Aadrikaa Legal Services (ALS) – IDT Tax I Arbitration I Litigation
Date: 08.04.2026
Supreme Court Holds Revisional Powers Must Be Exercised Within Reasonable Time
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.comor on his Mobile +91-9999005379.
On October 11, 2007, the Supreme Court of India delivered a significant judgment in the case of State of Punjab & Ors v. Bhatinda District Coop. Milk Producers Union Ltd.. This case revolved around the interpretation of the Punjab General Sales Tax Act, particularly concerning the reasonable period for exercising revisional powers under Section 21(1) of the Act. Below, we delve into the details of the case, the legal arguments presented, and the implications of the judgment.
Background of the Case
The respondent in this case, Bhatinda District Cooperative Milk Producers Union Ltd., is a federation of milk unions registered under the Punjab Cooperative Societies Act, 1948. It is also a registered dealer under the Punjab General Sales Tax Act and operates milk plants under the Punjab State Cooperative Milk Producers Federation Limited, Chandigarh.
The Punjab General Sales Tax Act mandates the levy of purchase tax on milk when purchased for use in the manufacture of goods other than tax-free goods. The respondent had filed quarterly returns for the financial year ending March 31, 2000, and the assessment proceedings were completed on March 20, 2001.
However, on September 4, 2006, the Revisional Authority issued a notice to the respondent, seeking to revise the assessment order from 2001. The respondent challenged this notice in the Punjab and Haryana High Court, arguing that the notice was time-barred and lacked justification for the delay in exercising revisional powers.
Legal Provisions in Question
The case primarily revolved around the interpretation of Sections 11 and 21 of the Punjab General Sales Tax Act:
Section 11: This section prescribes a three-year limitation period for completing tax assessments from the last date for filing returns. Sub-section (6) provides a five-year limitation period for assessing tax liabilities in cases where a dealer has failed to apply for registration.
Section 21: This section grants the Commissioner the power to revise any proceedings or orders made by subordinate authorities. However, it does not explicitly prescribe a time limit for exercising revisional powers.
Key Issues in the Case
The primary question before the Supreme Court was: What constitutes a reasonable period for reopening an order of assessment under the Punjab General Sales Tax Act?
The Revisional Authority issued the notice more than five years after the original assessment order was passed. The respondent argued that this delay was unreasonable and violated the principles of natural justice. The High Court had ruled in favor of the respondent, stating that the notice was unsustainable due to the lack of a reasonable time frame for exercising revisional jurisdiction.
Supreme Court’s Observations and Judgment
The Supreme Court upheld the High Court’s decision, emphasizing the following points:
Reasonable Period for Revisional Powers:
Although Section 21 does not specify a time limit for exercising revisional powers, the Court held that such powers must be exercised within a reasonable period.
The Court determined that a reasonable period for exercising revisional jurisdiction under the Act should generally be three years, and in any case, should not exceed five years.
Statutory Scheme and Precedents:
The Court referred to the statutory scheme of the Punjab General Sales Tax Act, which prescribes a maximum limitation period of five years under Section 11(6).
It also cited precedents, including The State of Orissa v. Debaki Debi & Ors. and S.B. Gurbaksh Singh v. Union of India & Ors., which emphasized the importance of exercising revisional powers within a reasonable time.
Jurisdictional Question:
The Court noted that the question of limitation is a jurisdictional issue. Since the Revisional Authority is a creature of statute, it cannot independently determine what constitutes a reasonable period for exercising its powers.
The High Court was justified in intervening, as the Revisional Authority had failed to provide any reasons for the delay in issuing the notice.
Judicial Review:
The Supreme Court acknowledged that while writ courts generally do not entertain challenges to show-cause notices, this case was an exception due to the jurisdictional question involved.
Implications of the Judgment
This judgment has significant implications for the exercise of revisional powers under the Punjab General Sales Tax Act and similar statutes:
Clarity on Reasonable Period:
The judgment establishes that revisional powers must be exercised within a reasonable period, which is generally three years and should not exceed five years.
Accountability of Revisional Authorities:
Revisional authorities must provide valid reasons for delays in exercising their powers. Failure to do so may render their actions legally unsustainable.
Judicial Oversight:
The judgment reinforces the role of High Courts in ensuring that statutory authorities act within their jurisdiction and adhere to principles of natural justice.
Conclusion
The Supreme Court’s judgment in the Bhatinda District Coop. Milk Producers Union Ltd. case serves as a landmark decision in clarifying the scope and limitations of revisional powers under the Punjab General Sales Tax Act. It underscores the importance of adhering to reasonable time frames and the need for statutory authorities to act within their jurisdiction. This case is a reminder of the judiciary’s role in upholding the rule of law and protecting the rights of individuals and organizations against arbitrary actions by authorities.
Connected Matter – CESTAT Chandigarh Sets Aside Time-Barred Provisional Assessment and Demand Under Section 28
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 22.01.2026
Supreme Court Clarifies Legal Validity of Government Notifications
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.comor on his Mobile +91-9999005379.
On January 21, 2026, the Supreme Court of India delivered a landmark judgment in the case of Viraj Impex Pvt. Ltd. vs. Union of India & Anr. (2026 INSC 80), addressing a critical issue regarding the interpretation of the term “date of this Notification” in the context of a government-imposed Minimum Import Price (MIP) on certain steel products. This judgment has significant implications for importers, exporters, and policymakers, as it clarifies the enforceability of notifications under the Foreign Trade (Development and Regulation) Act, 1992.
Background of the Case
The appellants, private limited companies engaged in the import and trading of steel products, challenged a Notification issued by the Directorate General of Foreign Trade (DGFT) on February 5, 2016. The Notification introduced a Minimum Import Price (MIP) for specified steel products under Chapter 72 of the Indian Trade Clarification (Harmonized System), 2012. While the Notification was uploaded on the DGFT website on February 5, 2016, it was officially published in the Official Gazette on February 11, 2016.
The appellants had entered into firm sale contracts with exporters from China and South Korea between January 29, 2016, and February 4, 2016, and opened irrevocable Letters of Credit (LCs) on February 5, 2016. Anticipating restrictions, they applied for registration of their LCs under transitional protection provided by paragraph 1.05(b) of the Foreign Trade Policy (FTP) on February 8, 2016.
