Tag: #SupremeCourtofIndia

Supreme Court on the Arbitration & Conciliation Act, 1996 (A&C)
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.
D. Section 34: set-aside, severance & limited “modification” themes — Gayatri Balasamy v ISG Novasoft Technologies Ltd & batch (30 Apr 2025)

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.
4) Practical drafting & litigation playbook (post-2023)
1. 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.
2. 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.
3. Multi-party deals. If affiliates are integral to negotiation/performance, record their role; that evidence supports GoC joinder later.
4. 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.

(iii) Unilateral appointment/panels — Constitution Bench (2024 INSC 857)

Summary. Unilateral appointment or one-sided curated panels violate equality (s.18) and independence (s.12(5)); ties into Contract Act s.23 unconscionability.
Ruling. Such clauses impermissible; TRF/Perkins reaffirmed; contrary strands disapproved.
Key law. A&C ss.11, 12(5), 18, Fifth/Seventh Schedules; Art.14.

(iv) Section 34 mapping — Gayatri Balasamy v ISG Novasoft & batch (2025)

Summary. Re-states narrow s.34 review; permits severance of invalid portions (s.34(2)(a)(iv) proviso), clarifies limited clerical/computation fixes and tailored post-award interest adjustments, without merits re-appreciation.
Ruling. Severance and limited corrections allowed; no appellate rehearing.
Key law. A&C ss.31, 33, 34, 37, 43; Ssangyong line preserved.

6) Legislative touchpoints to keep in view
- 2015 (Act 3 of 2016): neutrality via s.12(5) (Seventh Schedule), narrowed public policy, patent illegality ground for domestic awards.
- 2019: institutional appointments (s.11 route), timelines refined.
- 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).
- Gayatri Balasamy v ISG Novasoft Technologies Ltd & batch (30 Apr 2025) — s.34/severance/limited corrections.
Source: Supreme Court

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November 8, 2025
Supreme Court Clarifies Timing and Applicability of Customs Duty Notifications
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:
1. 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? 
2. Can such a notification apply retrospectively to transactions completed earlier on the same day? 
3. 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
1. 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.
2. 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.
3. 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.
4. 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.

Source: Supreme Court

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November 5, 2025
“SC Reinforces Attorney-Client Privilege: Summoning Lawyers for Client Information Held Illegal”
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
1. Client’s express consent.
2. Communication made in furtherance of an illegal purpose.
3. Observation of a crime or fraud during engagement.
4. Non-professional communications (outside the course of legal engagement).
5. 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
1. Investigating agencies cannot summon advocates merely for client or case details.
2. Any summons must explicitly mention the exception invoked under Section 132 BSA.
3. Prior written approval of a superior officer (not below the rank of Superintendent of Police) is mandatory.
4. Advocates have a right to challenge such summons under Section 528 BNSS.
5. Privilege extends to legal consultations, even outside pending cases.
6. 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.

