Court dismisses Nitco Ltd.'s plea challenging interest liability determination, reinforcing limited judicial review of Settlement Commission's decisions.
In a recent judgment, the Delhi High Court dismissed a writ petition filed by M/s Nitco Ltd. seeking to challenge the interest liability determined by the Customs, Central Excise, and Service Tax Settlement Commission. The court emphasized the limited scope of judicial review over orders passed by the Settlement Commission, reiterating that such decisions can only be contested on grounds of jurisdictional or statutory infirmity, fraud, bias, malice, or prejudice.
The case revolved around a Show Cause Notice (SCN) issued to Nitco Ltd. by the Directorate of Revenue Intelligence (DRI) for alleged evasion of customs duty. The SCN, dated June 18, 2018, demanded a duty of over Rs. 10 crore along with interest. After adjudication by the Commissioner of Customs, Nitco Ltd. chose to approach the Settlement Commission for a resolution. The commission settled the duty liability at approximately Rs. 6.7 crore, with a penalty imposed on both Nitco Ltd. and its managing director, Vivek Talwar.
Nitco Ltd. later contested the interest liability determined by the jurisdictional Commissioner, which was significantly higher than the amount initially computed by the company. The Delhi High Court, however, ruled that having elected to settle the matter through the Settlement Commission, Nitco Ltd. could not reopen the validity of the SCN or the subsequent interest determination in proceedings under Article 226 of the Constitution.
The judgment underscored that the Settlement Commission's role is to provide a final settlement of tax disputes, and its determinations are not subject to review merely because another view is possible. The court highlighted that the Petitioners had voluntarily invoked the jurisdiction of the Settlement Commission and accepted its order, thereby precluding them from challenging the underlying SCN or the interest liability in a writ petition.
This decision reinforces the principle that the orders of the Settlement Commission are conclusive, except in cases of statutory or jurisdictional errors. The court's ruling aims to uphold the legislative intent behind the establishment of the Settlement Commission, which is to provide a speedy resolution to tax disputes and reduce litigation.
Bottom Line :
Judicial review of orders passed by the Settlement Commission is limited to grounds of jurisdictional or statutory infirmity, fraud, bias, malice, or prejudice. The sufficiency of material and conclusions drawn by the Commission ordinarily fall outside the scope of judicial review.
Statutory provision(s):
Customs Act, 1962 Sections 28(4), 127B, 127J, 127L