The appellants argued that the Notification, published in the Official Gazette on February 11, 2016, could not be applied retroactively to imports covered by LCs opened before its publication. They sought to quash the Notification or, alternatively, a declaration that the Notification did not apply to their LCs.
High Court Judgment
The High Court of Delhi dismissed the appellants’ writ petitions on December 21, 2018. While the High Court acknowledged that the Notification became effective on February 11, 2016, it held that the uploading of the Notification on February 5, 2016, constituted sufficient notice to bind importers whose LCs were not opened before that date. The High Court also ruled that the Notification was not an act of delegated legislation.
Supreme Court’s Analysis
The Supreme Court examined the central issue: whether the term “date of this Notification” in paragraph 2 of the Notification referred to February 5, 2016 (the date of uploading) or February 11, 2016 (the date of publication in the Official Gazette). The Court’s analysis focused on the statutory framework and the legal principles governing the enforceability of delegated legislation.
Key Points from the Judgment:
Publication in the Official Gazette is Mandatory: The Court emphasized that delegated legislation, unlike parliamentary enactments, is framed without open legislative debate. Therefore, publication in the Official Gazette is essential to ensure accessibility, notice, accountability, and legal enforceability. The Notification itself acknowledged its incompleteness by stating it was “to be published in the Gazette of India.”
Legal Consequences of Publication: The Court held that a Notification acquires the force of law only upon its publication in the Official Gazette. Until such publication, the Notification remains an intention and does not impose legal obligations or curtail rights.
Interpretation of “Date of Notification”: The Court ruled that the expression “date of this Notification” in paragraph 2 of the Notification must be construed as the date of its publication in the Official Gazette, i.e., February 11, 2016.
Relevance of FTP Paragraph 1.05(b): The Court clarified that paragraph 1.05(b) of the FTP, which provides transitional protection for imports under LCs established before the imposition of restrictions, is integral to paragraph 2 of the Notification. The appellants, having opened their LCs before February 11, 2016, were entitled to the benefit of this transitional provision.
Rule of Law and Commercial Confidence: The Court underscored that imposing trade restrictions based on an unpublished Notification would undermine commercial confidence and violate the Rule of Law. Transparency and predictability are essential in regulating foreign trade.
Conclusion
The Supreme Court’s judgment in Viraj Impex Pvt. Ltd. vs. Union of India & Anr. sets a significant precedent in the interpretation of delegated legislation under the Foreign Trade (Development and Regulation) Act, 1992. By holding that a Notification becomes enforceable only upon its publication in the Official Gazette, the Court reaffirmed the importance of transparency, legal certainty, and adherence to statutory requirements in the exercise of delegated legislative power.
This decision is a victory for importers and exporters, as it ensures that trade restrictions cannot be imposed retroactively based on unpublished Notifications. It also serves as a reminder to policymakers and regulatory authorities to strictly comply with statutory publication requirements to uphold the principles of the Rule of Law and protect commercial interests.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 06.01.2026
Supreme Court Invalidates Retrospective Customs Duty on SEZ-to-DTA Electricity Transfers
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.
On January 5, 2026, the Supreme Court of India delivered a significant judgment in the case of Adani Power Ltd. & Anr. vs. Union of India & Ors. (Civil Appeal No. 22 of 2026), addressing the legality of customs duty imposed on electrical energy generated in Special Economic Zones (SEZs) and supplied to the Domestic Tariff Area (DTA). This decision marks the culmination of a decade-long legal battle and has far-reaching implications for taxation, judicial precedent, and the rule of law.
Background of the Case
Adani Power Ltd., a co-developer of a coal-based thermal power plant located in the Mundra SEZ in Gujarat, challenged the imposition of customs duty on electrical energy supplied from its SEZ unit to the DTA. Under Section 30 of the Special Economic Zones Act, 2005 (SEZ Act), goods removed from an SEZ to the DTA are chargeable to customs duties “as if such goods had been imported into India.” However, prior to 2009, electrical energy did not attract customs duty on import, maintaining fiscal neutrality for electricity supplied from SEZs to the DTA.
In 2010, the Union Government introduced Notification No. 25/2010-Cus., which imposed a 16% ad valorem customs duty on electrical energy cleared from SEZs to the DTA, with retrospective effect from June 26, 2009. This notification was challenged by Adani Power Ltd., and in 2015, the Gujarat High Court declared the levy unconstitutional, citing the absence of a lawful charging event, misuse of exemption powers, violation of Article 265 of the Constitution, and arbitrary double taxation.
The Union Government subsequently issued new notifications (Nos. 91/2010-Cus. and 26/2012-Cus.) that imposed reduced per-unit customs duties of ten paise and three paise, respectively, on SEZ-to-DTA electricity clearances. Adani Power Ltd. filed another writ petition in 2016, seeking a refund of the amounts paid under protest for the period between September 16, 2010, and February 15, 2016, arguing that the 2015 judgment should apply to the subsequent period as well.
Key Issues Addressed by the Supreme Court
The Supreme Court identified five critical issues for determination:
Scope and Effect of the 2015 Judgment: The Court held that the 2015 Gujarat High Court judgment was not limited to a single notification or a specific time frame. Instead, it was a general declaration of law that customs duty could not be levied on SEZ-to-DTA electricity clearances under the statutory framework existing at the time.
Changes in Statutory or Factual Footing: The Court found no material changes in the legal or factual basis between the periods before and after September 15, 2010. The subsequent notifications merely altered the rate and prospective nature of the levy but did not address the fundamental absence of a lawful charging event.
Grant of Relief Without Specific Challenges to Later Notifications: The Court rejected the argument that Adani Power Ltd. needed to challenge each subsequent notification separately. It emphasized that once a levy is declared ultra vires, all derivative attempts to enforce the same levy are equally unenforceable.
Effect of Binding Precedent on a Later Coordinate Bench: The Court criticized the Gujarat High Court’s 2019 judgment for narrowing the scope of the 2015 ruling. It reiterated that a coordinate bench is bound to follow an earlier decision unless it refers the matter to a larger bench for reconsideration.
Directions for Refund and Future Compliance: The Court directed the Union of India and customs authorities to refund the amounts deposited by Adani Power Ltd. under protest for the period in question, without interest. It also prohibited further demands for customs duty on SEZ-to-DTA electricity clearances for the relevant period.