Source: Supreme Court

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November 1, 2025
Understanding the Legal Landscape of Importing Second-Hand Digital Multifunction Devices in India
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:
1. Issue: Whether second-hand MFDs are freely importable or restricted items requiring BIS certification and DGFT authorization.
2. Petitioners’ Claim: MFDs qualify as Highly Specialized Equipment (HSE) and are exempt from restrictions under CRO, 2021, and FTP, 2023.
3. Respondents’ Claim: MFDs are restricted or prohibited items requiring compliance with BIS, DGFT, and environmental regulations.
4. Court’s Ruling: Directed provisional release of MFDs under Section 110A of the Customs Act, subject to conditions, and left final adjudication open.
5. Precedents: Previous rulings by the Madras High Court, Telangana High Court, and Supreme Court upheld the free importability of MFDs.
6. 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:
1. Petitioner: M/s. HD Printers.
2. Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai.
3. Issue: Provisional release of 120 second-hand digital multifunction print and copying machines.
4. Legal Basis: Article 226 of the Constitution of India and Section 110A of the Customs Act, 1962.
5. Customs Department’s Argument: Machines classified as “other wastes” under HOW Rules, 2016, requiring prior permission for import.
6. Court’s Decision: Directed provisional release of goods within four weeks, subject to conditions and final adjudication.
7. Reference Case: W.P.No.29418 of 2024, which allowed provisional release of similar goods.
8. Provisional Release Conditions: Execution of a simple bond for 100% of the enhanced value and payment of applicable GST.
9. 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:
1. Petitioner: M/s. Maruti Enterprises.
2. Respondents: Commissioner, Additional Commissioner, and Deputy Commissioner of Customs, Chennai.
3. Issue: Provisional release of two consignments of second-hand digital multifunction print and copying machines.
4. Legal Basis: Section 110A of the Customs Act, 1962, and Article 226 of the Constitution of India.
5. Court’s Reference: Previous Madras High Court order in WP No. 29418 of 2024, which allowed provisional release of similar goods.
6. Court’s Decision: Directed the Customs Department to grant provisional release within four weeks, subject to conditions under the Customs Act, 1962.
7. Provisional Release Conditions: Subject to final adjudication, and the Customs Department may reverse the provisional release order during the final adjudication process.
8. 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:
1. 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.
2. High Court Decision: Kerala High Court ruled that the imports required a license, relying on DGFT circulars.
3. 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.
4. 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.
5. 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:
1. 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.
2. Non-hazardous metal and metal-alloy wastes generated from these activities may be sold in the Domestic Tariff Area (DTA) under certain conditions:
3. 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.
4. Sale in the DTA is subject to payment of applicable customs duty and treated as import.
5. Such sales are allowed only to actual users or traders authorized by the State Pollution Control Board on a one-time basis.
6. 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.

Source: Supreme Court, Madras High Court

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November 1, 2025
Supreme Court Clarifies Time Limits for Seizure and Release of Goods Under Customs Act

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.

Source: Supreme Court

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September 20, 2025
Supreme Court Orders Refund to Patanjali Foods

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.

Source: Supreme Court

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September 12, 2025

The Canon India Saga- The Judgement & the journey going forward

ALO Law Office- IDT Tax I Arbitration I Litigation

Date: 31.08.2025

The Canon India Saga- The Judgement & the journey going forward

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.

Introduction

The jurisprudence surrounding the powers of the Directorate of Revenue Intelligence (DRI) under the Customs Act, 1962 has undergone dramatic shifts in recent years. The Supreme Court’s ruling in Canon India Pvt. Ltd. v. Commissioner of Customs (2021) appeared to decisively curtail DRI’s jurisdiction to issue show cause notices (SCNs) under Section 28. Yet, in Commissioner of Customs v. Canon India Pvt. Ltd. (2024 Review), the Court reversed course, validating DRI’s authority subject to statutory assignment. This oscillation, coupled with legislative intervention in 2022, has produced a recalibrated enforcement regime with profound implications for importers, exporters, and the State’s investigative machinery.

