M. Wig v. Hindustan Petroleum Corpn. Ltd. (2005) 8 SCC 242: (2005) 7 Scale 290)
  2. Article 243-O of the Constitution mandates that all election disputes must be determined only by way of an election petition. This by itself may not per se bar judicial review which is the basic structure of the Constitution, but ordinarily such jurisdiction would not be exercised. There may be some cases where a writ petition would be entertained but in this case we are not concerned with the said question.
  3. Yet again in Jaspal Singh Arora [(1998) 9 SCC 594] this Court opined:

“3. These appeals must be allowed on a short ground. In view of the mode of challenging the election by an election petition being prescribed by the M.P. Municipalities Act, it is clear that the election could not be called in question except by an election petition as provided under that Act. The bar to interference by courts in electoral matters contained in Article 243-ZG of the Constitution was apparently overlooked by the High Court in allowing the writ petition. Apart from the bar under Article 243-ZG, on settled principles interference under Article 226 of the Constitution for the purpose of setting aside election to a municipality was not called for because of the statutory provision for election petition and also the fact that an earlier writ petition for the same purpose by a defeated candidate had been dismissed by the High Court.”

Writ petition challenging Assessment Proceedings/Recovery of Tax.

The Apex Court in several cases has held that in assessment proceedings when there are specific statutory remedy available, High Court should not entertain the writ petition.

AIR 1983 SC, 603, Titagurh Paper Mills Co., Ltd., and Another Vs. State of Orissa and Another.

Facts:

The appellant had challenged two assessment orders of Assistant Sales Tax Officer in writ petition under Article 226 of the Constitution of India. The High Court dismissed the writ petition. Against which a S.L.P. was filed.

Relevant paragraphs are 4, 6 and 11

  1. “The only contention raised before the High Court was that the impugned orders of assessment being a nullity, the petitioners were entitled to invoke the extraordinary jurisdiction of the High Court under Art. 226 of the Constitution, but the High Court was not satisfied that this was a case of inherent lack of jurisdiction. The High Court while dismissing the writ petitions observed:

“Having heard the learned counsel for both the parties and having gone through the records, we are not inclined to interfere with the impugned order(s) in exercise with our extraordinary jurisdiction since there is a right of appeal against the same. It is contended on behalf of the petitioner that the impugned order being a nullity is entitled to invoke our extraordinary jurisdiction. We are not satisfied that this is a case of inherent lack of jurisdiction. There is no violation of principles of natural justice.”

  1. We are constrained to dismiss these petitions on the short ground that the petitioners have an equally efficacious alternative remedy by way of an appeal to the prescribed authority under sub-s. (1) of Section 23 of the Act, them a second appeal to the Tribunal under sub-s. (3)(a) thereof, and thereafter in the event the petitioners get no relief, to have the case stated to the High Court under Section 24 of the Act. In Raleigh Investment Co. Ltd. v. Governor General in Council; (1947) 74 Ind. App. 50: (AIR 1947 PC 78) Lord Uthwatt, J. in delivering the judgment of the Board observed that in the provenance of tax where the Act provided for a complete machinery which enabled an assessee to effectively raise in the courts the question of the validity of an assessment denied an alternative jurisdiction to the High Court to interfere. It is true that the decision of the Privy Council in Raleigh Investment Company’s case, (supra) was in relation to a suit brought for a declaration that an assessment made by the Income-tax Officer was a nullity, and it was held by the Privy Council that an assessment made under the machinery provided by the Act, even if based on a provision subsequently held to be ultra vires, was not a nullity like an order of a court lacking jurisdiction and that S. 67 of the Income-tax, 1922 operated as a bar to the maintainability of such a suit. In dealing with the question whether S. 67 operated as a bar to a suit to set aside or modify an assessment made under a provision of the Act which is ultra vires, the Privy Council observed:

“In construing the section it is pertinent in their Lordships opinion to ascertain whether the Act contains machinery which enables an assessee effectively to raise in the courts the question whether a particular provision of the Income-tax Act bearing on the assessment made is or is not ultra vires. The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to inquire into the same subject-matter.”

  1. Under the scheme of the Act, there is a hierarchy of authorities before which the petitioners can get adequate redress against the wrongful acts complained of. The petitioners have the right to prefer an appeal before the prescribed authority under sub-s. (1) of S. 23 of the Act. If the petitioners are dissatisfied with the decision in the appeal, they can prefer a further appeal to the Tribunal under sub-s. (3) of S. 23 of the Act, and then ask for a case to be stated upon a question of law for the opinion of the High Court under S. 24 of the Act. The Act provides for a complete machinery to challenge an order of assessment, and the impugned orders of assessment can only be challenged by the mode prescribed by the Act and not by a petition under Art. 226 of the Constitution. It is now well recognized that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clarity by Willes, J. in Wolverhampton New Water Works Co. v. Hawkesford; (1859) 6 CBNS 336 at p. 356 in the following passage:

“There are three classes of cases in which a liability may be established founded upon statute * * * * * * * * * * * * * * *  But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it  * * * * * * * * * * * * * * * * the remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class. The form given by the statute must be adopted and adhered to”

The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspaper Ltd.; 1919 AC 368 and has been reaffirmed by the Privy Council in Attorney-General of Trinidad and Tobago v. Gordon Grant & Co.; 1935 AC 532 and Secretary of State v. Mask & Co.; AIR 1940 PC 105. It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine.”