Key Takeaways from the Judgment
Limits of Delegated Legislation: The Supreme Court reaffirmed that delegated legislation, such as exemption notifications under Section 25 of the Customs Act, cannot be used to impose a new levy. The power to exempt is distinct from the power to tax, which rests solely with Parliament.
Judicial Precedent: The judgment underscores the importance of judicial discipline and adherence to precedent. A coordinate bench cannot arbitrarily narrow the scope of an earlier ruling; it must either follow the precedent or refer the matter to a larger bench.
Finality of Adjudication: The Court emphasized that once a judicial decision has attained finality, the executive is obligated to conform its conduct to the law declared. Reintroducing an invalidated levy through successive notifications undermines the rule of law and burdens the judiciary with repetitive litigation.
Restitution of Unlawfully Collected Taxes: The Court held that the State cannot retain amounts collected under a levy declared ultra vires. Restitution is a necessary consequence of the finding of illegality.
Conclusion
The Supreme Court’s judgment in the Adani Power Ltd. case is a landmark decision that reinforces the principles of constitutional taxation, judicial discipline, and the rule of law. By striking down the levy of customs duty on SEZ-to-DTA electricity clearances, the Court has provided clarity on the limits of delegated legislation and the importance of adhering to judicial precedent. The decision also serves as a reminder to the executive of its obligation to respect and implement judicial pronouncements, ensuring finality in litigation and upholding public confidence in governance.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 14.12.2025
The Issue of Pre-Import Condition under Advance Authorization Scheme
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.comor on his Mobile +91-9999005379.
The “pre-import condition” under the Advance Authorization Scheme has been a significant issue for exporters, particularly for imports made between October 13, 2017, and January 9, 2019. This condition required that goods be imported first and then used for manufacturing export goods, which created operational challenges for exporters. The condition was introduced to regulate exemptions from Integrated Goods and Services Tax (IGST) and GST Compensation Cess under the scheme.
Legal Framework Governing the Issue
1. Foreign Trade (Development and Regulation) Act, 1992 (FTDR Act):
The FTDR Act, 1992 provides the legal foundation for the formulation and implementation of the Foreign Trade Policy (FTP).
Section 5 of the FTDR Act empowers the Central Government to formulate and amend the FTP to regulate imports and exports.
The Advance Authorization Scheme is governed under Chapter IV of the FTP, which is framed under the FTDR Act.
2. Customs Act, 1962:
The Customs Act, 1962 governs the levy and collection of customs duties on imports and exports.
Section 25(1) of the Customs Act empowers the Central Government to issue exemption notifications for customs duties.
This notification exempted goods imported under Advance Authorization from various duties, including Basic Customs Duty (BCD), Additional Customs Duty, Anti-Dumping Duty, and others.
This notification amended Notification No. 18/2015-Customs to include exemptions for IGST and GST Compensation Cess, subject to the fulfillment of the pre-import condition.
Two key conditions were introduced:
Exemption from IGST and Compensation Cess was applicable only for physical exports.
The exemption was subject to the pre-import condition, meaning goods had to be imported first and then used for manufacturing export goods.
5. Customs Circular No. 16/2023:
Issued in compliance with the Supreme Court’s judgment, this circular provides a procedure for regularizing imports that failed to meet the ‘pre-import condition’ during the specified period. It allows importers to pay IGST and Compensation Cess along with applicable interest and claim refunds or ITC, subject to eligibility under GST laws.
6. Foreign Trade Policy (FTP) 2023:
Paragraph 4.03: Governs the Advance Authorization Scheme, allowing duty-free import of inputs physically incorporated into export products.
Paragraph 4.13: Empowers the Director General of Foreign Trade (DGFT) to impose pre-import conditions for specific inputs.
Paragraph 4.14: Lists the duties exempted under the Advance Authorization Scheme, including IGST and Compensation Cess, subject to the pre-import condition.
Paragraph 4.27: Permits exports in anticipation of authorization, allowing exporters to export goods before importing inputs under Advance Authorization.
7. Handbook of Procedures (HBP) 2023:
Paragraph 4.27(d): States that duty-free authorizations for inputs subject to pre-import conditions cannot be issued.
Appendix 4J: Lists specific inputs subject to pre-import conditions and their export obligation periods.
Supreme Court Judgment (April 28, 2023):
The Supreme Court upheld the Revenue’s appeal, ruling that the pre-import condition was valid and not arbitrary or unreasonable. Key points from the judgment include:
Legality of Pre-Import Condition:
The pre-import condition was within the powers of the DGFT under Paragraph 4.13(i) of the FTP and Section 5 of the FTDR Act.
The condition was introduced to align the Advance Authorization Scheme with the GST regime, which aimed to create a unified tax structure.
Impact of GST:
The GST regime introduced IGST and Compensation Cess, which were not part of the original Notification No. 18/2015-Customs. The pre-import condition was introduced to ensure compliance with the new tax framework.
Hardship to Exporters:
The court acknowledged the operational challenges faced by exporters due to the pre-import condition but emphasized that inconvenience does not render a policy arbitrary or unconstitutional.
Legislative Intent:
The court recognized the legislative intent behind the pre-import condition as part of broader fiscal reforms under GST.
How DGFT Clarifications Helped Address Discrepancies
The Directorate General of Foreign Trade (DGFT) issued several clarifications and circulars to address the challenges and discrepancies arising from the pre-import condition:
1. Trade Notice No. 07/2023-24 (June 8, 2023):
In compliance with the Supreme Court judgment, this notice informed exporters that imports made under the Advance Authorization Scheme between October 13, 2017, and January 9, 2019, which could not meet the pre-import condition, may be regularized by making payments as prescribed in Customs Circular No. 16/2023 (dated June 7, 2023).
Regional Authorities were instructed to guide exporters on the regularization process.
Provided detailed clarifications for specific scenarios:
Imports after January 10, 2019: Not subject to the pre-import condition.
Imports under Advance Authorization on payment of IGST and Compensation Cess: Not subject to the pre-import condition, irrespective of the date of import.
Partially completed imports: Imports made after January 10, 2019, are not subject to the pre-import condition, even if some imports were made before this date.
Clarified that the Export Obligation Discharge Certificate (EODC) shall not be withheld if all other requirements are fulfilled in the following cases:
IGST paid in cash during the specified period.
