𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Category: Delhi High Court

Delhi High Court Quashes Customs Show-Cause Notice for Breach of Natural Justice
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 25.05.2026

Delhi High Court Quashes Customs Show-Cause Notice for Breach of Natural Justice

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Delhi High Court recently delivered a significant judgment in the case of M/S Aggarwal Laminates Pvt. Ltd. vs. Deputy Commissioner of Customs (Import), highlighting the importance of procedural fairness and the principles of natural justice in customs proceedings. This article provides a detailed overview of the case, the court’s reasoning, and its broader implications for importers and regulatory authorities.

Background of the Case

Aggarwal Laminates Pvt. Ltd. imported goods described as “Aluminium Based Copper Clad Laminates” and classified them under Customs Tariff Item 74102100, paying the applicable duties and taxes. However, customs authorities later objected to this classification, alleging misclassification and a short payment of customs duty amounting to Rs. 3,07,010. The authorities issued a pre-notice consultation letter on June 1, 2021, calling for a personal hearing on June 2, 2021. When the petitioner did not appear, a show-cause notice was issued on June 2, 2021, demanding the differential duty and interest.

Key Issues Raised
1. Service of Notice and Opportunity to be Heard
  - The petitioner argued that the pre-notice consultation letter, sent by registered post on June 1, 2021, was received only on June 10, 2021—well after the scheduled hearing date.
  - As a result, the petitioner was deprived of the opportunity to appear or make written submissions, rendering the process an “empty formality.”
2. Violation of Principles of Natural Justice
  - The court observed that issuing a notice for a hearing within 24 hours, especially when sent by post, was arbitrary and failed to provide a reasonable opportunity for the petitioner to be heard.
  - The haste in fixing the hearing suggested a lack of application of mind by the authorities.
Court’s Findings and Judgment
- The High Court found that the customs authorities’ actions violated the principles of natural justice, which require reasonable and sufficient opportunity for a party to present its case.
- The court quashed the show-cause notice dated June 2, 2021, and revived the pre-notice consultation process, directing the authorities to grant a proper personal hearing to the petitioner on September 16, 2021.
- The court emphasized that regulatory authorities must ensure adequate time for service of notice and preparation before any hearing, reinforcing the need for fairness in administrative proceedings.
Implications of the Judgment
1. For Importers
  - Importers are entitled to a fair opportunity to respond to allegations of misclassification or duty evasion.
  - Any procedural lapses by authorities, such as inadequate notice periods, can be challenged in court.
2. For Customs Authorities
  - Authorities must ensure that notices are served with sufficient lead time for recipients to prepare and respond.
  - The judgment serves as a reminder to uphold the principles of natural justice in all quasi-judicial proceedings.
Conclusion

The Delhi High Court’s decision in the Aggarwal Laminates case underscores the judiciary’s commitment to upholding procedural fairness and natural justice in customs and tax matters. Both importers and authorities should take note of this precedent to ensure that all parties are given a genuine opportunity to be heard before any adverse action is taken.

Source: Delhi High Court

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May 25, 2026
Delhi High Court Quashes DRI Show Cause Notice
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 23.05.2026

Delhi High Court Quashes DRI Show Cause Notice

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Delhi High Court recently delivered a significant judgment in the case of Swatch Group India Pvt Ltd & Ors. vs. Union of India & Ors., addressing crucial issues related to customs law, procedural timelines, and the powers of the Directorate of Revenue Intelligence (DRI). This article provides a detailed overview of the case, the legal arguments, and the implications of the court’s decision.

Background of the Case

Swatch Group India Pvt Ltd, an importer and exclusive distributor of luxury Swiss watches, faced a show cause notice (SCN) from the DRI. The notice alleged mis-declaration of retail sale prices (RSP) to evade customs duties, leading to the detention and seizure of watches valued at over ₹45 crore. The DRI sought recovery of customs duty, interest, penalties, and confiscation of the seized goods under various sections of the Customs Act, 1962.

Key Legal Issues Raised

The petitioners challenged the SCN on two main grounds:
1. Jurisdiction of DRI Officers:
  - The petitioners argued that the DRI was not a “proper officer” under Section 2(34) of the Customs Act for assessment and re-assessment of goods, referencing the Supreme Court’s decision in Canon India Pvt Ltd v. Commissioner of Customs.
2. Limitation Period for Adjudication:
  - The petitioners contended that the SCN, issued in February 2018, was not adjudicated within the statutory 12-month period as required by Section 28(9) of the Customs Act, rendering any further adjudication time-barred.
Arguments by the Respondents

The government countered that:
- The SCN was issued before amendments to Section 28(9) (effective from 29 March 2018), and the earlier, more flexible timeline applied.
- Efforts were made to adjudicate the SCN, but delays occurred due to correspondence, hearings, and procedural requirements.
- The DRI’s status as a proper officer was under review by the Supreme Court, and legislative amendments had since clarified their authority.
The Court’s Analysis and Findings