AIR 1985 SC 330., Assistant Collector of Central Excise, Chandan Nagar, West Bengal Vs. Dunlop India Ltd and Others.

Facts:

Central Excise Department filed a S.L.P. challenging an interim order granted by the Calcutta High Court challenging the proceedings under Central Excise.

The Apex Court in the said judgement also deprecated the practice of granting interim order by the Calcutta High Court on an oral application. The Apex Court further held that in such matters whether the High Court ought not to have entertained the writ petition under Article 226 of the Constitution of India.

Relevant paragraphs 3 and 4:

  1. “In Titaghur Paper Mills Co. Ltd. v. State of Orissa (AIR 1983 SC 603) A.P. Sen, E.S. Venkataramiah and R.B. Misra, JJ, held that where the statute itself provided the petitioners with an efficacious alternative remedy by way of an appeal to the Prescribed Authority, a second appeal to the Tribunal and thereafter to have the case stated to the High Curt, it was not for the High Court to exercise its extraordinary jurisdiction under Art. 226 of the Constitution ignoring as it were, the complete statutory machinery. That it has become necessary, even now, for us to repeat this admonition is indeed a matter of tragic concern to us. Art. 226 is not meant to short circuit or circumvent statutory procedures. It is only where statutory remedies are entirely ill suited to meet the demands of extraordinary situations, as for instance where the very vires of the statute is in question or where private or public wrongs are so inextricably mixed up and the prevention of public injury and the vindication of public justice require it that recourse may be had to Art. 226 of the Constitution. But then the Court must have good and sufficient reason to by pass the alternative remedy provided by statute. Surely matters involving the revenue where statutory remedies are available are not such matters. We can also take judicial notice of the fact that the vast majority of the petitions under Art. 226 of the Constitution are filed solely for the purpose of obtaining interim orders and thereafter prolong the proceedings by one device or the other. The practice certainly needs to be strongly discouraged.
  2. In Union of India v. Oswal Woollen Mills Ltd. (AIR 1984 SC 1264), we had occasion to consider an interim order passed by the Calcutta High Court in regard to a matter no part of the cause of action relating to which appeared to arise within the jurisdiction of the Calcutta High Court. In that case the interim order practically granted the very prayers in the writ petition. We were forced to observe:

“It is obvious that the interim order is of a drastic character with a great potential for mischief. The principal prayer in the writ petition is the challenge to the order made or proposed to be made under Cl. 8-B of the Import Control Orders. The interim order in terms of prayers (j) and (k) has the effect of practically allowing the writ petition as the stage of admission without hearing the opposite parties. While we do not wish to say that a drastic interim order may never be passed without hearing the opposite parties even if the circumstances justify it, we are very firmly of the opinion that a statutory order such as the one made in the present case under Cl. 8-B of the Import Control Order ought not to have been stayed without at least hearing those that made the order. Such a stay may lead to devastating consequences leaving no way of undoing the mischief. Where a plentitude of power is given under a statute, designed to meet a dire situation, it is no answer to say that the very nature of the power and the consequences which may ensure is itself a sufficient justification for the grant of a stay of that order, unless,  of course, there are sufficient circumstances to justify a strong prima facie inference that the order was made in abuse of the power conferred by the statute. A statutory order such as the one under Cl. 8-B purports to be made in the public interest and unless there are even stronger grounds of public interest an ex parte interim order will not be justified. The only appropriate order to make in such cases is to issue notice to the respondents and make it returnable within a short period. This should particularly be so where the offices of the principal respondents and relevant records lie outside the ordinary jurisdiction of the court. To grant interim relief straightway and leave it to the respondents to move the court to vacate the interim order may jeopardize the public interest. It is notorious how if an interim order is once made by a court, parties employ every device and tactic to ward off the final hearing of the application. It is, therefore, necessary for the courts to be circumspect in the matter of granting interim relief, more particularly so where the interim relief is directed against orders or actions of public officials acting in discharge of their public duty and in exercise of statutory powers. On the facts and circumstances of the present case, we are satisfied that no interim relief should have been granted by the High Court in the terms in which it was done.” ”

(2002) 5 SCC 521., Secretary Minor Irrigation & Rural Engineering Services, U.P. And Others Vs. Sahngoo Ram Arya and Others.