Canon India (Customs) — 2021 vs 2024

Item	2021 decision	2024 review decision
Case & date	M/s Canon India Pvt. Ltd. v. Commissioner of Customs, Civil Appeal No. 1827/2018 and batch (decided 9-Mar-2021)	Commissioner of Customs v. M/s Canon India Pvt. Ltd., Review Petition No. 400/2021 (judgment dated 7-Nov-2024)
Core question	Whether DRI officers are “the proper officer” competent to issue SCNs under S28(4) after clearance by jurisdictional customs officers.	Whether Canon-2021 erred; whether DRI and certain other officers are “proper officers” for S28; validity/effect of later statutory changes/validations.
Holding (short)	DRI not “the proper officer” to issue S28(4) notices; SCNs by ADG-DRI set aside.	Review allowed; DRI are proper officers for S28 (subject to assignment via notifications). Canon-2021’s reasoning corrected; validation of past SCNs upheld.
Key statutory provisions discussed	S2(34) (definition of “proper officer”); S6 (entrustment to other govt officers); S28(4) (extended-period SCN); linkage emphasized to S17 (assessment). Court read S28 power as confined to the officer who handled assessment/re-assessment.	S2(34) (incl. post-2022 text linking assignment to S5); SS3–5 (classes/appointment/powers of customs officers); S6 (distinct from S2(34)/S5 assignment); S17 & S28 (no mandatory inter-dependence for jurisdiction under S28); S110AA (inserted 2022; prospective scheme); S28(11) (Validation Act 2011); S97, Finance Act 2022 (validation of past actions).
Notifications & Circulars considered / reproduced	• Notif. 17/2002-Cus (N.T.), 07-03-2002 (appointing ADG-DRI as Commissioner of Customs). • Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table incl. S28 to DC/AC and above). • Context: exemption Notif. 2005 + amending 15/2012 for DSICs (background facts).	Appointments / assignment • Notif. 19/90-Cus (N.T.), 26-04-1990 (DRI appointed as customs officers; later superseded). • Notif. 17/2002-Cus (N.T.), 07-03-2002 (superseding earlier; DRI appointments). • Notif. 44/2011-Cus (N.T.), 06-07-2011 (assigning “proper officer” functions incl. SS17 & 28 to DRI); amendments: 53/2012, 43/2019; rescinded/superseded by 25/2022-Cus (N.T.) aligned with Finance Act 2022. • Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table). • Notif. 60/2015-Cus (N.T.), 04-06-2015 (common adjudicating authority—delegation to Principal DG, DRI). Circulars • Circular 4/99-Cus, 15-02-1999 (DRI may issue SCNs in cases they investigate; adjudication by jurisdictional officers). • Circular 18/2015-Cus, 09-06-2015 (guidelines on common adjudicator after Notif. 60/2015). • Circular 44/2011-Cus, 23-11-2011 (referred to alongside 4/99).
Treatment of earlier case-law	Relied heavily on Sayed Ali (2011) to insist that the S28 “proper officer” must be the officer vested with S17 assessment; read S6 as the only entrustment route.	Explains Sayed Ali did not involve DRI with proper assignments; treats its S17–S28 “linkage” as erroneous/obiter; sets aside Delhi HC’s Mangali Impex; affirms Bombay HC’s Sunil Gupta on S28(11) validation.
Reasoning snapshot	• Notif. 40/2012 issued under S2(34) was held ultra vires (since S2(34) only defines; entrustment must be under S6). • Thus ADG-DRI lacked authority to issue S28(4) SCN.	• Distinguishes assignment of “proper officer” functions (S2(34) read with S5) from entrustment under S6 (for non-customs officers). • Confirms multiple proper officers can exist if functions are properly assigned by notification; no statutory need that the S28 officer must be the S17 assessor (pre-S110AA). • Notes post-2022 amendments (to SS2,3,5 and S110AA) and Section 97 validating earlier SCNs; upholds constitutionality of S97.
Outcome / effect	SCNs by DRI quashed; ripple effect invalidated many DRI SCNs.	Review allows department’s plea; DRI recognized as proper officers for S28 where assigned; S97 Finance Act 2022 validation upheld; Mangali Impex overruled; Sunil Gupta approved.

A. Legal provisions canvassed

2021 (Canon-I): S2(34); S6; S28(4); linkages to S17 (assessment); reliance on Sayed Ali (2011).
2024 (Canon-II / Review): SS2(34), 3, 4, 5, 6, 17, 28 (incl. Explanation 2 & S28(11) Validation Act); S110AA (inserted 2022); Finance Act 2022 S97 (validation); detailed discussion of assignment vs entrustment.

B. Notifications & Circulars cited by the Court

2021 judgment

Notif. 17/2002-Cus (N.T.), 07-03-2002 (ADG-DRI appointed as Commissioner of Customs).
Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table incl. S28).
Exemption notifications (factual background): 2005 exemption notification (the judgment text references No. 20/2005/25/2005) as amended by 15/2012 for digital still image video cameras. (India Budget)

2024 review judgment

Notif. 19/90-Cus (N.T.), 26-04-1990; superseded by Notif. 17/2002-Cus (N.T.), 07-03-2002 (appointment of DRI as officers of customs).
Notif. 44/2011-Cus (N.T.), 06-07-2011 (assigns “proper officer” functions incl. SS17 & 28 to DRI); amended by 53/2012 & 43/2019; superseded by 25/2022-Cus (N.T.).
Notif. 40/2012-Cus (N.T.), 02-05-2012 (assignment table; to be read with SS4/5).
Notif. 60/2015-Cus (N.T.), 04-06-2015 (common adjudicating authority—delegation to Principal DG, DRI).
Circular 4/99-Cus, 15-02-1999 (DRI to issue SCNs they investigate; adjudication by field formations).
Circular 18/2015-Cus, 09-06-2015 (post-Notif. 60/2015 guidance).
Circular 44/2011-Cus, 23-11-2011 (referred alongside 4/99).