1. Applicability of Limitation Period
- The court focused on whether the SCN had lapsed due to non-adjudication within the prescribed period under the unamended Section 28(9).
- The phrase “where it is possible to do so” in the old law allowed some flexibility, but not indefinite delay. The onus was on the department to prove it was genuinely not possible to adjudicate within the period.
- The court reviewed a detailed timeline of correspondence and hearings, noting a 17-month period of inaction by the department.
2. Departmental Lethargy vs. Genuine Impossibility
- The court held that mere exchange of letters and repeated adjournments did not justify the delay.
- No substantial reason was provided for not concluding hearings or determining duty within the statutory period.
- The court emphasized that statutory timelines are mandatory and cannot be ignored due to departmental indifference.
3. Effect of Subsequent Amendments
- Amendments to Section 28(9) and the introduction of Section 28(9A) (post-2018) did not apply retroactively to SCNs issued before 29 March 2018.
- The court clarified that only SCNs issued after the amendment could benefit from the extended timelines under the new law.
Judgment and Outcome

The Delhi High Court allowed the writ petition, holding that:
- The SCN issued to Swatch Group India had lapsed due to non-adjudication within the prescribed period under the unamended law.
- The department’s failure to act within the statutory timeline could not be excused without valid justification.
- The SCN could not be adjudicated, and the proceedings were quashed.
Implications of the Judgment
1. Strict Enforcement of Statutory Timelines:
  - The judgment reinforces that customs authorities must adhere to statutory deadlines for adjudication of SCNs, ensuring procedural fairness and certainty for taxpayers.
2. Departmental Accountability:
  - The court’s stance discourages administrative delays and holds authorities accountable for inaction.
3. Clarity on Applicability of Amendments:
  - The decision clarifies that amendments to procedural laws do not apply retroactively unless expressly stated.
4. Guidance for Future Cases:
  - The judgment serves as a precedent for similar disputes involving delayed adjudication of SCNs and the powers of DRI officers.
Conclusion

The Swatch Group India case is a landmark in customs jurisprudence, highlighting the importance of timely adjudication and the limits of departmental discretion. Importers and legal practitioners should take note of the court’s insistence on procedural discipline and the protection of taxpayer rights under the law.

Source: Delhi High Court

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May 23, 2026
Delhi High Court Dismisses Revenue’s Appeal Over Procedural Delay in Customs Valuation
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 19.05.2026

Delhi High Court Dismisses Revenue’s Appeal Over Procedural Delay in Customs Valuation

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Delhi High Court recently delivered a significant judgment in the case involving the Commissioner of Customs (Airport and General) and M/s. Bergen Engines India Pvt. Ltd., addressing key procedural and substantive issues in customs valuation and appellate practice.

Background of the Case

The dispute centered on the customs valuation of goods imported by Bergen Engines India Pvt. Ltd. from related foreign suppliers. The Adjudicating Authority initially examined whether the declared value of the imported goods was influenced by the relationship between the importer and the suppliers, as defined under Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

After a detailed review of the written submissions and supporting documents, the Authority concluded that the declared invoice value was not influenced by the relationship. As a result, the transaction value was accepted under Rule 3(3)(a) of the Valuation Rules, subject to standard checks and scrutiny.

Sequence of Appeals and Procedural Delays
1. First Appeal: The Revenue challenged the Adjudicating Authority’s order before the Commissioner of Customs (Appeals), but the appeal was rejected on 6 October 2017.
2. CESTAT Appeal: The Revenue then appealed to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 18 January 2018. However, the appeal was found defective, and the Registry issued defect notices on 6 February and 5 March 2018, asking the Revenue to rectify the issues.
3. Failure to Cure Defects: The Revenue did not address the defects, leading the Registry to return the appeal on 8 May 2018. Although there was some dispute about the receipt of earlier notices, it was undisputed that the final return letter was received by the Revenue.
4. Significant Delay: Despite receiving the returned appeal, the Revenue did not take prompt action. It filed a fresh appeal only on 10 February 2022—over four years later—seeking condonation of the delay.
Tribunal and High Court Findings
- CESTAT’s Decision: The Tribunal found the Revenue’s explanation for the delay insufficient. Most reasons cited were internal communication lapses and attempts to ascertain the appeal’s status. The Tribunal noted that the Deputy Commissioner of Customs (Review) had acknowledged, through verbal inquiries, that the appeal papers had been returned, yet no timely action was taken.
- High Court’s Ruling: The High Court upheld the Tribunal’s decision, stating that the order was well reasoned and that no substantial questions of law arose. The Court emphasized that procedural diligence is essential and that unexplained or unjustified delays cannot be condoned without sufficient cause.
Key Takeaways for Stakeholders
1. Importance of Timely Action: Government departments and litigants must act promptly when notified of procedural defects in appeals. Delays, especially those caused by internal miscommunication, are unlikely to be condoned by appellate bodies or courts.
2. Documentation and Communication: Proper record-keeping and prompt response to defect notices are critical in legal proceedings. Failure to do so can result in dismissal of appeals, regardless of the merits of the underlying case.
3. Customs Valuation Principles: The case reaffirms that the declared value of imported goods from related parties can be accepted if there is no evidence of influence due to the relationship, provided all documentation is in order.
Conclusion

The Bergen Engines case serves as a reminder of the importance of procedural compliance in customs and tax litigation. The High Court’s dismissal of the Revenue’s appeal underscores that legal remedies are contingent not only on substantive grounds but also on strict adherence to procedural requirements.

