GST UPDATE

Hon’ble Court: HIGH COURT OF DELHI AT NEW DELHI
Case Title: M/S AKEE INTERNATIONAL VS DEPUTY COMMISSIONER OF CUSTOMS
Petition No. & Citation: W.P.(C) 5063/2026 & CM APPL. 24816/2026

Hon’ble Judge(s)	JUSTICE NITIN WASUDEO SAMBRE AND JUSTICE AJAY DIGPAUL
Date of Order	16th April 2026
Outcome	In favor of the Department

Brief Facts of the Case

The petitioner, M/S AKEE INTERNATIONAL, was engaged in export of shawls. The dispute arises from the petitioner’s export consignments of shawls, samples of which were drawn by the customs authorities and sent for laboratory analysis. The first test report issued by the Wildlife Institute of India concluded that the shawls contained hair of Tibetan Antelope which is an endangered species, thereby export of the said Shawl was prohibited by Wildlife Institute of India (WII). Disputing this finding, the petitioner sought re-testing, which was permitted, and a second report was obtained; however, the same was inconclusive and indicated that DNA testing could be attempted subject to permissions and involving destructive procedures. Despite the second report, the petitioner remained dissatisfied and, after a considerable lapse of time, sought a third round of testing, which was declined by the department. Aggrieved by such rejection and the continuation of proceedings pursuant to the show cause notice, the petitioner approached the High Court alleging violation of principles of natural justice and seeking directions for re-testing.

Relevant Section / Rule / Notification

Public Notice No. 97/2017 dated 28th July, 2017

Question before Hon’ble Court / Authority

Whether an assessee has a vested right to seek repeated re-testing of samples, particularly when conflicting or inconclusive reports exist?

Brief Arguments by Petitioner

Violation of Natural Justice

The petitioner contended that denial of third testing violates principles of natural justice, as a fair opportunity must be provided to disprove adverse findings.

Retesting permitted by Judicial Pronouncements and Public Notice

Reliance was placed on judicial precedents, including Katyal Industries vs. Union of India, to support the claim that re-testing should be permitted in cases of conflicting reports.It was argued that Public Notice dated 28.07.2017 permits re-testing in appropriate cases, and therefore the request should have been allowed.

Re- testing should be permitted as the Second test Report was inconclusive

The petitioner emphasized that the second test report being inconclusive creates sufficient doubt, necessitating further verification.

Brief Arguments by Respondent

It was argued that one re-test had already been granted, and there is no automatic entitlement to further testing. The circular governing re-testing clearly provides that a second re-test (third test) can only be allowed in cases where the authority who is deciding the case is satisfied that the same is necessary.
It was further argued that the petitioner has approached this Court at belated stage.

Findings and Judgement

The Hon’ble High Court analyzed the Clause (f) of Public Notice dated 28.07.2017 thoroughly and made the following analysis:

Scope of Re-testing under Circular dated 28.07.2017

The Court interpreted Clause (f) of the circular to hold that in cases of conflicting test reports, the adjudicating authority has the discretion to rely on either report by recording reasons. A second re-test (third test) may be ordered only where the authority is unable to arrive at a conclusion, and even then, such power is discretionary and not to be exercised routinely. Thus, the circular does not grant any absolute right to the petitioner to demand repeated testing.

Role and Discretion of Adjudicating Authority

The Court emphasized that the power to order a third test lies within the discretion of the adjudicating authority and must be exercised based on the facts and necessity of the case. Judicial interference at this stage would amount to encroaching upon such discretion, which is not permissible.

Prematurity of Writ Petition

The Court held that since adjudication proceedings were still pending, the petitioner’s approach to the High Court was premature. Interference under writ jurisdiction at this stage was unwarranted.

Petitioner demanded the third retesting to stall the proceedings

The Court noted that the second test report was available in 2022, whereas the request for a third test was made only in 2025, with no effort made in the intervening period to conclude the proceedings. This delay indicated lack of diligence and supported the department’s contention that the request was made to prolong the matter.
Accordingly, the writ petition was dismissed. However, the Court clarified that the adjudicating authority is not precluded from considering the necessity of a third test at an appropriate stage, in accordance with the circular and based on the facts of the case.

Author’s Comment

The ruling reinforces that procedural safeguards must be respected but cannot be misused by taxpayers to delay proceedings. It clarifies that such safeguards ensure that they must be exercised within the framework of law. Further, it also signifies that the principles of natural justice cannot be used as a blanket to seek unlimited opportunities or to stall adjudication.

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GST update /2026-27/0010

GST UPDATE

Brief Facts of the Case

Relevant Section / Rule / Notification

Question before Hon’ble Court / Authority

Brief Arguments by Petitioner

Brief Arguments by Respondent

Findings and Judgement

Author’s Comment

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