What changed between 2021 and 2024?

Who can issue S28 SCNs?
• 2021: Only the officer who did (re)assessment under S17 (or was otherwise assigned) could issue S28 SCN—DRI’s SCNs were invalid.
• 2024: The Act does not require the S28 SCN issuer to be the same person who did S17 assessment (pre-S110AA). What matters is a valid assignment of S28 functions to that officer via proper notifications (read S2(34) with S5; S6 is for non-customs officers). DRI officers were validly appointed/assigned.
Effect of later legislation
• S110AA (2022) prospectively ties issuance of S28 SCN to the proper officer assigned to conduct S17 assessments; it doesn’t retrospectively invalidate earlier practice.
• S97, Finance Act 2022 validated past SCNs; SC upheld its constitutionality and clarified scope vis-à-vis S28(11) & Explanation-2.
Companion High Court rulings
• Delhi HC (Mangali Impex) set aside; Bombay HC (Sunil Gupta) approved.

Practical takeaways for customs disputes (post-2024)

Jurisdictional objections to DRI SCNs (pre-2022) now generally fail if the Department shows valid appointment & assignment via the above notifications.
For SCNs issued after 31-Mar-2022, consider S110AA: the issuing officer must be the assigned S17 officer; challenges should scrutinize post-2022 assignment orders.
Validation under S97 Finance Act 2022 covers past SCNs; constitutional challenges were rejected in the review.

1. Scope of the Review

The Supreme Court in 2024 was deciding a review petition against its earlier 2021 ruling. Its focus was:

Whether the 2021 reasoning (that DRI officers were not “proper officers”) was legally sustainable, and
Whether the post-2011 Validation Act (S28(11)) and Finance Act 2022 (S97) covered past SCNs.

Because of this limited scope, the Court concentrated on notifications and circulars that existed at the time of the disputed SCNs (2005–2015 era), and the validating provisions enacted later, not on fresh notifications meant to operate prospectively.

2. Temporal Relevance

Notifications 25/2022 and 26/2022 (N.T.) were issued after 31-03-2022, expressly to align officer-assignments with the newly inserted S110AA (Finance Act 2022).
Circular 07/2022-Cus (N.T.) clarified field implementation under the new law.

Since the SCNs in dispute in Canon India dated back years earlier, the Court treated these 2022 instruments as not directly applicable to the lis (dispute) before it. Instead, the Court examined:

older appointment/assignment notifications (17/2002, 40/2012, 44/2011, 60/2015, etc.), and
validating clauses (S28(11), S97 Finance Act 2022).

3. Statutory Coverage Already Achieved

The 2024 judgment did consider S110AA and S97 of Finance Act 2022 in detail. Those provisions themselves were the statutory foundation upon which Notifications 25/2022 & 26/2022 and Circular 07/2022 were based.
Thus, by upholding S97 and clarifying S110AA’s prospective effect, the Court implicitly accepted the validity of the 2022 notification/circular regime, without needing to cite each by number.

4. Judicial Practice

The Supreme Court often:

Cites only those notifications/circulars that form the crux of the dispute or which were argued before it.
Leaves out subsequent administrative instruments if their effect is prospective or merely implementational.

The 2024 bench emphasized that post-31.03.2022 SCNs would fall under S110AA and fresh notifications, but it was not ruling on those—so it found no need to reproduce or analyze 25/2022, 26/2022, or Circular 07/2022.

In short:
The 2024 Supreme Court judgment did not consider those specific 31-03-2022 notifications and circular because they were prospective instruments implementing S110AA, while the Court’s task was to decide the validity of pre-2022 SCNs and the scope of validation under S97. Their effect was implicitly acknowledged, but not directly adjudicated.