Source: Delhi High Court

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May 19, 2026
Delhi High Court Quashes Retrospective Restrictions on Export Incentive Scheme
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 11.05.2026

Delhi High Court Quashes Retrospective Restrictions on Export Incentive Scheme

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Delhi High Court recently delivered a significant judgment in the case of Indian Exporters Grievance Forum & Anr. vs. Union of India & Ors., addressing the legality of changes made to export incentive schemes through government circulars and notifications. This article provides a detailed overview of the case, its background, the legal arguments, and the court’s decision.

Background of the Case
1. Petitioners: The Indian Exporters Grievance Forum, a registered society representing professional exporting firms and recognized export houses, challenged certain government circulars and notifications.
2. Policy in Question: The dispute centered around the Target Plus Scheme (TPS), an export incentive scheme under the Foreign Trade Policy (FTP) effective from April 2004 to March 2006. TPS rewarded exporters achieving significant incremental growth in exports with duty credit entitlements.
3. Contested Changes: The government issued circulars and public notices after the scheme period, restricting the use of duty credit to only those imports that were “inputs” used in the manufacture of exported goods, rather than allowing a broader range of imports as originally permitted.
Key Provisions of the Target Plus Scheme
- Objective: Accelerate export growth by rewarding high-performing export houses.
- Entitlement: Duty credit based on incremental export growth, with specific percentage slabs.
- Imports Allowed: Initially, duty credit could be used for importing any inputs, capital goods, office equipment, and furniture, provided they were freely importable.
- Restrictions Introduced: Later circulars narrowed the scope, requiring a “broad nexus” between imported goods and exported products, and eventually restricting imports to only those used as inputs in the exported goods.
Legal Arguments

Petitioners’ Submissions
1. Retrospective Restriction: Petitioners argued that restricting import entitlements after exports had already occurred unfairly took away accrued benefits.
2. Procedural Impropriety: Changes to the scheme should only be made through formal notifications under Section 5 of the Foreign Trade (Development & Regulation) Act, not via circulars or forms.
3. Legitimate Expectation: Exporters planned their imports based on the original policy; sudden changes violated their legitimate expectations.
Respondents’ Submissions
1. Clarification of Policy: The government contended that defining “broad nexus” was necessary to prevent misuse, ensuring imported goods were relevant to exported products.
2. Policy Decision: Argued that the changes were policy decisions not subject to judicial review.
Court’s Analysis and Decision

Maintainability
- The court rejected the government’s objection to the petitioners’ locus standi, affirming their right to represent collective interests.
Scope of Judicial Review
- The court clarified it was not reviewing the policy itself, but the procedure used to change it.
Lawfulness of Procedure
1. FTP Language: The court found that para 3.7.6 of the FTP did not restrict imports to only those used as inputs in exported goods; its language was broad.
2. Power to Amend: Only the Central Government, not the DGFT or other authorities, could amend the policy via notification under Section 5 of the FTDR Act.
3. Retrospective Effect: The restrictive circulars and notices were issued after exports had taken place, unfairly negating accrued benefits.
4. Ultra Vires: The court held that the circulars and notices went beyond the FTP’s provisions and were ultra vires (beyond legal authority).
Final Orders
- The impugned circulars and notices were quashed.
- Duty entitlement for petitioners would be computed based on the original, broader interpretation of the scheme.
Implications for Exporters
- Policy Certainty: Exporters can rely on the announced policy without fear of retrospective changes through informal means.
- Legal Precedent: The judgment reinforces the requirement for formal amendments to trade policies, protecting exporters’ legitimate expectations.
Conclusion

This Delhi High Court judgment is a landmark in ensuring procedural fairness and legal certainty in India’s export incentive schemes. It underscores the importance of adhering to statutory procedures for policy changes and protects exporters from arbitrary, retrospective restrictions.

Connected Matter

CESTAT Chennai Overturns Duty Demand and Penalty on Godrej Consumer Products Ltd. in Target Plus Scheme Dispute

Source: Delhi High Court

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May 11, 2026
Delhi High Court Acquittal under Section 21(c) NDPS Act Due to Procedural Lapses and Evidentiary Deficiencies
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 08.05.2026

Delhi High Court Acquittal under Section 21(c) NDPS Act Due to Procedural Lapses and Evidentiary Deficiencies

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

This article examines a significant legal judgment from the Delhi High Court concerning the conviction and subsequent acquittal of Sunil Sharma under Section 21(c) of the Narcotic Drugs and Psychotropic Substances Act, 1985 (NDPS Act). The case highlights procedural complexities, evidentiary standards, and the importance of strict compliance in narcotics prosecutions.

Case Background
1. Incident & Arrest: On May 18, 2012, Sunil Sharma was intercepted at the Singhu Border, Delhi, allegedly found in possession of 1 kg of heroin while driving a Honda Civic. The Directorate of Revenue Intelligence (DRI) conducted the operation based on secret information.
2. Trial Proceedings: Sharma was charged under Section 21(c) of the NDPS Act, which deals with possession of commercial quantities of narcotic drugs. The trial court convicted him, sentencing him to 10 years of rigorous imprisonment and a fine of ₹1,00,000.
3. Appeal: Sharma appealed, claiming false implication, procedural lapses, and violations of mandatory legal provisions.
Key Legal Issues