Non-availing of duty exemptions for IGST, Compensation Cess, or other levies (except Basic Customs Duty).
Compliance with pre-import condition and other procedural requirements under the scheme.
Addressing Deficiencies in Advance Authorization Applications
For exporters facing deficiencies due to non-compliance with the pre-import condition, the following steps can be taken:
1. Regularization of Imports:
As per Trade Notice No. 07/2023-24, imports made between October 13, 2017, and January 9, 2019, which did not meet the pre-import condition, can be regularized by paying the applicable duties and interest to the Customs Authority.
Exporters should approach the jurisdictional Customs Authority with the required documentation and make the necessary payments.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 08.11.2025
Supreme Court on the Arbitration & Conciliation Act, 1996 (A&C)
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.
Recent Landmarks, Contract Act interplay, and what they mean for commercial arbitration
1) The statutory frame (A&C Act × Contract Act)
Consent & separability. Arbitration rests on contract formation under the Indian Contract Act, 1872 (offer/acceptance, free consent, lawful object/consideration). The arbitration clause is separable from the underlying contract (A&C s.16); even when the main contract is challenged, the clause can survive.
Party autonomy, neutrality, minimal court intervention. A&C ss.5, 7, 8, 11, 12, 18, 34, 37; the 2015/2019/2021 amendments tightened neutrality (s.12(5)), nudged institutional appointments (s.11), narrowed “public policy” and “patent illegality” review (s.34), and introduced a fraud/corruption stay to enforcement (s.36(3) proviso, 2021).
Contract Act “filters”. Clauses that are unconscionable or in restraint of legal proceedings (s.23/s.28) are policed through A&C provisions on equal treatment (s.18) and independence (s.12). The Court now reads constitutional equality into appointment schemes in standard-form public contracts.
2) Landmark Supreme Court judgments (late-2023 to 2025)
A. 7-Judge Bench — In Re: Interplay between Arbitration Agreements under the A&C Act, 1996 and the Indian Stamp Act, 1899 (13 Dec 2023)
Issue. Is an arbitration clause in an unstamped/insufficiently stamped agreement void/inoperative at the pre-referral stage? Held.Not void ab initio. Non-stamping affects admissibility, not existence/validity of the arbitration agreement. Courts at s.8/s.11 stage should ordinarily refer to arbitration; any stamp duty objection can be cured in the arbitral process. This overruled N.N. Global (2023). Arguments noted. Parties relying on Contract Act theory of consensual bargain + separability urged that stamping is a fiscal curable defect; the opposing side pressed “no contract without stamp”. Principles. (i) separability; (ii) kompetenz-kompetenz; (iii) pro-arbitration minimal judicial review at referral stage. Commercial impact. No more pre-arbitration derailments on technical stamp objections; faster references and lower front-end risk.
B. Constitution Bench — Cox & Kings Ltd v SAP India Pvt Ltd (6 Dec 2023): Group of Companies doctrine (GoC)
Issue. Can non-signatory affiliates be bound to arbitration by conduct/participation in a single economic transaction? Held.Yes, in limited circumstances. The Court clarified and affirmed the GoC doctrine: look at common intention, participation in negotiation/performance, composite transaction, and mutuality of claims. Not a back-door to rope in every affiliate; it’s a fact-intensive inquiry. Arguments. Pro-GoC: modern commerce uses multi-entity structures; consent can be inferred from conduct. Anti-GoC: Contract Act requires privity/express assent. Principles. Consent remains the lodestar; Contract Act privity yields where objective indicia of consent exist. Impact. Better alignment of multi-party disputes with a single forum, fewer parallel litigations.
C. Five-Judge Bench — Unilateral appointments & curated panels (8 Nov 2024; 2024 INSC 857)
Issue. Are clauses letting one party (often a PSU) unilaterally appoint the sole arbitrator or restrict the other party to a curated panel valid? Held.No. The Court reaffirmed TRF/Perkins and disapproved Voestalpine/CORE to the extent they enabled one-sided control. Such clauses offend equality (A&C s.18) and independence (s.12(5)), and may be unconscionable under Contract Act s.23. Arguments.
Challengers: one-sided curation breeds bias; equality must exist at appointment.
Defenders: party autonomy permits agreed procedures; state needs vetted panels. Principles. Procedural equality and neutrality are non-derogable; waiver only post-dispute (s.12(5) proviso). Impact. Standard PSU/SoE clauses need re-drafting; expect more court-appointed neutrals or truly joint panel mechanisms.
Questions. Scope of s.34 intervention; can courts partially set aside (sever), correct clerical/computational errors, and adjust post-award interest without re-writing merits? What the Court did.
Re-maps s.34: public policy confined; patent illegality for domestic awards only; no merits re-appreciation.
Severance is intrinsic to s.34(2)(a)(iv) proviso — courts may excise only the bad part and preserve the rest.
Recognizes a narrow window to correct clerical/computational errors and, in limited circumstances, to recalibrate post-award interest while remaining within s.34 guardrails—without converting s.34 into an appellate re-hearing. Arguments.
For a wider power: “the greater power to set aside includes the lesser to vary”; comparative seats allow calibrated fixes.
Against:Project Director, NHAI v M. Hakeem (2021) disallowed modification; only legislature can expand remedies. Takeaway. Courts cannot re-adjudicate, but may sever invalid portions and make limited corrections that keep within s.34’s text (not a merits review). Useful in construction/infra awards with multiple segregable claims.
3) How these rulings interlock with the Contract Act in commercial disputes
Consent & privity (ss.10, 13–19, 23).Cox & Kings aligns modern privity analysis with objective consent across a composite commercial matrix; affiliates who negotiated/performed or benefitted can’t later plead non-signatory status when the facts show assent by conduct.
Unconscionability/public policy (s.23). The 2024 Constitution Bench grounds neutral appointments in equality and public policy; boilerplate “sole arbitrator by employer/PSU” provisions risk invalidation as procedurally unconscionable.
Illegality/fraud (ss.23, 17). The 2021 amendment to s.36(3) A&C permits automatic stay of enforcement if the arbitration agreement/contract/award appears induced by fraud/corruption—a direct cross-over from Contract Act invalidating factors into the enforcement stage.
Stamping is not contract-killing. The 7-Judge ruling treats stamping as a curable admissibility issue, preventing Contract Act “existence” objections from being misused to stall references.