That’s a very important concern. After the Canon India litigation saga and the March 2022 amendments, the powers of DRI officers have indeed been regularized, but they are not “unlimited” or unchecked. Let me explain in detail:

1. What changed in 2022?

Finance Act, 2022 inserted Section 110AA into the Customs Act, 1962.
→ It mandates that the same “proper officer” who is assigned functions of assessment under Section 17 will also have jurisdiction to issue show cause notices under Section 28.
To operationalize this:
- Notification 25/2022-Cus (N.T.) and 26/2022-Cus (N.T.) (31-03-2022) were issued. They re-assigned functions clearly to DRI, Audit, Preventive, and Commissionerates, ensuring statutory backing.
- Circular 07/2022-Cus (31-03-2022) gave field-level guidance, clarifying how officers should exercise powers under the new framework.

This effectively plugged the “jurisdictional defect” highlighted in Canon India (2021).

2. Checks on DRI powers post-2022

Even with these notifications, DRI officers are not beyond scrutiny:

(a) Statutory Limitation

Section 110AA ties issuance of SCNs to proper assignment; DRI can only act if lawfully assigned by notification.
Their jurisdiction flows strictly from Sections 2(34), 3, 5, 6, and 110AA read with the assignment notifications.

(b) Validation but Prospective Guardrails

The Supreme Court in 2024 (Canon India Review) upheld the validity of past SCNs via Section 97 of Finance Act 2022, but also emphasized that going forward, the post-2022 assignment regime applies.
This means future SCNs can be challenged if issued contrary to Section 110AA or without proper assignment.

(c) Procedural Safeguards

DRI must comply with natural justice (notice, reply, hearing).
SCNs are adjudicated by jurisdictional Commissioners/Principal Commissioners, not by DRI itself, preventing them from being “judge in their own cause.”
Circular 07/2022 reinforces this segregation of roles.

(d) Judicial Oversight

Courts and CESTAT remain open to review whether DRI officers exceeded statutory assignment, acted mala fide, or violated procedural safeguards.
Writ petitions under Article 226/227 and appeals under Section 129A (CESTAT) and Section 130 (High Court) continue to act as a check.

3. Practical Position Going Forward

Yes, DRI has regained legal authority (as “proper officers”), but their powers are not unfettered.
The 2022 notifications and circulars give them jurisdiction, but also bind them within the statutory scheme of Sections 17, 28, and 110AA.
Any SCN post-2022 must be tested for:
- Correct assignment in the relevant notification;
- Compliance with limitation under Section 28;
- Observance of natural justice.

Conclusion:
DRI officers’ powers will not go unchecked under Notifications 25/2022, 26/2022, and Circular 07/2022. These instruments regularize and define their jurisdiction, but checks still exist through Section 110AA, adjudication by separate authorities, and judicial review.

The Canon India Saga: Judicial U-Turn, Legislative Response, and the Recalibration of DRI Powers under the Customs Act, 1962

I. The 2021 Decision: Curtailing DRI Jurisdiction

In its 9 March 2021 judgment, the Supreme Court held that officers of DRI were not “proper officers” under Section 28 of the Act.

The Court relied on Section 2(34) (defining “proper officer”) and Section 6 (entrustment of functions to other government officers) to conclude that only the officer who originally assessed goods under Section 17 could subsequently reopen or reassess liability under Section 28.
Notifications such as Notification No. 40/2012-Cus (N.T.), issued to empower DRI, were held ultra vires, since Section 2(34) was merely definitional and could not serve as a source of power.
In effect, all SCNs issued by DRI under Section 28(4) were rendered invalid.

The judgment’s reasoning was strongly influenced by Union of India v. Sayed Ali (2011), which had emphasized a close nexus between the assessing officer and the officer reopening the assessment.

II. Legislative Response: Finance Act, 2022

The 2021 ruling created widespread disruption in anti-evasion enforcement. Parliament responded promptly through the Finance Act, 2022, which introduced two pivotal reforms:

Section 110AA (prospective): mandated that the “proper officer” assigned the functions of assessment under Section 17 would also have jurisdiction to issue notices under Section 28. This tied jurisdiction to statutory assignment rather than to the original assessing officer.
Section 97, Finance Act 2022 (retrospective): validated all past actions of DRI and similar officers, curing the jurisdictional defect identified in Canon 2021.