1. Procedural Compliance under NDPS Act
- Section 52A: Mandates inventory, sampling, and certification by a Magistrate for seized narcotics. The court found that the inventory and sampling procedures were not strictly followed, with unexplained delays and missing documentation.
- Standing Order No. 1/89: Requires immediate deposit of samples and seals in the malkhana (storage), which was not done. The seal remained with the raiding team, raising concerns about possible tampering.
- Section 50: Ensures the accused’s right to be searched before a Magistrate or Gazetted Officer. While the accused opted for a Gazetted Officer, the search was conducted at the DRI office, not at the place of seizure or before a Magistrate.
2. Evidentiary Concerns
- Confession Statement: The trial court relied on Sharma’s confession under Section 67 of the NDPS Act. However, the Supreme Court in Tofan Singh v. State of Tamil Nadu ruled such confessions inadmissible unless made before a Magistrate.
- Chain of Custody: The court noted discrepancies in the chain of custody, including unclear handling of samples and the main contraband, and inconsistencies in the recorded quantity.
3. Burden of Proof & Benefit of Doubt
- The NDPS Act prescribes stringent punishments, requiring a higher degree of proof. The court emphasized that strong suspicion cannot substitute for proof beyond reasonable doubt.
- Due to procedural lapses and unsatisfactory evidence, the court granted Sharma the benefit of doubt and acquitted him.
Court’s Findings & Rationale
1. Procedural Lapses: The court found major anomalies in inventory preparation, sample handling, and chain of custody, violating mandatory provisions and standing orders.
2. Evidentiary Gaps: The absence of proper documentation and unexplained delays undermined the prosecution’s case.
3. Legal Precedents: The court cited Supreme Court judgments, including Bharat Aambale v. State of Chhattisgarh and Tofan Singh v. State of Tamil Nadu, reinforcing the need for strict compliance and heightened scrutiny in NDPS cases.
4. Acquittal: The conviction was set aside, and Sharma was acquitted, with the court directing authorities to ensure strict compliance in future cases to prevent miscarriage of justice.
Lessons & Recommendations
- Strict Compliance: Law enforcement must rigorously follow NDPS Act procedures, especially regarding inventory, sampling, and chain of custody.
- Documentation: Proper and timely documentation is crucial for maintaining evidentiary integrity.
- Training & Oversight: The judgment recommends enhanced training and oversight for officers handling narcotics cases.
Conclusion

This case underscores the critical importance of procedural safeguards in narcotics prosecutions. Even in cases involving commercial quantities of dangerous drugs, lapses in compliance can result in acquittal. The judgment serves as a reminder to law enforcement and judicial authorities to uphold the highest standards of evidence and procedure under the NDPS Act.

Source: Delhi High Court

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May 8, 2026
Delhi HC Upholds Statutory Exception to Cross-Examination: Section 9D Validated in Excise Adjudication Framework
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 05.05.2026

Delhi HC Upholds Statutory Exception to Cross-Examination: Section 9D Validated in Excise Adjudication Framework

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

Section 9-D of the Central Excise and Salt Act, 1944, has been at the center of a significant legal dispute involving major cigarette manufacturers and the Central Excise authorities. The Delhi High Court case, involving J & K Cigarettes Ltd., GTC Industries Ltd., and others, examined the constitutional validity and procedural fairness of Section 9-D, which governs the admissibility of statements in excise proceedings.

Background of the Case

Multiple show-cause notices were issued to Kanpur Cigarette Ltd. and GTC Industries, alleging duty evasion through deceptive pricing and false declarations. The notices relied heavily on statements from wholesale dealers and other witnesses. The petitioners requested cross-examination of these witnesses, a request initially denied by the authorities, leading to a series of writ petitions and appeals.

Key Legal Issues
1. Constitutional Validity of Section 9-D: Petitioners challenged the extension of Section 9-D to quasi-judicial proceedings, arguing it deprived them of the right to cross-examine witnesses whose statements were used against them.
2. Principles of Natural Justice: The right to cross-examination is a fundamental aspect of natural justice, especially in proceedings that may result in civil or penal consequences.
3. Safeguards and Guidelines: Petitioners argued Section 9-D lacked sufficient safeguards, allowing excise officers unfettered discretion to admit statements without cross-examination.
Section 9-D Explained

Section 9-D allows statements made before a gazetted Central Excise Officer to be admitted as evidence under certain circumstances:
- The witness is dead, cannot be found, is incapable of giving evidence, is kept out of the way by the adverse party, or cannot be produced without unreasonable delay or expense.
- These provisions apply both to court proceedings and other proceedings under the Act.
Arguments Presented

Petitioners
- Right to Cross-Examination: Essential for fairness; denial violates natural justice.
- Lack of Safeguards: No requirement for prior intimation, opportunity to respond, or recording of reasons.
- Potential for Abuse: Uncontrolled discretion could lead to arbitrary decisions.
Respondents (Central Excise Authorities)
- Inherent Safeguards: Section 9-D mirrors Section 32 of the Indian Evidence Act, which has been upheld as constitutional.
- Exceptional Circumstances: Only applies when witness production is genuinely impossible or impractical.
- Judicial Review: Decisions can be challenged through statutory appeals.
Court’s Findings
1. Section 9-D Is Not Unconstitutional: The Court found that the provision is not arbitrary, as it is limited to specific, exceptional circumstances and requires objective formation of opinion based on material evidence.
2. Safeguards Are Inherent: The requirement to form an opinion, record reasons, and provide an opportunity to the affected party are implicit in the exercise of quasi-judicial powers.
3. Judicial Review Available: Aggrieved parties can challenge the invocation of Section 9-D through appeals, ensuring oversight.
Practical Implications
- Cross-Examination: While the right is valuable, it can be restricted under Section 9-D if justified by circumstances.
- Procedural Fairness: Authorities must base their decisions on sufficient material and provide affected parties a chance to respond.
- Appeal Rights: Parties retain the right to challenge decisions in higher forums.
Conclusion

