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Commissioner of Customs vs M/S Canon India Pvt. Ltd.

Not available · 2024 INSC 854Decided 7 Nov 2024
Not available

Background

In its 2021 decision in Canon India, the Supreme Court had held that officers of the Directorate of Revenue Intelligence (DRI) were not "proper officers" under the Customs Act and therefore lacked authority to issue show cause notices demanding customs duty under Section 28: a ruling that threw thousands of pending demand notices and cases into doubt across the country. The government filed review petitions arguing this ruling was based on an incorrect reading of the statutory scheme, and Parliament had also since enacted validating provisions, including Section 97 of the Finance Act, 2022.

Decision Breakdown

The Court allowed the review petitions on the central jurisdictional question, holding that DRI officers, being customs officers under the Act, are entitled to be entrusted with and exercise the functions of a "proper officer" for issuing show cause notices under Section 28, correcting the position taken in the 2021 Canon India judgment. It upheld the constitutional validity of Section 97 of the Finance Act, 2022 (which had retrospectively validated such notices), overruled the Delhi High Court's contrary view in Mangali Impex and approved the Bombay High Court's view in Sunil Gupta. However, it left undisturbed the separate finding in the original Canon India judgment that some notices were issued beyond the limitation period. It gave detailed directions for restoring and re-adjudicating the large number of connected show cause notices, appeals, and writ petitions that had been stayed or quashed on the strength of the now-corrected 2021 ruling.

Lesson Learnt

Even a Supreme Court ruling on jurisdiction can be revisited and corrected through a review petition when the government shows the earlier reasoning overlooked the true statutory scheme: taxpayers and authorities alike should be cautious about treating any single judgment as final where a review is pending on a foundational legal question with mass impact.

Official source (sci.gov.in)View Judgment (PDF)

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