GST UPDATE on WIDE POWERS OF COMMISSIONER APPEALS IN CUSTOMS

The Budget, 2021 had amended the provision contained in section 5 of the Customs Act, 1962 which reads as follows: - SECTION 5 POWERS OF OFFICERS OF CUSTOMS- (3) Notwithstanding anything contained in this section, a Commissioner (Appeals) shall not exercise the powers and discharge the duties conferred or imposed on an officer of customs other than those specified in Chapter XV, section 108 and sub-section (1D) of section 110. Furthermore, the provisions as referred above are listed for the sake of convenient reference as follows: - Chapter XV pertains to Appeals and Revision Section 128A Procedure in appeal- (3) The Commissioner (Appeals) shall, after making such further inquiry as may be necessary, pass such order, as he thinks just and proper- (a) confirming, modifying or annulling the decision or order appealed against; or (b) referring the matter back to the adjudicating authority with directions for fresh adjudication or decision, as the case may be, in the following cases, namely: - (i) where an order or decision has been passed without following the principles of natural justice, or; (ii) where no order or decision has been passed after re-assessment under section 17; or (iii) where an order or refund under section 27 has been issued by crediting the amount to Fund without recording any finding on th evidence produced by the applicant. Section 108 Power to summon persons to give evidence and produce documents (3) All the persons so summoned shall be bound to attend either in person or by an authorised agent, as such officer may direct; and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents and other things as may be required. ??www.capradeepjain.com??pradeep@capradeepjain.com??5 SECTION 110 SEIZURE OF GOODS, DOCUMENTS AND THINGS.- “(1D) Where the goods seized under sub-section (1) is gold in any form as notified under sub-section (1A), then, the proper officer shall, instead of making an application under subsection (1B) to the Magistrate, make such application to the Commissioner (Appeals) having jurisdiction, who shall, as soon as may be, allow the application and thereafter, the proper officer shall dispose of such goods in such manner as the Central Government may determine.”. Therefore, according to amended section 5 of the Customs Act, the Commissioner (Appeals) is empowered to remand the case back to the adjudicating authority for decision afresh, power to summon a person for tendering statements and even to seize gold in form. The above provisions are no doubt very wide in ambit but they seek to distort the set framework of adjudication and appeal procedure in indirect taxation. As per general parlance, the Commissioner Appeals being first appellate authority is only a quasi judicial authority which is liable to re-consider the order already passed by the adjudicating authority. The Commissioner Appeals usually do not have the power of initiating investigation such as issuance of summons or carry out seizure of goods, documents or things. The issuance of summons for recording statement is the preliminary stage of investigation which cannot be resorted by the first appellate authority but the Customs Act, 1962 gives wide powers to the Commissioner Appeals. In this context, it is pertinent to mention that one of the most common contentions made by the assessees is that the order cannot be passed beyond the allegations made in the show cause notice. In other words, the issuance of show cause notice marks an end to the possibility of any further addition or advancement in the allegations made towards the assessees. Consequently, it has been pleaded in number of judicial pronouncements that the order passed beyond the allegations of the show cause notice is not at all legally tenable. Reference may be made to the following decisions:- • APEX FLUIDOMATICS LIMITED VERSUS ASSISTANT COMMISSIONER OF C. EX., AHMEDABAD [2014 (313) E.L.T. 106 (TRI. - AHMD.)] • ASSISTANT COMMISSIONER OF CUSTOMS, AHMEDABAD VERSUS KRISHNA PETROCHEMICALS ??www.capradeepjain.com??pradeep@capradeepjain.com??6 [2014 (304) E.L.T. 744 (TRI. - AHMD.)] • SAURABH ORGANICS PVT. LTD. VERSUS ASSISTANT COMMISSIONER OF CENTRAL EXCISE, THANE [2012 (275) E.L.T. 582 (TRI. – MUMBAI)] In light of the above cited decisions, it is clear that the Customs Act, 1962 empowering the Commissioner Appeals with the power of issuance of summons for statements and for seizure of gold is clearly distorting the already set mechanism of adjudication proceedings thereby adding to complexities. Consequently, the government should re-look their decision to empower Commissioner (Appeals) of Customs with such powers that have direct nexus with the adjudication of the case. This will lead to very unpleasant situation where a taxpayer contends that the order is moving beyond the show cause notice then Commissioner (Appeal) will start investigation once again. Else, on pleading of not taking of statements of a key person, the Commissioner summons that person and start taking his statement. So, starting of investigation once again by Appellate authority does not match with basic role of appeal by Commissioner (Appeal). Hence, delegation of such power to Commissioner (Appeal) will create chaos and confusion and lead to more disputes and litigation.

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GST UPDATE on WIDE POWERS OF COMMISSIONER APPEALS IN CUSTOMS

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