Facts:

In this case the Apex Court held that even if the U.P. Public Services Tribunal has no jurisdiction to pass an interim order that cannot be a ground for bypassing the alternate remedy.

Relevant paragraphs 11 and 12:

  1. “These appeals are preferred against the order made by the High Court of Judicature at Allahabad in Civil Misc. WP No. 47130 of 2000 etc. on 1.2.2001. A DivisionBench of the High Court of Allahabad by the impugned judgment has held that the petitioner in the said writ petitions has an alternate remedy  by way of petitions before the U.P. Public Services Tribunal (the Tribunal), and had permitted the writ petitioner therein to approach the Tribunal and directed the Tribunal to entertain any such petition to be filed by the writ petitioner without raising any objection as to limitation. There was a further direction to the Tribunal to decide the matter expeditiously.
  2. Mr. Sunil Gupta, learned counsel appearing for the petitioner contended that the remedy before the Tribunal under the U.P. Public Services (Tribunals) Act is wholly illusory inasmuch as the Tribunal has no power to grant an interim order. Therefore, he contends that the High Court ought not to have relegated the petitioner to a fresh proceeding before the said Tribunal. We do not agree with these arguments of the learned counsel. When the statute has provided for the constitution of a Tribunal for adjudicating the disputes of a government servant, the fact that the Tribunal has no authority to grant an interim order is no ground to bypass the said Tribunal. In an appropriate case after entertaining the petitions by an aggrieved party if the Tribunal declines an interim order on the ground that it has no such power then it is possible that such aggrieved party can seek remedy under Article 226 of the Constitution but that is no ground to bypass the said Tribunal in the first instance itself. Having perused the impugned order, we find no infirmity whatsoever in the said order and the High Court was justified in directing the petitioner to approach the Tribunal. In the said view of the matter, the appeals are dismissed. No costs.”

(1981) 4 SCC., 247, V. Vellaswamy Vs. Inspector General of  Police, Tamil Nadu, Madras and Another.

Facts:

In this case the Apex Court held that even though there is a power of review under a statutory enactment that cannot be a ground for not entertaining the writ petition under Article 226 of the Constitution of India.

Now, before closing the discussion on this topic, it will be useful to recollect again the exceptions to the principles of not entertaining the writ petition when alternate remedy is available.

The Apex Court in (1998) (8) SCC 1., Whirlpoorl Corporation Vs. Registrar of Trade Marks, Mumbai, considered the said aspect and reiterated the principles and also noticed the exception to the rule.

Relevant paragraphs are 15, 16, 17, 18, 19, 20 and 21:

  1. “Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. There is a plethora of case-law on this point but to cut down this circle of forensic  whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the field.
  2. Rashid Ahmed v. Municipal Board, Kairana [AIR 1950 SC 163: 1950 SCR 566] laid down that existence of an adequate legal remedy was a factor to be taken into consideration in the matter of granting writs. This was followed by another Rashid case, namely, K.S. Rashid & Son v. Income Tax Investigation Commission [AIR 1954 SC 207: (1954) 25 ITR 167]  which reiterated the above proposition and held that where alternative remedy existed, it would be a sound exercise of discretion to refuse to interfere in a petition under Article 226. This proposition was, however, qualified by the significant words, “unless there are good grounds therefore”, which indicated that alternative remedy would not operate as an absolute bar and that writ petition under Article 226 could still be entertained in exceptional circumstances
  3. A specific and clear rule was laid down in State of U.P. v. Mohd. Nooh [AIR 1958 SC 86: 1958 SCR 595] as under:

“But this rule requiring the exhaustion of statutory remedies before the writ will be granted is a rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies.”

  1. This proposition was considered by a Constitution Bench of this Court in A.V. Venkateswaran, Collector of Customs v. Ramchand Sobhraj Wadhwani [AIR 1961 SC 1506: (1962) 1 SCR 753] and was affirmed and followed in the following words:

“The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions which the learned Solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy. We need only add that the broad lines of the general principles on which the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus pre-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court.”

  1. Another Constitution Bench decision in Calcutta Discount Co. Ltd. v. ITO, Companies Distt. [AIR 1961 SC 372: (1961) 41 ITR 191] laid down:

Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts will issue appropriate orders or directions to prevent such consequences. Writ of certiorari and prohibition can issue against the Income Tax Officer acting without jurisdiction under Section 34, Income Tax Act.”

  1. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.
  2. That being so, the High Court was not justified in dismissing the writ petition at the initial stage without examining the contention that the show-cause notice issued to the appellant was wholly without jurisdiction and that the Registrar, in the circumstances of the case, was not justified in acting as the “Tribunal”.

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