The 'Proper Officer' Conundrum: A Critical Analysis Of Conferment Of Adjudicatory Powers

The 'Proper Officer' Conundrum: A Critical Analysis Of Conferment Of Adjudicatory Powers On Investigative Officers In Light Of The Recent Canon India Judgment

Udbhav Bhargava, B.A.LL.B. (Hons), National University of Juridical Sciences, Kolkata1

ABSTRACT

In March 2021, a three-judge bench of the Supreme Court in Canon India held in unequivocal terms that an officer of the DRI is not a "proper officer" to issue Show Cause Notices (SCN) or raise a customs duty demand against importers. It is the officer who had undertaken the original assessment of imports or his successor, who would be the "proper officer" to issue Show Cause Notices and demand customs duty. As an aftermath of the Supreme Court judgement, High Courts and Tribunals have quashed SCN issued by DRI officers on account of an inherent lack of jurisdiction. In an expected turn of events, the Government resorted to amendments in the forthcoming Budget to retrospectively empower the DRI to issue SCN and validate their past actions.

The above flow of events is not new in history of indirect tax jurisprudence and has also occurred after the judgments in Mangali Impex and Sayed Ali were delivered by the respective honourable courts. In both these cases, powers of the officers of investigative and preventive wings to issue Show Cause Notices (SCNs) to assesses, in an event of short-levy, short payment or non-payment of custom duty were challenged. Since the respective courts found such SCNs lacking the force of law, the Government foresaw that assessments/re-assessments conducted by such officers will be vulnerable to invalidation resulting in loss of revenue to the exchequer and disruption of revenue streams. The Government, thus, amended the Customs Act to empower multiple investigative officers to issue SCNs.The trend of empowering multiple investigative officers to issue SCNs (adjudicatory power) adopted by the Government digresses from the expected compartmentalization of duties between various officers of customs. Further, 1 Udbhav Bhargava, Penultimate Year Student, B.A.LL.B. (Hons), National University of Juridical Sciences, Kolkata absence of guidelines for exercise of powers among multiple jurisdictional officers contravened Article 14 of the Constitution as it may lead to multiple proceeding for a single assessee leading to hardship and inconvenience. The paper thus investigates and comments on the legal and practical consequences arising out of such approach.

The author aims to accomplish so by mapping out the decades long interplay between the judiciary and the government by tracing judgments nullifying SCNs issued by revenue intelligence officers and the accompanying statutory amendments and validating legislations by the government to bypass those judgments.

The author then analyses the amendments and circulars empowering multiple jurisdictional officers and comments on various consequences such as – incoherence in tax policy, executive officers unable to specialize in their domain due to adjudicatory duties, complicated tax administration due to multiple officer governing an assessee, etc. And the author then concludes with comments on the impact of recent amendments made by the Finance Act, 2022.