New Delhi: The Supreme Court on Thursday declared that Directorate of Revenue Intelligence (DRI) officers are “proper officers” under the Customs Act and have the power to exercise powers under the Act, to issue show-cause notices and recover duties.
The verdict was delivered by a three-judge bench led by Chief Justice of India DY Chandrachud and comprising justices JB Pardiwala and Manoj Misra. The apex court clarified that it has only dealt with the issues arising out of the Canon India decision. The bench said it has not rendered any expression of merit on any other pending challenge to the 2022 Finance Act provisions.
Earlier the apex court, in the Canon judgment (2021), had held that only the customs officers originally responsible for clearing goods could issue such notices, invalidating those issued by DRI officers. This interpretation by the apex court resulted in the dismissal of numerous DRI-issued notices by courts and tribunals across the country.
Today's verdict is a shot in the arm for the Centre and DRI, as they can proceed with numerous pending tax recovery cases, which were left in the lurch due to legal challenges. These tax recovery cases are estimated to involve over Rs 20,000 crore. The detailed judgment of the apex court will be uploaded later in the day.
The verdict delivered on Thursday overturned the previous stance taken by the apex court in the Canon India Pvt Ltd case, in which DRI’s authority was limited in connection with issuing notices under the Customs Act, 1962. Additional solicitor general (ASG) N Venkatraman, representing the Centre, had contended in its review petition that the Canon judgment was flawed and had overlooked crucial statutory interpretations.
In 2021, the Canon judgment created substantial ambiguity by stating that DRI officers were not “proper officers” to issue show-cause notices, which impacted several cases in various stages of adjudication.
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