Appointment clauses. Avoid one-party curation or unilateral appointment. Provide joint nomination or neutral institution with open panels. Cite s.12(5)/s.18; anything else risks being struck down.
Stamping hygiene. Don’t panic at referral: proceed to arbitration and cure stamping as directed; don’t burn time at s.11 on fiscal technicalities.
Multi-party deals. If affiliates are integral to negotiation/performance, record their role; that evidence supports GoC joinder later.
Section 34 strategy. Frame challenges narrowly: target jurisdictional overreach or non-arbitrable slices, seek severance of the bad portion, and limit prayer to clerical/interest corrections where appropriate—do not invite re-hearing on facts.
5) One-page case synopses (for ready citation)
(i) 7-JB Stamping — In Re: Interplay… (2023)
Summary. Unstamped/under-stamped agreements do not kill arbitration clauses; referral courts should not conduct mini-trials on stamp duty. Stamp issues can be addressed after reference. Ruling. Referral allowed; earlier contrary view overruled. Key law. A&C ss.8, 11, 16; Stamp Act; separability/kompetenz.
(ii) Group of Companies — Cox & Kings v SAP India (2023)
Summary. Clarifies when non-signatories can be bound: intention, participation, composite transaction, interdependence of agreements. Ruling.GoC affirmed; fact-intensive consent test. Key law. A&C s.7; Contract Act consent doctrines.
2021:s.36(3) proviso—automatic stay where prima facie fraud/corruption taints the agreement/contract/award. These provisions colour s.8/s.11 referrals and s.34/s.36 enforcement arguments.
Bottom line for commercial arbitration
The Court has de-clogged referrals (stamping), modernised consent analysis (GoC), insisted on neutral appointments (no unilateral/panel strangleholds), and stabilised s.34 practice (sever the bad; correct the obvious; do not retry the case). Draft your clauses to share appointment power, anticipate multi-entity realities, and litigate s.34 with surgical precision.
References (primary):
In Re: Interplay between Arbitration Agreements… (7-JB, 13 Dec 2023).
Cox & Kings Ltd v SAP India Pvt Ltd (CB, 6 Dec 2023).
Constitution Bench on unilateral appointments & curated panels (8 Nov 2024; 2024 INSC 857).
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 05.11.2025
Supreme Court Clarifies Timing and Applicability of Customs Duty Notifications
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.
The Supreme Court of India recently delivered a landmark judgment in the case of Union of India & Ors. vs. M/S G S Chatha Rice Mills & Anr. (Civil Appeal No. 3249 of 2020), which has significant implications for importers, exporters, and the government. The case revolved around the timing and applicability of a notification issued under Section 8A of the Customs Tariff Act, 1975, which increased customs duty on goods imported from Pakistan to 200%. This judgment provides clarity on how notifications under the Customs Tariff Act are to be applied and whether they can have retrospective effect.
Background of the Case
On February 14, 2019, a terrorist attack occurred in Pulwama, leading to heightened tensions between India and Pakistan. In response, the Indian government issued a notification under Section 8A of the Customs Tariff Act on February 16, 2019, increasing the customs duty on all goods originating from or exported by Pakistan to 200%. The notification was published in the e-Gazette at 20:46:58 hours on the same day.
However, earlier on February 16, 2019, several importers had already presented their bills of entry for home consumption under Section 46 of the Customs Act, 1962. These bills of entry were self-assessed based on the prevailing rate of duty before the notification was issued. The customs authorities later sought to reassess these bills of entry and apply the enhanced duty rate retroactively, leading to a legal challenge by the importers.
Key Legal Questions
The case raised several important legal questions:
When does a notification under Section 8A of the Customs Tariff Act take effect? Is it from the time it is published in the e-Gazette or from the start of the day it is issued?
Can such a notification apply retrospectively to transactions completed earlier on the same day?
Does the principle of disregarding fractions of a day apply to notifications under Section 8A?
Supreme Court’s Observations
The Supreme Court, in its detailed judgment, addressed these questions and provided clarity on the timing and applicability of notifications under Section 8A of the Customs Tariff Act.
1. Nature of the Notification
The Court clarified that a notification issued under Section 8A is a form of delegated legislation. While it has the force of law, it is not equivalent to a “Central Act” or “Regulation” as defined under the General Clauses Act, 1897. Therefore, Section 5(3) of the General Clauses Act, which allows Central Acts to take effect from the expiration of the previous day, does not apply to such notifications.
2. Timing of Notification
The Court emphasized that the notification under Section 8A takes effect only from the time it is published in the e-Gazette. In this case, the notification became effective at 20:46:58 hours on February 16, 2019. It cannot apply to bills of entry presented before this time. The Court noted that the exact time of publication in the e-Gazette is critical in determining the enforceability of such notifications, especially in the era of electronic governance.
3. Retrospectivity
The Court held that Section 8A does not empower the Central Government to issue notifications with retrospective effect. The enhanced rate of duty can only apply prospectively, starting from the time of publication. The Court emphasized that delegated legislation does not have retrospective effect unless explicitly authorized by the parent statute.
4. Reassessment
The Court ruled that the customs authorities could not reassess bills of entry that were presented and self-assessed before the notification was published. The rate of duty applicable at the time of presentation of the bill of entry is final and cannot be altered retroactively. The Court also clarified that the power of reassessment under Section 17(4) of the Customs Act cannot be used to apply a new rate of duty to transactions that were completed before the notification was issued.
Key Takeaways from the Judgment
Publication Time Matters: The Supreme Court highlighted the importance of the exact time of publication in the e-Gazette for determining the enforceability of notifications. In this case, the notification took effect only from 20:46:58 hours on February 16, 2019, and could not apply to transactions completed earlier that day.
No Retrospective Effect: Delegated legislation, such as notifications under Section 8A, cannot have retrospective effect unless explicitly authorized by the parent statute. This ensures that importers are not unfairly penalized for transactions completed before the notification was issued.
Legal Certainty for Importers: The judgment reinforces the principle that importers are entitled to rely on the rate of duty in force at the time of presenting their bills of entry. This provides much-needed transparency and predictability in tax administration.
Impact of Electronic Governance: The Court acknowledged the evolving role of technology in regulatory governance. With the shift to electronic systems for filing bills of entry and publishing notifications, the timing of publication has become a critical factor in determining the applicability of laws.