To operationalize these amendments, the Government issued:

Notification No. 25/2022-Cus (N.T.) and 26/2022-Cus (N.T.) (both dated 31-03-2022), re-assigning assessment and demand functions across Customs Commissionerates, DRI, Audit, and Preventive formations.
Circular No. 07/2022-Cus (31-03-2022), clarifying procedural aspects of SCN issuance and adjudication under the new regime.

III. The 2024 Review Decision: A Judicial Recalibration

In its 7 November 2024 judgment, the Supreme Court allowed the Department’s review petitions, effectively reversing the 2021 ruling.

Assignment vs. Entrustment: The Court distinguished between assignment of functions (Sections 2(34) read with 3, 4, and 5) and entrustment of functions (Section 6). Since DRI officers were duly appointed and their functions assigned through statutory notifications (17/2002, 44/2011, 40/2012, 60/2015), they qualified as “proper officers.”
Rejection of Section 17–28 Nexus: The earlier insistence that the officer under Section 28 must be the same officer who assessed under Section 17 was held erroneous, save for the prospective effect of Section 110AA.
Validation: The Court upheld the constitutionality of Section 97, Finance Act 2022, thereby retrospectively validating past SCNs.
Precedents Revisited: Mangali Impex (Delhi High Court), which had invalidated DRI notices, was expressly overruled, while Sunil Gupta (Bombay High Court) was approved.

Thus, the Court restored DRI’s jurisdiction while acknowledging the legislative guardrails introduced in 2022.

IV. The Status of Notifications and Circulars

It is noteworthy that Notifications 25/2022, 26/2022 and Circular 07/2022 were not expressly discussed in the 2024 judgment. This was deliberate:

The Court’s task in review was confined to pre-2022 SCNs and the effect of retrospective validation.
Since the 2022 instruments were prospective, their role was implicitly recognized but not adjudicated upon.

Accordingly, future SCNs will be governed by Section 110AA and these notifications, while past SCNs stand validated by Section 97 of Finance Act, 2022.

V. Will DRI Powers Go Unchecked?

Concerns about unchecked investigative powers must be balanced against statutory safeguards:

Statutory Assignment – DRI’s jurisdiction flows strictly from notifications issued under Sections 3, 5, and 110AA; it cannot act beyond assigned functions.
Separation of Roles – While DRI investigates and issues SCNs, adjudication lies with jurisdictional Commissioners, ensuring impartiality.
Natural Justice and Limitation – Section 28 prescribes limitation periods and procedural fairness, binding on DRI.
Judicial Oversight – Writ jurisdiction under Article 226 and appeals under Sections 129A and 130 act as systemic checks on arbitrary exercise.

Thus, the new framework strengthens enforcement while embedding institutional and judicial safeguards.

VI. Conclusion

The Canon India saga exemplifies the dynamic interplay between judicial pronouncement, legislative correction, and administrative implementation.

The 2021 judgment underscored the dangers of empowering investigative agencies without statutory clarity.
The 2022 amendments created a prospective framework under Section 110AA and retrospectively validated past SCNs under Section 97.
The 2024 review judgment restored balance by recognizing DRI’s jurisdiction but within the bounds of statutory assignment.

Going forward, litigation will likely shift from jurisdictional challenges to questions of procedural compliance, limitation, and fairness in adjudication. For taxpayers and counsel, the message is clear: the battle has moved from “whether” DRI can issue SCNs, to “how” those SCNs are exercised under law.

Editorial Note:
The Canon India trajectory—from invalidation, to legislative intervention, to judicial recalibration—is a striking illustration of how revenue enforcement, judicial oversight, and legislative sovereignty co-evolve. For customs law in India, it marks the end of jurisdictional uncertainty and the beginning of a new era of substantive procedural scrutiny.

Source: Canon-2021 judgment (9-Mar-2021) — Supreme Court of India (Reportable) & Canon-2024 review judgment (7-Nov-2024) — Supreme Court of India (Reportable)

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August 31, 2025

Tag: #SupremeCourtofIndia

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