Customs Summons u/s 108 directly to Managing Director untenable: Guwahati High Court
Guwahati High Court on 18th May 2022 said Summoning of the MD should be take on only as a last resort in cases where assesses are not cooperating or the investigations are to be finished directly. The same is not justified in the present case. This was seen in the matter of Century Plyboards (India) Ltd & Anr. Vs The Union of India & 3 Ors. The matter was presided over by Honourable Mr. Justice Achintya Malla Bujor Barua
FACTS OF THE CASE
The issue in the present matter is that in connection with import of EPCG Licenses by the petitioner, a summon dated 27th April 2022 u/s 108 of the Customs Act, 1962 had been issued to the Managing Director (MD) of the petitioner company(Co.) by name. Conclusion- Based on circular no. 208/122/89-CX.6 dated 13th October 1989 it discernible that it is the practice of the Dept not to issue the summons to the MD or the other Directors without any reason & secondly, the summoning of the MD or Director should be take on only as a last resort in cases where assesses are not cooperating or the investigations are to be finished directly. In the instant case, no material is available that there is a reasoned view formed by the Dept that the petitioner assessee is not cooperating or that the presence of the MD particularly is required for the investigation for any reason.
In the circumstance, we dispose of this writ petition by directing the dept authorities issuing the summons u/s 108 of the Act of 1962 not to issue summons directly to the MD of the petitioner Co. & on the other hand to issue it to an authorized representative of the Co. in terms of the provisions of the Circular. Heard Dr. A Saraf, learned senior counsel for the petitioner, Mr. SC Keyal, learned counsel for the respondents No. 2, 3 & 4 being the authorities in the Directorate of Revenue Intelligence & Ms. A Gayan, learned counsel for the respondent No. 1 being the Union of India through the Ministry of Commerce & Industry, Dept of Commerce.
Without going into the details of the framework facts leading to this writ petition, we take note of that in forwarding of an enquiry in connection with import of EPCG Licenses by the petitioner Star Cement Meghalaya Ltd, a summon dated 27th April 2022 u/s 108 of the Customs Act, 1962 (in short Act of 1962) had been issued to the MD of the petitioner Co. by name.
The summon dated 27th April 2022 was directly issued to the MD of the petitioner Co. without providing the alternative of it being issued to an authorized representative. Dr. A Saraf, learned senior counsel for the petitioner relies upon a circular bearing C.B.E & C Letter F. No. 208/122/89-CX.6 dated 13th October 1989 of the Central Board of Excise & Customs, which provides for an instruction to the dept authorities not to summon the MDs of any Co. for enquiry. The relevant portion of the circular is extracted below:- “Complain have been received from the trade that in some of the Collect orates summonors 14 of the Central Excises & Salt Act, 1944 are being issued to the MDs & other high officers with a view to enforce recovery of dues which are under dispute. Action under this Sec is to be taken only as a last resort in cases where assesses are not cooperating or investigations are to be finished directly. This Sec shouldn’t be used for harassing the top level management for forcing them to pay up demands which are disputed by them. For recovery of demands normal procedure under the law should be followed. If any instance of issue of summons to MDs & other Directors without justification is noticed, a serious view will be taken by the board. Collectors will be held personally responsible for enforcing these instructions in their charges.”
A reading of the extracted portion makes it discernible that it is the practice of the Dept not to issue the summons to the MD or the other Directors without any justification & secondly, the summoning of the MD or Director should be take on only as a last resort in cases where assesses are not cooperating or the investigations are to be finished directly.
JUDGEMENT
In the instant case, no material is available that there is a reasoned view formed by the Dept that the petitioner assesse is not cooperating or that the presence of the MD particularly is required for the investigation for any reason.
In the circumstance, we dispose of this writ petition by directing the dept authorities issuing the summons u/s 108 of the Act of 1962 not to issue summons directly to the MD of the petitioner Co. & on the other hand to issue it to an authorized representative of the Co. in terms of the provisions of the Circular dated 10th October 1989. The summons to be issued to the petitioner Co. shall henceforth be done in the required manner by not directly requiring the MD to be summoned & to act in accordance with the law provided in the circular dated 13th October 1989.
To facilitate the process, the Board of Directors of the petitioner Co. shall authorize a competent person for the purpose & further summons be issued only to such authorized person. In view of the above, the summon dated 27th April 2022 be not acted upon & in its place modified summons may be issued in the manner as provided above. The writ petition is disposed of in the above terms.
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JUDGEMENT REVIEWED BY YAKSHU JINDAL.