Implications of the Judgment
This judgment has far-reaching implications for importers, exporters, and the government. It ensures that importers are not subjected to sudden and retrospective changes in duty rates, protecting their rights and fostering trust in the legal system. It also emphasizes the importance of precise timing in the publication of notifications, particularly in the digital age.
For the government, the judgment serves as a reminder to ensure timely publication of notifications and to avoid retrospective application of laws unless explicitly authorized by the parent statute. It also highlights the need for clear and consistent regulatory frameworks that align with modern technological advancements.
Conclusion
The Supreme Court’s decision in this case is a significant step forward in ensuring fairness and clarity in the application of fiscal laws, particularly in the context of international trade. By upholding the principle of prospective application of delegated legislation and emphasizing the importance of publication timing, the Court has reinforced the need for transparency and predictability in tax administration.
This judgment will undoubtedly serve as a precedent for future cases involving the timing and applicability of notifications under fiscal laws, ensuring that the rights of importers and exporters are protected while maintaining the integrity of the legal system.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.11.2025
“SC Reinforces Attorney-Client Privilege: Summoning Lawyers for Client Information Held Illegal”
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.
Supreme Court Upholds Advocate-Client Privilege
2025 INSC 1275 | In Re: Summoning Advocates by Investigating Agencies
Background of the Case
The Supreme Court of India, taking suo motu cognizance, addressed a fundamental question: Can investigating agencies summon an advocate to disclose information about a client or case he represents?
The case originated when an advocate was summoned under Section 179 of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023 to provide details about a bail matter he handled. The Gujarat High Court dismissed his plea, leading to the present intervention by the Supreme Court.
Core Legal Issue
Whether the investigating agency can compel an advocate to divulge client communications or case details — and if such summons violates Section 132 of the Bhartiya Sakshya Adhiniyam (BSA), 2023, which codifies the doctrine of attorney-client privilege.
Key Legal Provisions Discussed
Section 132 BSA (2023): Protects confidential communication between advocates and clients.
Section 179 BNSS (2023): Empowers officers to summon witnesses.
Section 528 BNSS (2023): Provides for judicial oversight of such summons.
Articles 19(1)(g), 20(3), 21 & 22(1) – Constitutional protection of professional rights, liberty, and the right to legal counsel.
Rule 11, Bar Council of India Rules (1975): Mandates advocates to maintain confidentiality and act with integrity.
Arguments & Perspectives
Bar Associations & Advocates
Summoning advocates infringes the right to practice and attorney-client confidentiality.
Disclosure without client consent violates Section 132 BSA and may lead to professional misconduct.
Judicial oversight is essential before any summons is issued.
State & Union of India
No advocate can be summoned merely for rendering a legal opinion or appearing for a client.
If an advocate participates in an illegal act, the privilege does not apply.
The statutory framework under BNSS & BSA already provides sufficient safeguards.
Court’s Observations: Role of an Advocate
The Court eloquently reaffirmed the noble role of lawyers as:
Guardians of liberty and officers of justice, not mere agents of clients.
Bound by trust, confidence, and confidentiality.
Essential to ensuring the rule of law and protection of rights.
“The position of trust the advocate occupies vis-à-vis his client cannot be put to test by any attempt to breach professional confidence.” — Justice K. Vinod Chandran
Exceptions to Privilege under Section 132 BSA
Client’s express consent.
Communication made in furtherance of an illegal purpose.
Observation of a crime or fraud during engagement.
Non-professional communications (outside the course of legal engagement).
In-house counsel exclusion — salaried corporate lawyers are not covered.
Comparative Jurisprudence
The Court cited global precedents to reinforce the principle:
Greenough v. Gaskell (UK, 1833) — Privilege essential for justice.
US v. Upjohn & Co. (1979) — Ensures full disclosure between client and lawyer.
Minister of National Revenue v. Duncan Thompson (Canada, 2016) — Privilege as a principle of fundamental justice.
Akzo Nobel v. European Commission (2010) — Exclusion of in-house counsel privilege.
Judgment Highlights
Investigating agencies cannot summon advocates merely for client or case details.
Any summons must explicitly mention the exception invoked under Section 132 BSA.
Prior written approval of a superior officer (not below the rank of Superintendent of Police) is mandatory.
Advocates have a right to challenge such summons under Section 528 BNSS.
Privilege extends to legal consultations, even outside pending cases.
Documents & digital devices may be produced before a court, but confidentiality must be protected.
Final Ruling
“The power to summon under Sections 175 & 179 BNSS is not the power to destroy the sanctity of attorney-client communications so long as the constitutional courts stand.”
The Court held the summons issued in the present case illegal, as it sought “true details of facts and circumstances of the case” from the advocate — a direct violation of Section 132 BSA and the constitutional right to effective legal representation.
Impact & Legal Significance
Reinforces Rule of Law and independence of the Bar.
Prevents coercive misuse of investigative powers.
Clarifies that privilege is client-centric, yet advocates can assert it.
Promotes judicial accountability through Section 528 BNSS oversight.
Draws a balance between investigation and professional confidentiality.
Conclusion
The Supreme Court’s 2025 decision in In Re: Summoning Advocates marks a watershed moment for the legal profession — reaffirming that the advocate-client relationship is sacred, and confidentiality is the cornerstone of justice. While exceptions exist for illegality and fraud, the Court’s message is clear:
No lawyer should be made to betray the trust that forms the soul of legal representation.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 01.11.2025
Understanding the Legal Landscape of Importing Second-Hand Digital Multifunction Devices in India
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.
The importation of second-hand Digital Multifunction Devices (MFDs) has been a contentious issue in India, with various legal and regulatory challenges faced by importers. Recent judgments from the High Court of Madras and the Supreme Court of India have provided clarity on the matter, particularly regarding the provisional release of these goods under Section 110A of the Customs Act, 1962.
The Background
MFDs, which are highly specialized equipment used for printing, copying, and scanning, have been subject to scrutiny by the Customs Department. The primary concerns revolve around their categorization under import/export regulations, which classify items as prohibited, restricted, or freely importable. While importers argue that MFDs are freely importable, the Customs Department and other government bodies, such as the Ministry of Electronics and Information Technology (MEITY) and the Ministry of Environment, Forest and Climate Change (MoEFCC), have raised objections, claiming that these goods are restricted or prohibited.