The Delhi High Court upheld the constitutional validity of Section 9-D, emphasizing that its application is limited to exceptional situations and is subject to inherent procedural safeguards. The ruling clarifies the balance between efficient adjudication and the rights of parties to a fair hearing, reinforcing the importance of reasoned decisions and opportunities for judicial review.

Connected Matter

CESTAT Mumbai Sets Aside Customs Duty Demands and Penalties in Imports of Second-Hand Machinery

Source: Delhi High Court

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May 5, 2026
Delhi High Court Sets Aside Rejection of Refund Claims
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 20.04.2026

Delhi High Court Sets Aside Rejection of Refund Claims

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Delhi High Court’s decision in the case of M/s Kanika Exports v. Union of India & Ors. (pronounced on April 18, 2026) addresses a critical issue for exporters and GST-registered businesses: What is the correct period of limitation for filing GST refund applications, especially after statutory amendments? This article provides a detailed, accessible analysis of the judgment, its background, legal reasoning, and implications for taxpayers.

Background: The Dispute

Two petitioners, M/s Kanika Exports (a garment exporter) and M/s Malik Seasoning and Spices Pvt. Ltd. (a manufacturer/exporter), filed refund applications for unutilized Input Tax Credit (ITC) under the GST regime. Their claims were rejected by the GST authorities as being time-barred, leading to appeals and, ultimately, writ petitions before the Delhi High Court.

Key Facts:
- Kanika Exports exported goods in FY 2017-18 and filed a refund application on March 29, 2020, for ITC accumulated from July 2017 to March 2018.
- Malik Seasoning and Spices filed refund applications in March 2021 for ITC accumulated due to inverted duty structure for periods July 2017–March 2018 and April 2018–March 2019.
- Both refund claims were rejected as time-barred by the Adjudicating and Appellate Authorities.
The Legal Issue: Which Limitation Period Applies?

The core question was: From which date should the two-year limitation period for filing a GST refund application be calculated?
- The authorities applied the date of export (Explanation 2(a) to Section 54 of the CGST Act) or the amended definition of ‘relevant date’ (Explanation 2(e)), which, after February 1, 2019, refers to the due date for furnishing the return under Section 39.
- The petitioners argued that the unamended Explanation 2(e) (which set the relevant date as the end of the financial year in which the refund claim arises) should apply for periods before the amendment.
The Court’s Analysis

1. Statutory Framework
- Section 54(1) of the CGST Act: Refund applications must be filed within two years from the ‘relevant date.’
- Explanation 2(a): For exports, the relevant date is the date the goods leave India.
- Explanation 2(e) (Unamended): For refund of unutilized ITC, the relevant date is the end of the financial year in which the claim arises.
- Explanation 2(e) (Amended from 1 Feb 2019): For refund of unutilized ITC due to inverted duty structure, the relevant date is the due date for furnishing the return under Section 39.
2. Key Judicial Findings
- The Court held that the applicable limitation provision is the one in force at the time the relevant transaction (export or accrual of ITC) occurred, not when the refund application was filed.
- The amendment to Explanation 2(e) is prospective and cannot curtail vested rights for periods prior to its enactment.
- For both Kanika Exports and Malik Seasoning, the unamended Explanation 2(e) applied, meaning the two-year period started from the end of the relevant financial year.
3. Why This Matters
- If the authorities’ view were accepted, exporters could lose their right to claim refunds simply due to a change in law after their transactions, which the Court found unfair and contrary to legislative intent.
- The Court cited supporting judgments from the Bombay, Jammu & Kashmir, and Madras High Courts, reinforcing the principle that limitation amendments are generally prospective unless expressly stated otherwise.
Practical Example

Suppose an exporter made zero-rated supplies in FY 2017-18. Under the unamended law, the two-year period to file a refund application would run from March 31, 2018 (end of the financial year), expiring on March 31, 2020. If the exporter filed the application on March 29, 2020, it would be within time, even if the application was processed after the amendment came into force.

The Court’s Decision
- The High Court set aside the orders rejecting the refund claims as time-barred.
- The GST Department was directed to process the refund applications on their merits within three months.
Implications for Taxpayers
- Refund claims for periods before February 1, 2019, should be assessed using the unamended Explanation 2(e): the end of the financial year as the relevant date.
- Amendments to limitation provisions do not operate retrospectively unless expressly stated.
- Taxpayers should carefully check which version of the law applies to their refund claims, especially for older periods.
Conclusion

The Delhi High Court’s judgment in the Kanika Exports case provides much-needed clarity on the limitation period for GST refund applications. It protects the vested rights of taxpayers and ensures that statutory amendments do not unfairly deprive them of legitimate claims. Exporters and businesses should review their refund applications in light of this judgment and, if wrongly rejected as time-barred, consider seeking redress.

