Time Limit To Refer Statement Of Case By CESTAT To High Court, Under Section 130A (4) Of The Customs Act, Is Directory: Bombay High Court

The Division Bench of Justices K.R. Shriram and A.S. Doctor held that the CESTAT is a judicial body, over whose actions the revenue authorities have no control. It added that if the time limit within which the CESTAT is required to make a reference, as provided in Section 130A (4), is construed as mandatory, it might deprive the revenue authorities of their right to have a question of law considered by the High Court.

In an application made before the Bombay High Court under Section 130 A (1) of the Customs Act, 1962, the High Court directed the respondent no. 1/CESTAT to send the statement of the case relating to the assessee/petitioner- Asit C. Mehta Financial Services Limited, as expeditiously as possible. Averring that the CESTAT had failed to send the statement of case, the petitioner filed a writ petition before the Bombay High Court seeking dismissal of the case directed to be filed against the assessee by the CESTAT, as filed by the Commissioner of Customs (Preventive).

Section 130A (1) of the Customs Act provides that the specified revenue authorities, or the other party, may file an application to the High Court, seeking a direction to the Appellate Tribunal to refer any question of law arising from the order of the Appellate Tribunal to the High Court.

The petitioner- Asit C. Mehta Financial Services Limited, submitted before the Bombay High Court that in view of Section 130A (4) of the Customs Act, 1962, where the High Court directs the Appellate Tribunal to refer the question of law raised in an application filed under Section 130A (1), the Appellate Tribunal is required to draw up a statement of the case and refer it to the High Court, within 120 days of the receipt of such direction.

The petitioner submitted that since the CESTAT had failed to submit the statement of facts, the High Court must dismiss the case for want of prosecution.

The High Court, while concluding that respondent no. 2/ Commissioner of Customs (Preventive) had not abandoned the application filed under Section 130A (1), ruled that the time limit of 120 days, as prescribed in Section 130A (4) of the Customs Act, is only directory and not imperative in nature.

The Court held that the CESTAT is a judicial body, over whose actions the revenue authorities have no control. Thus, the bench ruled that if the time limit for submission of the case, as provided in Section 130A (4), is construed as mandatory, it might deprive the revenue authorities of their right to have a question of law considered by the High Court, which the Customs Act intends to be considered.

It added that a party should not be deprived of a statutory right for no fault of its own or for the fault of a public body over which it has no control.

The Court referred to the case of Raja Benoy Kumar Sahas Roy versus Commissioner of Income Tax (1953), where the Calcutta High Court was considering the provisions of Section 66(1) of the Income Tax Act, 1922, which enabled the Commissioner or the assessee to require the Appellate Tribunal to refer any question of law arising out of its order to the High Court. Section 66(1) of the Income Tax Act, 1922 required the Appellate Tribunal to draw up a statement of the case and refer it to the High Court, within 90 days of the receipt of such application.

Noting that the reference was not made by the Tribunal within 90 days from the receipt of the application, the Calcutta High Court in Raja Benoy Kumar Sahas (1953) had held that a party cannot be made to suffer prejudice due to any default or negligence on the part of the court. Thus, it had ruled that the provisions contained in Section 66(1) of the Income Tax Act, 1922, as to the time within which the reference was to be made by the Tribunal, was not mandatory but only directory. Therefore, the Calcutta High Court had ruled that the reference made by the Tribunal after the expiry of 90 days, was valid.

While ruling that Section 66(1) of the Income Tax Act, 1922, was pari materia to Section 130A (4) of the Customs Act, the Bombay High Court held that the time limit within which the CESTAT is required to make a reference, as prescribed in Section 130A (4) of the Customs Act, is only directory in nature.

Directing the CESTAT to submit the statement of case within six weeks, the Court dismissed the petition.

Case Title: Asit C. Mehta Financial Services Limited versus The Customs Excise and Service Tax Appellate Tribunal (CESTAT)

Dated: 20.10.2022 (Bombay High Court)

Counsel for the Petitioner: Mr. Abhishek Adke a/w Ms. Vibha Joshi

Counsel for the Respondent: Ms. Shehnaz V. Bharucha a/w Mr. Ram Ochani;

Mr. Sriram Sridharan, Amicus Curiae

Citation: 2022 LiveLaw (Bom) 435 

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