Key Legal Developments
Provisional Release Under Section 110A of the Customs Act
Section 110A allows for the provisional release of seized goods during investigation or adjudication. This provision aims to prevent financial losses and operational delays for importers while ensuring that the Customs Department can continue its investigation. Importers are required to execute a bond or provide a bank guarantee to cover potential duties, fines, or penalties.
Madras High Court Judgments
In a landmark judgment dated 10th July 2025 (WP No. 29418 of 2024), the Madras High Court ruled in favor of importers, stating that MFDs qualify as Highly Specialized Equipment (HSE) under Clause 8 of the Compulsory Registration Order (CRO), 2021. The court emphasized that MFDs weighing more than 80 kg and imported in less than 100 units per model per year are exempt from the application of CRO, 2021. The court also clarified that the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, do not prohibit the import of MFDs, provided the required documents are submitted to the Customs Authorities.
Tanish Enterprises vs Commissioner of Customs– WP No. 29418 of 2024
The case involves importers seeking provisional release of second-hand digital multifunction devices (MFDs) detained by the Customs Department, which claimed the goods were restricted or prohibited. The petitioners argued that MFDs are freely importable as Highly Specialized Equipment (HSE) under the Compulsory Registration Order (CRO), 2021, and Foreign Trade Policy (FTP), 2023. The court ruled in favor of the petitioners, directing the Customs Department to provisionally release the goods under Section 110A of the Customs Act, 1962, subject to conditions, while leaving the final adjudication open.
Key Points:
Issue: Whether second-hand MFDs are freely importable or restricted items requiring BIS certification and DGFT authorization.
Petitioners’ Claim: MFDs qualify as Highly Specialized Equipment (HSE) and are exempt from restrictions under CRO, 2021, and FTP, 2023.
Respondents’ Claim: MFDs are restricted or prohibited items requiring compliance with BIS, DGFT, and environmental regulations.
Court’s Ruling: Directed provisional release of MFDs under Section 110A of the Customs Act, subject to conditions, and left final adjudication open.
Precedents: Previous rulings by the Madras High Court, Telangana High Court, and Supreme Court upheld the free importability of MFDs.
Provisional Release: Allows importers to access goods while investigations continue, preventing financial losses due to detention.
HD Printers vs Commissioner of Customs- Writ Petition No.39010 of 2025 and W.M.P.No.43694 of 2025
The case involves M/s. HD Printers, represented by its proprietor Mr. Jagan Kumar, filing a writ petition under Article 226 of the Constitution of India. The petitioner sought a Writ of Mandamus directing the Customs Department to allow the provisional release of 120 units of second-hand digital multifunction print and copying machines. These machines were imported and submitted for clearance with the required documentation, including a report from a DGFT-approved Chartered Engineer. The Customs Department had initially refused to release the goods, citing restrictions under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 (HOW Rules). However, the court referred to a previous judgment (W.P.No.29418 of 2024) and ruled that the case was covered under the earlier order, which allowed provisional release of similar goods. The court directed the Customs Department to release the goods provisionally, subject to conditions and final adjudication.
Key Points:
Petitioner: M/s. HD Printers.
Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai.
Issue: Provisional release of 120 second-hand digital multifunction print and copying machines.
Legal Basis: Article 226 of the Constitution of India and Section 110A of the Customs Act, 1962.
Customs Department’s Argument: Machines classified as “other wastes” under HOW Rules, 2016, requiring prior permission for import.
Court’s Decision: Directed provisional release of goods within four weeks, subject to conditions and final adjudication.
Reference Case: W.P.No.29418 of 2024, which allowed provisional release of similar goods.
Provisional Release Conditions: Execution of a simple bond for 100% of the enhanced value and payment of applicable GST.
Final Adjudication: Customs Department retains the right to reverse the provisional release order during final adjudication.
Maruti Enterprises vs Commissioner of Customs- WP No. 35987 of 2025
The case involves M/s. Maruti Enterprises, represented by its proprietor Gautam Sharma, filing a writ petition under Article 226 of the Constitution of India for the issuance of a writ of mandamus. The petitioner seeks the provisional release of two consignments of second-hand digital multifunction print and copying machines (MFDs) imported by them. The petitioner claims that the goods were examined by a DGFT-approved Chartered Engineer, who provided a report to the Customs Officer. Despite this, the Customs Department proceeded to forfeit the goods. The petitioner argues that the issue is covered by a previous order of the Madras High Court, which allowed the provisional release of similar goods under Section 110A of the Customs Act, 1962.
The court referred to the earlier judgment, which clarified that MFDs are not prohibited items under the Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016, and are freely importable. The court directed the Customs Department to grant provisional release of the goods within four weeks, subject to conditions as per the Customs Act, 1962. The provisional release is subject to final adjudication, and the Customs Department retains the authority to reverse the provisional release order during the final adjudication process.
Key Points:
Petitioner: M/s. Maruti Enterprises.
Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai.
Issue: Provisional release of two consignments of second-hand digital multifunction print and copying machines.
Legal Basis: Section 110A of the Customs Act, 1962, and Article 226 of the Constitution of India.
Court’s Reference: Previous Madras High Court order in WP No. 29418 of 2024, which allowed provisional release of similar goods.
Court’s Decision: Directed the Customs Department to grant provisional release within four weeks, subject to conditions under the Customs Act, 1962.
Provisional Release Conditions: Subject to final adjudication, and the Customs Department may reverse the provisional release order during the final adjudication process.
No Costs: The court disposed of the writ petition without imposing any costs.
Supreme Court Endorsement
The Supreme Court upheld the decision of the Telangana High Court, which had granted provisional release of MFDs under similar circumstances. This decision reinforced the stance that MFDs are freely importable and eligible for provisional release.
Atul Commodities Pvt. Ltd. & Ors. vs Commissioner of Customs- Civil Appeal Nos. 5259/2007, 3226/2007 and 3977/2007
The case revolves around whether second-hand photocopying machines imported by M/s Atul Commodities Pvt. Ltd. in January 2005 were “freely importable” as capital goods under the Foreign Trade Policy (FTP) 2004-09 or required a license for import. The Kerala High Court had ruled that such imports required a license, relying on policy circulars issued by the Directorate General of Foreign Trade (DGFT). However, the Supreme Court held that the DGFT circulars were clarificatory and not amendatory, and only the Central Government had the authority to amend the FTP under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. The Court ruled that second-hand photocopying machines were “capital goods” and were freely importable under the FTP 2004-09. The Supreme Court allowed the appeal of M/s Atul Commodities Pvt. Ltd. and dismissed the appeals filed by the Department.
