ASSTT. COLLECTOR OF CUSTOMS vs. CHARAN DAS MALHOTRA
What did the Supreme Court hold?
The Supreme Court held that the power of extension under the proviso to Section 110(2) of the Customs Act, 1962, is quasi-judicial, or at least requires a judicial approach. The Court reasoned that the proviso requires the Collector to determine 'sufficient cause being shown' based on materials placed before him, indicating a factual inquiry and determination, not a mere administrative decision. Furthermore, granting an extension defeats the civil right of the owner to have the seized goods restored upon the expiry of the initial six months. Therefore, an opportunity of being heard ought to have been given to the respondent before ordering extensions. The Court found no merit in the argument that such an opportunity would be detrimental to the investigation, stating that the only disclosure would be that the investigation is incomplete, which is a necessary consequence of the statutory period. The Court overruled contrary decisions from the High Courts of Gujarat, Mysore, and Bombay. Consequently, the High Court was justified in ordering the restoration of the watches. The second question regarding the vagueness of the notice under Section 124(a) was not decided as it was not challenged before the Supreme Court.
What were the facts?
Goods were seized from the respondent on March 19, 1963. The customs authorities applied for an extension of the six-month period for issuing a notice under Section 124 of the Customs Act, 1962, on September 19, 1963, which was granted for four months by the Collector of Customs. Subsequently, on February 20, 1964, after the extended period had expired, the Collector granted a further extension of two months. Both extension orders were passed without affording the respondent an opportunity to be heard. The respondent challenged the second extension order, and the High Court ruled that the extension orders were invalid because the Collector was required to decide such applications judicially. The present appeal is against this High Court judgment.
What were the issues?
1. Whether the power of extension of the period for issuing a notice under Section 124 of the Customs Act, 1962, vested in the Collector of Customs under the proviso to Section 110(2) is quasi-judicial or administrative in nature, and if quasi-judicial, whether an opportunity of being heard must be given to the owner of the seized goods. Assessee's Contention: The assessee argued that the power of extension is quasi-judicial, requiring a judicial approach and an opportunity to be heard, as it affects the civil right to have seized goods returned. The High Court's decision that the extension orders were bad for not providing an opportunity to be heard was correct. Revenue's Contention: The revenue contended that the power of extension is administrative. They relied on the principle that if an order is made in the bona fide exercise of power within the Act's provisions, it is immune from interference, and the adequacy of the cause shown may not be a ground for interference. They also argued that requiring an opportunity to be heard would be detrimental to ongoing investigations, citing cases like Sheikh Mohammed Sayeed v. Asstt. Collector of Customs and GaneshmuJ Channilal Gandhi v. Collector of Central Excise.
Which sections of the Income-tax Act were involved?
Section 110(1), Section 110(2), Section 124(a)
AI-generated summary — verify with the full judgment below
so~ ASSTT. COLLECTOR OF CUSTOMS .. CHARAN DAS MALHOTRA February 19, 1971 [J. M. SHELAT AND C. A. VAIDIALINGAM, JJ.J Customs Act (52 of 1962), s. 110 (I) and (2) and proviso-Power of extension of period,"· quasi judici<l-'Su/ficient cause being shown'-Scope oJ.
Under s. 110(1) of the Customs Act. 1962. if a proper officer has 'reason to believe' that any goods are liable to confiscation under the Act, he may seize such goods. Section 124 provides that no order confiscating any goods shall be made unless the owner of the goods is given notice in writing informing him of the grounds on which it is proposed to confiscate the goods. Under s. 110(2) where any goods are seized under sub-s. (1) and no notice in respect thereof is given under s. 124 within six months of the seizure, the goods shall be returned to the person from whose pos- session they were seized; provided, the period . of six months ·may 'on •ufficient cause beipg shown' be extended by the Collector of Customs for a period not exceeding six months.
On March 19, 1963 goods were seized from the respondent and, on September 19, 1963 an extension for a period of four months was applied !or by the customs
The order continues below.
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