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Source: Delhi High Court

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April 20, 2026
Delhi High Court Protects MTNL from Time-Barred and Unsustainable Service Tax Demand
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 17.04.2026

Delhi High Court Protects MTNL from Time-Barred and Unsustainable Service Tax Demand

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The High Court of Delhi delivered a significant judgment in the case of Mahanagar Telephone Nigam Ltd. (MTNL) versus Union of India and others. This case revolved around the legality of a show cause notice issued to MTNL, demanding service tax on compensation received for surrendering its 800 MHz CDMA spectrum. The judgment addressed critical issues surrounding service tax liability, jurisdiction, and the interpretation of declared services under the Finance Act, 1994.

Background of the Case

MTNL, a Government of India enterprise, provides telecom services in Delhi and Mumbai. In 2014, the Department of Telecommunications (DoT) informed MTNL that the Telecom Regulatory Authority of India (TRAI) had recommended the withdrawal of MTNL’s spectrum holding in the 800 MHz band. MTNL responded by stating that the spectrum was allocated until October 2017 and requested compensation for the premature surrender of the spectrum. The Union Cabinet approved financial support of ₹458.04 crores to MTNL for surrendering the spectrum, which was paid in two installments in 2016.

In May 2018, the Additional Director General, Directorate General of GST Intelligence, issued a show cause notice to MTNL, demanding service tax of ₹56.61 crores (inclusive of cess) on the compensation received for surrendering the spectrum. The notice alleged that the surrender of spectrum constituted a “declared service” under Section 66E(e) of the Finance Act, 1994, and was therefore taxable.

Key Issues Raised by MTNL

MTNL challenged the show cause notice on four main grounds:
1. Extended Period of Limitation: MTNL argued that the notice was issued beyond the stipulated period under Section 73(1) of the Finance Act, 1994. The extended period of limitation was not applicable as MTNL had not willfully suppressed any material facts or made any misstatements to evade service tax.
2. Mandatory Pre-Consultation: MTNL contended that the notice was issued without mandatory pre-consultation, which is a procedural requirement.
3. Taxability of Spectrum Surrender Compensation: MTNL claimed that the compensation received for surrendering the spectrum was not a taxable service under Section 66E(e) of the Finance Act, 1994. It argued that the insertion of Clause (j) in Section 66E by the Finance Act, 2016, which specifically included the assignment of the right to use radio frequency spectrum as a declared service, indicated that such transactions were not taxable prior to 2016.
4. Jurisdiction: MTNL challenged the jurisdiction of the Additional Director General in issuing the show cause notice and its assignment for adjudication to the concerned officer.
Court’s Analysis and Judgment

The High Court examined the case in detail and addressed the following key points:

1. Extended Period of Limitation

The court found that the show cause notice was issued beyond the one-year limitation period stipulated under Section 73(1) of the Finance Act, 1994. The extended period of five years is applicable only in cases involving fraud, collusion, willful misstatement, or suppression of facts with the intent to evade service tax. The court held that there was no evidence to suggest that MTNL had deliberately suppressed material facts or acted with the intent to evade tax. MTNL had declared the compensation as income in its books of accounts, which were publicly available, and its officials genuinely believed that the compensation was not taxable.

2. Taxability of Spectrum Surrender Compensation

The court analyzed the definition of “service” under Section 65B(44) of the Finance Act, 1994, which includes declared services. The respondents argued that the surrender of spectrum constituted a declared service under Section 66E(e), which covers “agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act.” However, the court rejected this argument, stating that the surrender of spectrum did not constitute forbearance or tolerance of an act. Instead, it was a relinquishment of an asset allocated by the government.

The court also noted that Clause (j) of Section 66E, introduced by the Finance Act, 2016, specifically included the assignment of the right to use radio frequency spectrum as a declared service. This amendment indicated that such transactions were not considered taxable under Section 66E(e) prior to 2016. Since MTNL received the compensation before the introduction of Clause (j), the surrender of spectrum was not chargeable to service tax.

3. Jurisdiction and Procedural Issues

While the court did not delve deeply into the jurisdictional and procedural issues raised by MTNL, it noted that the show cause notice was invalid due to being issued beyond the limitation period and the lack of taxability of the compensation received.

Conclusion

The High Court of Delhi set aside the show cause notice issued to MTNL, ruling that the demand for service tax was invalid. The court’s decision was based on the following conclusions:
- The extended period of limitation under Section 73(1) of the Finance Act, 1994, was not applicable as there was no evidence of willful suppression of facts or intent to evade tax.
- The compensation received by MTNL for surrendering the spectrum did not constitute a taxable service under Section 66E(e) of the Finance Act, 1994.
- The introduction of Clause (j) in Section 66E by the Finance Act, 2016, confirmed that such transactions were not taxable prior to its enactment.
This judgment is a landmark decision that clarifies the scope of declared services under the Finance Act, 1994, and sets a precedent for similar cases involving service tax liability on spectrum-related transactions. It underscores the importance of adhering to statutory limitations and the need for clear legislative intent in defining taxable services.

Connected Matter

CESTAT Delhi- the extended period of limitation under Section 28(4) of the Customs Act cannot be invoked

Source: Delhi High Court

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April 17, 2026
Customs Seizure Under Section 110 of the Customs Act, 1962
Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation

Date: 14.04.2026

Customs Seizure Under Section 110 of the Customs Act, 1962

This Short Article has been prepared & written by Advocate Ravi Shekhar Jha-Delhi High Court, New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com .