Key Points:
Issue: Whether second-hand photocopying machines imported in January 2005 were freely importable as “capital goods” or required a license under the FTP 2004-09.
High Court Decision: Kerala High Court ruled that the imports required a license, relying on DGFT circulars.
Supreme Court Decision: The Supreme Court held that DGFT circulars were clarificatory, not amendatory, and only the Central Government could amend the FTP under Section 5 of the Foreign Trade Act, 1992.
Outcome: The Supreme Court ruled that second-hand photocopying machines were “capital goods” and were freely importable under FTP 2004-09. The judgment of the Kerala High Court was set aside, and the Tribunal’s decision favoring M/s Atul Commodities Pvt. Ltd. was restored.
Final Verdict: M/s Atul Commodities Pvt. Ltd. won the case, and the Department’s appeals were dismissed.
Recent Judgments
Subsequent cases, such as WP No. 39010 of 2025 and WP No. 35987 of 2025, have followed the precedent set by the Madras High Court and the Supreme Court. These judgments have consistently directed the Customs Department to grant provisional release of MFDs, subject to conditions such as the execution of a bond and payment of applicable GST.
Notification on Special Economic Zones (Fourth Amendment) Rules, 2024
The document is a notification issued by the Ministry of Commerce and Industry, Department of Commerce, dated June 20, 2024. It announces the Special Economic Zones (Fourth Amendment) Rules, 2024, which amend the Special Economic Zones Rules, 2006. The amendments focus on rule 18, sub-rule (4), clause (d), specifically modifying the provisions related to reconditioning, repair, and re-engineering activities within Special Economic Zones (SEZs).
Key changes include:
Reconditioning, repair, and re-engineering are permitted under the condition that exports must have a one-to-one correlation with imports, and all processed products must be exported.
Non-hazardous metal and metal-alloy wastes generated from these activities may be sold in the Domestic Tariff Area (DTA) under certain conditions:
The waste must be in metallic, non-dispersible form without contaminants listed under Basel No. B1010 in Part D of Schedule III of the Hazardous and Other Wastes Rules, 2016.
Sale in the DTA is subject to payment of applicable customs duty and treated as import.
Such sales are allowed only to actual users or traders authorized by the State Pollution Control Board on a one-time basis.
Verification of specified documents by Customs Authority is required.
The rules come into effect upon publication in the Official Gazette. The notification also references previous amendments to the principal rules, last updated on June 6, 2024.
Key Takeaways for Importers
Provisional Release: Importers can seek provisional release of detained goods under Section 110A of the Customs Act, provided they fulfill the conditions set by the Customs Department.
Exemption Criteria: MFDs that meet the criteria for HSE under Clause 8 of CRO, 2021, are exempt from the application of the order. Importers must ensure their goods weigh more than 80 kg and are imported in less than 100 units per model per year.
Compliance with HOW Rules: Importers must submit the required documents as per Schedule VIII of the HOW Rules to the Customs Authorities at the time of import.
Final Adjudication: Provisional release does not guarantee the final outcome. The Customs Department retains the authority to reverse the provisional release order during final adjudication.
Conclusion
The legal clarity provided by the courts is a significant relief for importers of second-hand MFDs. However, it is crucial for importers to ensure compliance with all regulatory requirements and maintain proper documentation to avoid complications during the import process. As the legal landscape continues to evolve, staying updated on relevant judgments and notifications is essential for smooth business operations.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 20.09.2025
Supreme Court Clarifies Time Limits for Seizure and Release of Goods Under Customs Act
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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.
The Supreme Court of India recently delivered a significant judgment in the case of Union of India & Ors. vs. Respondent (Civil Appeal No. 3489 of 2024), addressing the legal implications of non-issuance of show-cause notices under the Customs Act, 1962. This ruling has far-reaching consequences for businesses dealing with seized goods and the procedural obligations of customs authorities.
Background of the Case
The dispute arose when the Directorate of Revenue Intelligence (DRI) seized a luxury car (Maserati) owned by Respondent, a trader in imported and second-hand luxury cars. The car was detained under Section 110 of the Customs Act, 1962, and later provisionally released under Section 110A. However, the DRI failed to issue a show-cause notice within the stipulated time frame prescribed under Section 110(2) of the Act.
The respondent approached the Delhi High Court, which ruled in his favor, declaring that the failure to issue a show-cause notice within the prescribed period entitled him to the unconditional release of the seized car. The Union of India challenged this decision before the Supreme Court.
ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 12.09.2025
Supreme Court Orders Refund to Patanjali Foods
This Article has been written by Shri Ravi Shekhar Jha, Advocate 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 May 19, 2025, the Supreme Court of India has ruled in favor of M/s Patanjali Foods Limited (formerly known as M/s Ruchi Soya Industries Limited), directing the Union of India and its departments to refund amounts covered by bank guarantees encashed by the customs department. The judgment, authored by Justice, sets a significant precedent in the application of the doctrine of unjust enrichment and the interpretation of Section 27 of the Customs Act, 1962.
Background of the Case
The dispute originated in 2002 when M/s M.P. Glychem Industries Limited (later merged with Ruchi Soya Industries Limited) imported crude degummed soybean oil and filed a bill of entry for clearance. The customs department demanded higher customs duty based on a tariff value fixed under Section 14(2) of the Customs Act. The appellant contended that the notification fixing the tariff value was not in effect at the time of import, and duty should be assessed under Section 14(1) instead.
To resolve the impasse, the Gujarat High Court directed the appellant to furnish bank guarantees for the differential duty amounts, allowing the goods to be cleared. Subsequently, the appellant challenged the validity of the notification, but the High Court dismissed the writ petitions in 2012. Following this, the customs department encashed the bank guarantees in 2013, even as the appellant’s appeal was pending before the Supreme Court. In 2015, the Supreme Court ruled in favor of the appellant in the case of Union of India vs. Param Industries Limited, holding that the notification fixing the tariff value was not offered for sale at the time of import, making the customs department’s demand for differential duty unlawful.