The Customs Act, 1962, governs the procedures for the seizure and provisional release of goods suspected to be liable for confiscation. This article delves into the legal framework, case summaries, and the importance of recording reasons to believe during the seizure process.

Legal Framework: Section 110 of the Customs Act, 1962

Section 110 of the Customs Act, 1962, empowers customs officers to seize goods if they have “reason to believe” that the goods are liable for confiscation. The provision also includes:
- Sub-section (1): Allows the proper officer to seize goods if they have reason to believe the goods are liable for confiscation.
- Proviso to Sub-section (1): If it is not practicable to seize the goods, the officer may serve an order on the owner, prohibiting them from removing, parting with, or dealing with the goods without prior permission.
- Sub-section (2): Specifies that if no notice is issued under Section 124(a) within six months of seizure, the goods must be returned to the person from whom they were seized. This period can be extended by the Principal Commissioner or Commissioner of Customs for up to six additional months, provided reasons are recorded in writing.
Importance of “Reasons to Believe” in Seizure Cases

The phrase “reasons to believe” is a critical element in the seizure process under Section 110. It requires the proper officer to record valid reasons before seizing goods. This ensures transparency and accountability in the exercise of seizure powers.

Key Guidelines from Instruction No. 01/2017-Customs

The Central Board of Excise and Customs issued Instruction No. 01/2017-Customs on February 8, 2017, emphasizing:
1. Mandatory Recording of Reasons: Proper officers must pass an appropriate order (seizure memo/order) clearly mentioning the reasons to believe that the goods are liable for confiscation.
2. Panchnama Cannot Replace Seizure Memo: The Delhi High Court ruled that a panchnama, being a statement by witnesses, cannot be considered an order under Section 110.
3. Timely Issuance of Show Cause Notices: Even if goods are provisionally released, the stipulated time period for issuing show cause notices under Section 110(2) must be strictly adhered to.
Customs Instruction

Case Summaries

1. Worldline Tradex Private Limited v. Commissioner of Customs (Import) & Ors.
- Court: Delhi High Court
- Case No.: W.P.(C) 5939/2016
- Summary:
  - The petitioner sought the provisional release of imported goods and a copy of the panchnama.
  - The court held that the panchnama cannot be considered an order under Section 110 of the Customs Act, 1962.
  - The court emphasized that the proper officer must record reasons to believe before seizing goods.
Order Copy

2. Krishna Kali Traders v. Union of India
- Court: Patna High Court
- Case No.: CWJC No. 7682 of 2020
- Summary:
  - The petitioners challenged the seizure of 21,098 kg of betel nuts and a truck.
  - The court ruled that the seizure memo did not comply with Section 110 as it lacked recorded reasons to believe.
  - The court quashed the seizure memo but allowed the customs authorities to continue their investigation.
Order Copy

3. Ashoke Das v. Union of India
- Court: Patna High Court
- Case No.: CWJC No. 4918 of 2021
- Summary:
  - The petitioners challenged the seizure of 19,188 kg of betel nuts and a truck.
  - The court found that the seizure memo did not include valid reasons to believe, as required under Section 110.
  - The court quashed the seizure memo but refrained from interfering with the show cause notice, allowing the investigation to proceed.
Order Copy

4. Sheo Nath Singh v. Appellate Assistant Commissioner of Income Tax, Calcutta
- Court Name: Supreme Court
- Diary No: 379/1967
- Summary:
- The Supreme Court ruled that the Income-tax Officer’s reasons for issuing notices under Section 34(1-A) of the Income-tax Act, 1922, were insufficient and self-contradictory, failing to meet the statutory requirements.
- The court clarified that “reason to believe” must be based on reasonable grounds and supported by relevant material, not mere suspicion or rumor, and that the Income-tax Officer would act without jurisdiction if these conditions were not met.
Order Copy

Reasons to Believe and Panchnama

The courts have consistently emphasized that the recording of reasons to believe is a prerequisite for a valid seizure under Section 110. Merely citing sections of the Customs Act without providing material information or evidence does not fulfill this requirement. Additionally, panchnama documents, which are statements by witnesses, cannot substitute for a seizure memo.

Key Observations from Case Law:
- Worldline Tradex Case: The panchnama is not an order under Section 110.
- Krishna Kali Traders Case: Panchnama cannot be read into the seizure memo.
- Ashoke Das Case: The absence of recorded reasons in the seizure memo renders it invalid.
Conclusion

The legal framework under Section 110 of the Customs Act, 1962, and subsequent judicial interpretations highlight the importance of adhering to procedural requirements during the seizure of goods. Proper officers must ensure that reasons to believe are clearly recorded in the seizure memo, and panchnama documents should not be used as a substitute for this requirement. Failure to comply with these guidelines can lead to the quashing of seizure memos, as demonstrated in the cases discussed above.

Source: CBIC, Delhi High Court, Patna High Court, Supreme Court

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April 14, 2026
Delhi High Court Ruled on Interest for Delayed Customs Duty Refunds
ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 31.03.2026

Delhi High Court Ruled on Interest for Delayed Customs Duty Refunds

Adv Ravi Shekhar Jha

This Article has been written by Advocate Ravi Shekhar Jha-BALLB & LLM (Constitutional Law) based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.

In a landmark judgment delivered on March 30, 2026, the Delhi High Court addressed a series of writ petitions filed by multiple companies seeking interest on delayed refunds of excess customs duty paid under protest. The case revolved around the failure of the Customs Department to update its Electronic Data Interchange (EDI) system, which prevented the Petitioners from availing concessional rates of duty under a government notification.

The judgment, delivered by Justice, provided clarity on the applicability of interest on refunds under the Customs Act, 1962, and set a precedent for similar cases in the future.

Background of the Case 

The Petitioners, including Lava International Ltd., Jaina Marketing & Associates, Jaina Mobile India Pvt. Ltd., Intex Technologies (India) Ltd., and U.T. Electronics Pvt. Ltd., had imported mobile phones, tablets, and related parts during various periods between 2014 and 2015. They paid additional customs duty, known as Countervailing Duty (CVD), at rates of 6% or 12.5%, instead of the concessional rate of 1% that they were entitled to under Notification No. 12/2012-CE.

The Petitioners argued that the Customs Department’s EDI system did not allow them to claim the concessional rate, forcing them to pay higher CVD under protest. They later sought refunds of the excess duty paid, along with interest, citing the Supreme Court’s decision in SRF Ltd. v. Commissioner of Customs, Chennai (2015), which clarified that the Petitioners were eligible for the concessional rate.

Key Legal Issues

The case revolved around two primary legal questions:
1. Were the Petitioners entitled to interest on the refunds of excess customs duty paid under protest? 
2. If so, from what date should the interest be calculated? 
The Court examined the following legal provisions and precedents:
- Section 27A of the Customs Act, 1962: Provides for interest on delayed refunds if the refund is not issued within three months from the date of receipt of the refund application.
- Section 27(1A) of the Customs Act, 1962: Requires refund applications to be accompanied by documentary evidence proving that the duty was paid and not passed on to another party.
- ITC Limited v. Commissioner of Central Excise (2019): Established that refund applications cannot be entertained unless the original assessment order (self-assessment or otherwise) is reassessed.
Arguments Presented

Petitioners’ Arguments 
- The excess customs duty was paid under protest due to the failure of the Customs Department to update its EDI system.
- The Petitioners were entitled to concessional rates of duty under Notification No. 12/2012-CE, as clarified by the Supreme Court in SRF Ltd. v. Commissioner of Customs, Chennai (2015).
- The Customs Department unduly retained the Petitioners’ money for several years, and interest should be paid as compensation for the delay.
Respondents’ Arguments
- Refunds were processed within the statutory three-month period after the refund applications were filed, so no interest was payable.
- The Petitioners failed to challenge the original self-assessment orders within the prescribed time, and refunds were granted only after re-assessment.
- A protest letter cannot be treated as a formal application for refund or re-assessment.
Court’s Findings

The Court divided its judgment into two parts, addressing the claims of Lava International Ltd. separately from the other Petitioners.

Lava International Ltd. (W.P .(C) 10977/2017 & W.P. (C) 11319/2017) 
- The Court found that the refunds were processed within the statutory three-month period after the refund applications were filed, as stipulated under Section 27A of the Customs Act, 1962.
- The Court noted that there was no undue delay on the part of the Customs Department in re-assessing or processing the applications once they were filed.
- Outcome: The Court ruled against Lava International Ltd., denying their claim for interest on the refunds.
Other Petitioners (W.P. (C) 1225/2024, W.P. (C) 1291/2024, W.P. (C) 1297/2024, & W.P. (C) 1325/2024) 
- The Court observed that there was a significant delay in re-assessment and refund processing by the Customs Department, with some cases taking over seven years from the date of the first re-assessment application.
- The Court held that the Petitioners were entitled to interest on the refund amounts for the period between the filing of the first re-assessment application and the date of actual refunds.
- Outcome: The Court ruled in favor of the Petitioners and directed the Customs Department to compute and pay interest at statutory rates within three months.
Key Legal Precedents Cited 

The Court relied on several landmark judgments to arrive at its decision:
- ITC Limited v. Commissioner of Central Excise (2019): Established the necessity of re-assessment before filing refund applications.
- SRF Ltd. v. Commissioner of Customs, Chennai (2015): Clarified the eligibility for concessional rates of customs duty.
- Union of India v. Tata Chemicals Ltd. (2014): Held that interest on refunds is a matter of right and serves as compensation for delayed payments.
- Indure Ltd. v. Commercial Tax Officer & Ors. (2010): Established that interest is payable on refunds of taxes paid under protest.
- Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) (2004): Highlighted the importance of challenging assessment orders before seeking refunds.
Conclusion

The Delhi High Court’s judgment in this case underscores the importance of timely re-assessment and refund processing by the Customs Department. While Lava International Ltd. was denied interest due to the timely processing of its refunds, the other Petitioners were awarded interest for the significant delays in their cases. This judgment serves as a reminder to both taxpayers and tax authorities about the importance of adhering to statutory timelines and the principle of restitution in cases of delayed refunds. It also highlights the evolving jurisprudence on the interplay between self-assessment, re-assessment, and refund claims under the Customs Act, 1962.

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Source: Delhi High Court

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March 31, 2026